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Nike Inc.: Operations and Logistics Report

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Updated: Jun 9th, 2021

Strategic Audit

Nike Incorporated manufactures a variety of sports equipment, including cleats, jerseys, shoes, and shorts. Initially, this company was renowned for the production of track running shoes. It later ventured into other sportswear as a strategy to grow its market share and overcome competition. Phau, Teah, and Chuah (2015) state that Nike sells an assortment of clothes and shoes for sports like tennis, basketball, athletics, football, golf, and cycling among others. The popularity of this firm’s brand has prompted it to invest in different product lines. Recently, this corporation launched a first-class line dubbed NikeLab that specializes in the production and distribution of streetwear (Chen, Hao, & Zhao, 2015). This business continues to diversify its products based on the changes in consumer demands.

One of the factors that have helped Nike to succeed in the sportswear industry is its ability to source discounted raw materials and labor overseas. This company manufactures its products in Asian countries, including China, Indonesia, India, and Taiwan. These nations have a high number of semi-skilled workers, who offer cheap labor to Nike’s contract factories. Phau et al. (2015) cite increased material innovation as one of the reasons why Nike outsources the production of its footwear and apparel to these nations. States like Vietnam, Pakistan, China, Indonesia, and Malaysia have factories with capabilities of manufacturing “just about any footwear styles a Nike designer can imagine” (Chen et al., 2015, p. 5521).

Nike’s logistics comprises five major distribution centers that are situated in the United States. It partners with over 700 shops across the globe to aid in the distribution of products (Distelhorst, Hainmueller, & Locke, 2017). Nike uses three modes of distribution to sell merchandise. It sells apparel and footwear to wholesalers both in the United States and across the globe. Nike also distributes goods through global brand divisions and sells direct to clients.

Human Resource Management

Nike is among the companies that have provided job opportunities to many people across the globe. Today, this firm has employed over 74,400 workers internationally. It offers competitive packages to employees as a way to attract and retain experienced personnel. Moreover, this firm provides a wide range of benefits to its staff, including a stock purchase plan, paid leave, medical cover, and compensated holidays among others.

Distelhorst et al. (2017) posit that Nike gives both long-term and short-term disability insurance to its workers, therefore, ensuring that employees, who become incapacitated while on duty, lead a quality life. This firm uses the stock purchase strategy to motivate employees because they own part of the company. As aforementioned, this corporation outsources the production of apparel and footwear to Asian companies.

Some of the contract factories that have partnered with Nike allow their employees to form unions. Nonetheless, they do not abide by the established labor policies. For instance, most of Nike’s contract factories in Vietnam and Indonesia are blamed for offering poor working conditions to employees (Bain, 2017). In Vietnam, the United Students Against Sweatshops (USAS) complain that these industries pay their workers badly (Bain, 2017). There are allegations that the Vietnamese factories force employees to work under hot conditions, resulting in some staff fainting while operating machines.

Nike is being pressured to reveal the names of the factories that it has partnered with as a measure to ensure that they abide by the established labor standards. In 2014, Chinese workers at the Yue Yuen plant staged demonstrations blaming Nike for poor remuneration (Hopkins & Bowers, 2017). Additionally, in 2017, the Paradise Papers released a report that revealed how Nike uses unconventional means to boost its profit (Hopkins & Bowers, 2017). The report stated that this company colluded with its Bermudan subsidiary to evade tax. Nike is trying to improve employment conditions by asking suppliers and contract factories to abide by the existing labor regulations.

Information Technology

Investment in information technology (IT) has helped Nike to boost service delivery and improve the quality of its products. This company endeavors to connect with clients via innovation in merchandise and marketing. Today, Nike has social network platforms that enable it to gather information from customers, which is helpful in the production of subsequent goods (IntelligentHQ, 2018). Moreover, this company has an online store where customers can order and pay for products without having to visit a physical outlet.

Nike has developed a chip that is inserted in the sole of its shoes and used to gather data that helps to boost customer experience (IntelligentHQ, 2018). This gadget allows the company to monitor athletes’ speed and distance. The information collected via this chip is useful in improving the quality of athletic shoes.

Nike leverages technology in the manufacture of its footwear and apparel. Distelhorst et al. (2017) say that technology was invaluable in the design of the Flyknit which is Nike’s infamous one-piece weave shoe. The application of technology in the production of this footwear facilitated the minimization of material wastage. Newcomb (2019) argues that this company uses Flywire tech to boost the firmness of its shoes. Nike has not only utilized technology to manufacture and improve the quality of its products but also attain sustainability. Currently, the company has launched the “Re-use A Shoe” campaign to advocate the recycling of old footwear.

Nike intends to spend extra money on technology as it looks forward to manufacturing self-fitting footwear for different sports (Newcomb, 2019). Presently, this company has invented FitAdapt technology that allows it to install the power-lacing system in basketball shoes (Newcomb, 2019). One does not require fastening their shoes using laces. Instead, this application allows the footwear to adjust based on the tension that a person’s foot requires.

References

Bain, M. (2017). . Web.

Chen, X., Hao, X., & Zhao, S. (2015). Dynamic numerical analysis of the “foot – training shoe” model. Procedia Manufacturing, 3(1), 5519-5526.

Distelhorst, G., Hainmueller, J., & Locke, R. M. (2017). Does lean improve labor standards? Management and social performance in Nike supply Chain. Management Science, 63(3), 587-900.

Hopkins, N., & Bowers, S. (2017). . The Guardian. Web.

IntelligentHQ. (2018). . Web.

Newcomb, T. (2019). . Forbes. Web.

Phau, I., Teah, M., & Chuah, J. (2015). Consumer attitudes towards luxury fashion apparel made in sweatshops. Journal of Fashion Marketing and Management, 19(2), 169-187.

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IvyPanda. 2021. "Nike Inc.: Operations and Logistics." June 9, 2021. https://ivypanda.com/essays/nike-inc-operations-and-logistics/.

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