...ICMR Case Collection C op y ICFAI Center for Management Research N OPER 049 ot SCM and ERP Software Implementation at Nike – From Failure to Success D o This case was written by Ruchi N. Chaturvedi, under the direction of Vivek Gupta, ICFAI Center for Management Research (ICMR). It was compiled from published sources, and is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. 2005, ICFAI Center for Management Research. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means- electronic or mechanical, without permission. To order copies, call 0091-40-2343-0462/63/64 or write to ICFAI Center for Management Research, Plot # 49, Nagarjuna Hills, Hyderabad 500 082, India or email icmr@icfai.org. Website: www.icmrindia.org OPER/049 SCM AND ERP SOFTWARE IMPLEMENTATION AT NIKE – FROM FAILURE TO SUCCESS “We became a poster child for failed implementations.”1 - Roland Wolfram, Vice-president - Global Operations, Nike Corporation, commenting on the i2 software implementation failure in 2000. op y “The lesson of Nike’s failure and subsequent rebound lies in the fact that it had a sound business plan that was widely understood and accepted at every level of the company. Given that resiliency it afforded the company, in the...
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...Case Study: Nike ERP Implementation Nike shoe division grew and spread rapidly around the globe from its inception in 1972 through 1998. Yet in 1999, Nike realized that in order to keep up with the growing demands of their products, and specifically their Air Jordan line of basketball shoes, they would have to make changes in the way they forecasted and projected demands and distributed their products. Eventually it was decided that these changes would take place in the form of the implementation of a new supply chain and Enterprise Resource Planning (ERP) software system. This paper will examine the supply chain problems Nike was trying to fix with the new system, the problems that arose from the implementation of the new system, and how Nike resolved these problems. Nike was founded in 1957 on the vision of two men, Bill Bowerman and Phil Knight; a vision to redefine the industry of athletic footwear. Bill Bowerman was a track and field coach at the University of Oregon in search of a competitive edge for his athletes, a competitive edge which could be achieved by spearheading changes to the running shoes of the time. At the time, Adidas and Puma were the dominant brands of running shoes. Phil Knight, a Portland runner with a degree in finance from Stanford University, proposed to compete with the German (Adidas and Puma) brands of running shoes by manufacturing them in Japan, which at the time was experiencing a post WWII boon in its economy, and their stage of manufacturing...
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...Nike Case Study Nike roots trace themselves back to the 1950s with University of Oregon field coach Bill Bowerman. Bowerman was always trying to find a competitive advantage for his track runners and had the idea of a lighter show. He would late team up with recent graduate Phil Knight and create the first Nike shoe, “the Swoosh”, which debuted in 1972. Through the years, Nike would continue to create innovative sports apparel, expand into new markets, and challenge the way people look at athletics. Forty years later Nike continues “to seek new and innovative ways to develop superior athletic products, and creative methods to communicate directly with customers” (nikeinc, 2012). Nike is one of the leading distributor and manufacturer of sports apparel, controlling 32 percent of the worldwide market (Koch, 2004). Nike offers brands such as Converse, Cole Hann, Umbro, Jordan brand, etc. to markets around the world. With a stock price ranging from 91.40-92.95, with 450.55 million shares, Nike is one of the highest grossing apparel companies in the world. Lead by president and CEO Mark Parker, Nike runs “a complete offense, and it’s based on core commitment to innovation.”(nikeinc, 2012) In the 2012 fiscal year, Nike generated 24.1 billion dollars, a 16 percent increase from the previous year. The company has announced an increase in its fiscal 2015 target revenue to range from 28-30 billion (nikeinc, 2012). Nike employs more than 30,000 employees worldwide, and the contracts that...
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...CIO - Nike Rebounds Page 1 of 8 Features Nike Rebounds Christopher Koch 12 July, 2004 10:54:58 How (and Why) Nike Recovered from Its Supply Chain Diaster Too many Air Garnetts. Too few Air Jordans. Nike lost money, time and a measure of pride when its demand-planning software led it astray. How did it recover? Patience, perseverance and, most important, an understanding of what it was trying to accomplish in the first place READER ROI The limitations of demand-planning software How a robust business plan can insulate tech execs from blame Single-instance strategies in a global environment "I thought we weren't going to talk about i2," growls Roland Wolfram, Nike's vice president of global operations and technology, his eyes flashing at his PR manager with ill-concealed ire. Wolfram, who was promoted in April to vice president and general manager of the Asia-Pacific division, is all Nike. His complexion is ruddy, his lips cracked from working out or working hard, or both. He's casually dressed, but with a typical Nike sharpness to his turtleneck and slacks, a sharpness reflected also in his urgent, aggressive defence of his company - a Nike pride that would seem arrogant were not the company so dominant in its industry. Wolfram calls the i2 problem - a software glitch that cost Nike more than $US100 million in lost sales, depressed its stock price by 20 percent, triggered a flurry of class-action lawsuits, and caused its chairman, president and CEO,...
