Nike is the premiere seller of athletic footwear and apparel in the world. In the late 1990’s, the company announced plans to create an IT supply chain management solution it named the NIKE Supply Chain (NSC) Project. The goals of the project were to improve the company’s ability to respond to changes in the dynamic footwear and apparel industry, better serve its customer base, reduce the inventory levels and associated costs, reduce risk, and improve overall information along the supply chain.
Although the goals of the project were straightforward, setting out to accomplish those goals was not.
The team faced a variety of daunting challenges, from the complexity and size of the supply chain, to the inexperience of the software vendors in the footwear industry, to the vast array of products that Nike has to offer. In order to deal with the complexity of the project rollout, Nike utilized multidisciplinary teams of consultants from a variety of software companies. The project team also divided the NSC Project into logically geographical segments, and determined that Canada was to be used as the test ground for the rest of the world.
The solution was built from a combination of the world’s leading supply chain software companies. Software from Siebel, i2, Rentrak, and Global Logistics Village were integrated into foundation software from SAP. The solution was then integrated into the existing ERP and legacy systems residing at Nike. The initial rollout of the project was a disaster. Nike announced in May 2001 that sales for the quarter were $100 million less than expected due to problems in the supply chain solution.
However, three years later Nike dramatically rebounded. The company moved from a $49 million loss to a $261 million profit. Gross margin improved by almost 2%. , 75% of which was attributed to the NSC project. Nike is the world’s premiere athletic footwear and apparel company and holds the position of the “800-pound gorilla” amongst its main competitors. In 2003 the company’s sales toped $10 billion worldwide, and controlled over 20% of the USA footwear market share (Hoovers).
The profitability of the company has long been enhanced by the excellent margins that the company maintains by charging a high premium for the “cool” factor of their products. With such a dominate market share, Nike began to look to cost-cutting methods in order to continue the growth of the past several decades. Like many companies in the late nineties, Nike turned to Supply Chain Management software to improve its bottom line. The project came to be known internally as the Nike Supply Chain (NSC) project. The intention to create the digital management of its supply chain was announced in late 1999.
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