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Nike Global Supply Chain
271
M/N David Kimmerlein, M/N Angela Parker, M/N Dominick Brusca / Team 4
02/21/2019
Nike’s Global Supply Chain
Overview
O
Nike is a leading global manufacturer in fashion and has a complex supply chain to maintain its efficient and functional operation.
From a designer’s sample to mass production in foreign countries, Nike must coordinate the raw materials, labor, inventory, and marketing for all of their products.
Constant demand and fluctuations in sales and popularity increases the demand for inventory and production.
Overview
Nike caters to athletes and sportsmen alike
P
Sports equipment
NFL/ Sponsorships
Clothing
Shoes, shirts,
pants, all athletic gear
Product
Nike Brand golf clubs, baseball bats, lacrosse sticks
Personal sponsorships for celebrity athletes and professional leagues
Clothing Focus
Nike is treading all over its competition. Ranked as the world’s most valuable sports brand and worth $34 billion
Clothing
Running and the Jordan Brand are currently the top-selling footwear categories
Revenues for Converse were $425 million, up 6% due to increased market in Asia
Shoe's production
99% of all shoes sold in the United States are manufactured abroad
Footwear
96% of the factories are in Vietnam, China, and Indonesia, though no single facility accounts for any more than 5% of Nike’s total footwear output.
The US Market
2018: NIKE Brand and Converse sales in the United States accounted for approximately 42% of total revenues
M
Household name dominating all sports ware brands
Nike has 392 retail stores with 7 major distribution centers
Market
International Market
non-U.S. NIKE Brand and Converse sales accounted for approximately 58% of total revenues
Int Market
790 stores
Argentina, Australia, Austria, Belgium, Bermuda, Brazil, Canada, Chile, China, Croatia, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hong Kong, ETC.
Supply Chain Statistics
Nike, Inc.
S
- Total Revenue: $36,397,000,000
- Employees: 74,400
- U.S. Retail Stores (392)/ Outside U.S. retail stores (790)
- Last year in Nike sold over 9.3 billion in footwear in North America alone
- Footwear manufactured in 142 contracted factories in 15 different countries
- Factories in Vietnam, China, and Indonesia respectively manufactured approximately 43%, 28%, and 25% of NIKE’s total footwear.
- In fiscal 2016 (May year end) North America accounted for 46% of sales, Western Europe (18%), Greater China (12%), Emerging Markets (11%), Central & Eastern Europe (4%), and Japan (3%)
- Nike has 5 out of 7 of its significant U.S. distribution centers located in Memphis, Tennessee. The largest of which is 2.8 million sq. ft.
- Nike utilizes 62 distribution centers outside of the U.S.
Supply Chain
Double click to edit
Value Chain Graphic
Business Model
B
- Promote maximum efficiency in the supply chain
- Create demand for products
Business Model
Supply Chain Efficiency
- Utilizes a large supply chain
- 127 footwear factories
- Maintains close control over supply chain
- Minimal use of 3PLs
- Partnered with FLEX in 2015
- Seeking to increase manufacturing efficiency
Creating Demand
- Over 60% of footwear sold to wholesale customers
- Recognizes the growth of direct-to-customer sales
- Seeks to create demand for products
- $3.6 billion spent in 2018
Customs and Regulations
C
- All Nike footwear is subject to tariffs
- Exact value of tax paid is determined using the Harmonized Tariff Schedule (HTS)
- Possibility tariffs may increase due to trade war with China
Customs
Tariff Details
Tariff Details
- Duty Tax charged upon being brought into the United States
- Includes a freight charge and import duty assessment
- Duties for sports footwear from 7.5-10%
Challenges Encountered
C
- Nike struggles with direct-to-consumer (DTC) sales compared to rivals like Adidas and Under Armour
- Throughout the 90s Nike was criticized for selling products manufactured in sweatshops across Asia
- Child Labor controversy: Nike contracted factories in Pakistan and Cambodia accused of soliciting children for the production of footwear and equipment
Challenges
Code of Conduct:
Nike's Response to Controversy
Response
Nike has implemented a specialized code of conduct since these labor allegations
Key Points from Code of Conduct:
- Employment is voluntary
- Employees are age 16 or older
- Compensation is timely payed
- Working hours are not excessive
- The workplace is healthy and safe
Conclusion
C
In conclusion the logistics chain for a global fashion company such as nike is complex, demanding, and always changing
The company must constantly stay ahead of designs and the demands of their customers
Conclusion