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...Introduction Nike is a name of the major manufacturer of athletic footwear, apparel and equipment for a wide-ranging of sports from the United States. According to Ashford (1997) it was established in 1963 by Phil Knight as ‘Blue Ribbon Sports’ and began as an importer for the running shoes, which were imported from Japan. In 1972, the new name ‘Nike’ has introduced with an extensive product range to more variety of footwear and apparel for sports. Since then, Nike sales grew progressively to be the leading sportswear company. While, growth went beyond its national home base, especially in European region. Since 1980s, after firstly success with local distributors, Nike decided to possess its own distribution centres by acquired its distributors business in all the leading countries and integrated into its owned subsidiaries. However, each country still ran its operations such as warehousing and logistics separately. Hence, in 1992, Nike made up its mind to reorganizing its European internal supply chain management and logistics (Ashford 1997). Because the entirely synchronized of materials flow and customer demands for the finished goods, that produces is the idyllic implementation for an internal supply chain management (Waage 2008). If the company do not achieve this ideal, it might lead to uncoordinated forecasts and decisions that produce inadvertent accumulation of inventories, excessive lead times, delays in production and product being left unsold finally...
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...NIKE SUPPLY CHAIN MANAGEMENT INSERT NAME HERE INSERT UNIVERSITY/COLLEGE NAME HERE INSERT SUBMISSION DATE HERE2 TABLE OF CONTENTS 1 INTRODUCTION...................................................................................................................................................3 2 OVERVIEW OF NIKE...........................................................................................................................................4 3 NIKE SUPPLY CHAIN PROCESSES...............................................................................................................5 3.1 Nike Product Development....................................................................................................................5 3.2 Nike’s Manufacturing flow management........................................................................................6 3.3 Lean manufacturing ..................................................................................................................................6 4 NIKE SUPPLY CHAIN ASPECTS.....................................................................................................................7 4.1 Nike Vertical Relations.............................................................................................................................7 4.2 Horizontal Relations .................................................................................................................................8 5 NIKE...
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...Nike Case Summary Although it is still a highly successful athletic shoemaker today, Nike has went through its fair share of financial and public relations problems. Many believe that Nike went in decline due to two reasons: Michael Jordan’s final retirement and the slowing economy. Another aspect of Nike that has brought a negative image upon them are the negative accusations of exploiting foreign labor. Much like everyone else, Nike knew that its main problems revolved around the overproduction of unpopular shoes alongside the underproduction of popular shoes. They knew they needed a way to better forecast demands and market changes. Although Nike has had experience with major IT projects, their poor project management has left these projects with undesirable outcomes. Their project in mid-1997 when they invested in the installation of intranet which was supposed to improve global collaboration and reduce the time it took to make product design decisions. An evaluation of this project showed that Nike poorly planned the project and had poor communication among its main users. Nike’s first attempt at installing supply-chain management with SAP in the late 90s ended up failing due to being problem-ridden and ‘inadequate’ for Nike. They gave supply-chain management a second try when partnering with i2 Technologies, Inc.; having had experience with the SAP project, Nike knew that this was going to be a difficult undertaking but they still had high hopes that the i2 project...
