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Nike Supply Chain System Essay
Introduction
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NIKE is a major company of USA with apparel, footwear and sporting equipments; generating more than $ 15 billion revenues during the financial year 2006 (FY06). This company is headquartered in Beaverton, Oregon with more than 28000 employees in the 160 countries of the world.
NIKE is differentiated from other companies of the world due to its innovative products and marketing strategy in the world. The marketing strategy includes the celebrity, brand identity and logos.
NIKE’s Supply Chain: In the overseas NIKE contracts many factories for its products. It is known that business model of NIKE was developed by the Phil Knight on consideration that the products can be outsourced on lower prices. NIKE moved its production towards the countries Korea and Taiwan when costs increased in Japan during 1970s.
NIKE Outsourcing
NIKE started to contract for the shoes production as the Japanese markets matured; a change of supplier was seen there. With the increase in demand these suppliers further subcontracted into other less developed countries of the world like Indonesia, china, Vietnam and Thailand (Parloff, 2002).
The brands of the NIKE become so famous that it gained athletic wear from the 500 factories of 45 countries in 1999. (Annual, 2003). As the production level of subcontractors increased the control of the NIKE decreased. However this trend was reversed in 1996 because the NIKE’s factories become the hot topic of media.
It is necessary for the contractors to cut down the expenses to stay in the business and must get profit on this investment. Expenses can be reduced either in production chain or supply chain. NIKE wants the quality products and cannot sane in the supply chain. Operation chain is the place where the contractors can save the expenses.
Supply Chain of NIKE
Supply chain is the network of NIKE Company along with the business processes procuring the raw materials and transforming it into intermediate and final products. These final products are distributed to end users. A link is made between the suppliers, manufacturers, distribution centers and retail centers where the goods are supplied from the source through the consumptions.
The flow of the material and payment is kept through the supply chain between the both directions (Lauden, ). The products of the NIKE sold throughout the world. NIKE designs and sells the sneakers, athletic clothing, socks and other accessories, equipments internationally.
NIKE’s finished products are fashioned by the contract manufacturers who are also the primary suppliers of NIKE. Sneakers are not manufactured by the scratch by the Company’s suppliers. Sneakers provide the components such as the laces, eyelets and soles from the other suppliers.
They assemble these components into the final products. The suppliers of different components have their own suppliers. For example sole suppliers have suppliers for the synthetic rubbers etc. Following figure depicts the supply chain of the NIKE’s Company. It shows the processes of the flow of information and managing the relationships between them.
NIKE’s efforts to capture the apparel market of women’s sports are a good addition because before the 2000 men’s feet fold were used for the women’s feet. After that NIKE changed its approach towards the women and overhauled the women’s apparel line. The purpose was to design and create the better fitting and colorful clothes for the women. In many major cities of the world NIKE has opened the Nikewomen stores.
Brand Positioning
The importance of the brand positioning is a crucial factor for the business growth of NIKE. Athletic shoes for the winner are a good example of the brand of NIKE. This company has focused from the start on the importance of the brands. Back in 1972, Phil Knight the CEO of the company persuaded the marathons to wear the NIKE shoes during the Olympic trials at Eugene, Oregon.
In those Olympics the main four top runners had worn the NIKE shoes. Its products represent the desired potential attributes from the specific brands. NIKE has known its limits. When some enters the shoe markets the brand of NIKE seems naturally fit for the foot. When Phil Knight purchased the Cole-Haan then Company achieved the access to this segment of the business.