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...Nike I2 ERP Implementation Failure Case Study February 9, 2014 Shafer Minnick Morgan Correll Jeff Harvey Nike stands as the World’s leading producer of Athletic Footwear, Apparel and Equipment. As of 2013 they held complete ownership or joint venture in the following companies: Nike Brand Cole Haan Converse Hurley International Umbro Athletic Wear Nike Golf Jordan Brand This is a rather long and somewhat surprising list to many, based on some of these brands are portrayed as competitors in the daily consumer market. Nike products are sold in over 170 countries worldwide through their network of 700 retails stores. They have 38,00 Nike employees worldwide, based in those retail store, or one of 65 administrative offices or 10 plus Sales Offices or showrooms worldwide. Nike products are manufactured through a contract manufacturing partnership consisting of 900 contract plants worldwide using over 1 million contract employees. These same plants are managed by their local ownership, but Nike spends significant time and money coaching these plants in the Nike sustainable manufacturing plan. The Nike Strategy The Nike Business strategy focuses on Innovation. First the “Innovation to Serve the Athlete”-meaning they desire to design and produce the best products for athlete safety and performance. They want to be the leaders in new and improved products to advance athletic performance. Secondly, “Innovation to Grow the Company”- Nike wants...
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...Assignment Hassan Gulzar B-13733 Supply Chain Process of Nike To, Sir Imran Hussain Nike’s supply chain, and its emphasis on sustainability – along with its aim to cut emissions – has been well-reported. But it goes far deeper than merely calculating the carbon cost and asking its transport providers to try to cut emissions. No, this is a company well ahead of the curve in sustainability. And there’s a lot other companies can learn from it. If its vision of the future comes to pass, then logistics providers seriously need to take note. It could change everything. Company Overview NIKE, the world's biggest shoe company, has a reputation for fancy footwork, especially in the arena of marketing. With both Forrest Gump and Michael Jordan sporting NIKE's athletic shoes, NIKE's appeal is wide ranging. The shoe giant still holds nearly 37% of the US market, a giant lead over #2 Reebok, which has 20.5%, and #3 Fila, with only 5.1%. NIKE - a powerhouse in the world of sports, the designer and international marketer of athletic shoes, casual footwear, apparel, and accessories - is looking for new growth opportunities. Founders: Bill Bowerman and Phil Knight. First year-sales totaled $ 8,000 (1962). Employees: NIKE employs approximately 26,000 people worldwide with 650,000 workers are employed in Nike contact factories around the world. Revenue FY05: $ 13.7 billion ( 12% increase from FY04) Manufacturing: Nike brand had 137 factories in Americas (including US), 104 in EMEA...
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...1 - What are the failure factors for the first NIKE-i2 ERP-SCM implementation? The following factors contributed to the failure if the ERP-SCM implementation for Nike which then resulted in a loss of $48 million for the year: • i2 Inexperience: Nike although were aware that i2 was unable to provide all the required functionalities initially, requested i2, who were already inexperienced with the footwear industry, to adjust and provide high level of complex customization. • Integration: Nike failed to hire a Third Party Integrator which could have assisted them in overlooking the entire implementation. The integrator could have advised on any issues as well as act as a means of communication between Nike and i2. Instead, i2 was not even integrated with the current SAP ERP, and was rather set up to perform in complete isolation • Customization: Nike underestimated the complexity of the implementation by demanding i2 high level of customization by having an extremely high level of detailed forecasting in addition to trying to forecast too far ahead. i2 was unable to keep up with the quick changes in the market and seasonal trends and thus creating several delays and inaccurate forecasts. • Pilot Test: Nike underestimated the potential risk of failure in implementing i2 and did not conduct any pilot testing. Having done so, could have prevented or at least minimized their losses. A pilot test would have enabled them to be better equipped and deal with...
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...Globalisation NIKE – just do it Introduction Nike, Inc. is an incorporated company that designs, develops and markets worldwide athletic footwear, apparel, equipment and accessories. Nike is the biggest seller of athletic footwear and athletic apparel in the world and creates designs for men, women and children. Nike employs both traditional and non-traditional distribution channels in almost 200 countries with primary market regions in the United States, Europe, Asia Pacific, and the Americas. Nike has some 20,000 retailers worldwide including Nike factory stores, Nike stores, Nike Towns, Cole Haan stores and Web sites which sell Nike's sports and leisure products. Nike markets its products under its own brand, as well as Nike Golf, Nike Pro, Nike+, Air Jordan, Nike Skateboarding, and subsidiaries including Cole Haan, Hurley International and Converse. Nike accounts for 33% of the global market share in the athletic footwear industry. Nike sponsors many high profile athletes and sports teams around the world with the highly recognized trademarks of Just do it (www.nike.co.uk). GLOBALISATION: Globalisation is defined as the micro- phenomenon where there are a free flow of capital efficiency, technology and other factors of production which promote world welfare in its strides. (Nande and Dias, 2007.,p.2) KEY DRIVERS OF GLOBLISATION: there are three main factors which motivate the globalisation of markets and production which are explained as under: Falling barriers to trade...
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...Enterprise Resource Planning (ERP) projects are no exception. Whether the project is a few months or a few years long, whether it’s an upgrade or a new implementation, the financial and cultural well-being of the entire organization is at stake, and the associated costs of the failure range from disruptive to catastrophic. Everything possible must be done to ensure success. What is an ERP System? An ERP System is an industry acronym for Enterprise Resource Planning System, referring to automation and integration of a company’s core business to help focus on effectiveness and simplified success (Syspro, n.d.). ERP is business process management software that allows an organization to use a system of integrated applications to manage the business and automate many back office functions related to technology, services, and human resources. ERP software integrates all facets of an operation, including product planning, development, manufacturing, sales, and marketing. By doing so, a single computer system can serve the unique needs of each functional area. ERP systems support a smooth and seamless flow of information across the organization by providing a standardized environment for a firm’s business processes and a common operational database that supports communications. Data in the operational database are modeled, structured, and stored in accordance with the internal attributes of the data. They remain independent of any specific application. Extensive data sharing among...
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...Political factor: If Nike wants to open international market such as China, the company would get disadvantages because every country will protect and priority for its domestic products. So, the company must find out exactly these requirements that the country require in Nike to overcome these barriers. International trade regulations The trade regulations in China are formulated in accordance with the "Foreign Trade Law of the People's Republic of China" in order to maintain foreign trade order and fair competition and to protect domestic industry. In 2011, Nike has difficulties to highlight the deep problems businesses face in manufacturing in China, particularly at a time of sharply rising costs and a stiffening legal environment. In its first country-specific supply chain report, which it said focused on China because of the forthcoming Beijing Olympics, Nike detailed the efforts it has been making to get suppliers to comply with its code of conduct and with Chinese law, including a program to monitor Olympics-related suppliers this year. Government attitude The Chinese government may have a love-hate relationship with the West — eager for Western technology yet threatened by democracy. Therefore, it is an disadvantage for Nike when expanding its business in China. But for Chinese consumers, Western goods mean one thing: status. China's biggest seller of athletic shoes, Li Ning, recently surrendered its top position to Nike, even though Nike's shoes — upwards of $100...
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...Defining Marketing Companies in today’s market compete with one another to sell their products and in hope of making profits. The tool to get consumers to notice and buy their products is marketing. Generally, consumers think marketing is made of two factors which are advertising and selling. In a nutshell the thought is essentially letting people know what the company has to offer. This concept however is just part of marketing. There are other factors contributing to how the companies market their products. Those factors are the constant analyzing in the numerous changes in competitive environment, to strategize to meet those changes, and to create their business niche. This paper will define marketing by providing definition from two sources. It will explain the importance of marketing to the organizations’ success. Also, it will provide three examples from the business world. Marketing Defined Marketing had been a crucial tool for businesses. It is use to influence and create the urge to in the heart of the consumers. To understand the influence and the need to create this urge lets define marketing on how it impacts the consumers’ choices. According to the text by Kotler and Keller, marketing is an expression of art and science. The statement itself illustrates the boundary between the formulated and creative side. In short it identifies the needs and meeting those needs. Generally, companies want to build a long lasting relationship and trust with...
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...TO: CEO and Board FROM: Andres L. Garcia DATE: June 2nd, 2015 SUBJECT: Enterprise Systems As a business grows, so does the complexity in keeping all departments running smoothly. Things such as logistics, manufacturing, inventory management and Human Resources are all vital to keep businesses competitive and growing. As this became painfully obvious, technology presented a solution to these issues with the creation of enterprise systems. Businesses soon found that using these systems, they could streamline the management of many of these functions. Further, because these systems collected and managed a plethora of data, tools were also developed to aid in other things like forecasting orders. While these systems had the potential to save money, they also become notoriously known for being incredibly difficult to implement. Through research an analysis, I have determined that implementation of an enterprise system will benefit Wint. Transaction Processing Systems Transaction processing systems process data related to functions such as order processing, purchasing and accounting business functions. It also can be used to query data to display a variety of information such as the status of inventory and account balances. This system is especially important when dealing with large and complex orders. Because this data influences the direction of a business, reports that are error-free and quickly accessible are essential. (123Helpme.com, 2015) Implementation The...
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