Nike's New Supply Chain Project
Nike's New Supply Chain Project
Introduction: Nike's Value Chain and Competitive Forces
In 1984, Nike owned just 16% of the athletic-shoe market, and for much of the 1980s it was running neck-and-neck with Reebok (Wilson 1). Now, with somewhere between 43-47% of that market, Nike is the undisputed leader. However, things are not perfect with the company. In the late 1990's, Nike began to see the results of many unresolved issues concerning competitive forces exterior to the company and a value chain, unrepresentative of its marketplace and enormous growth, interior to the company. Both issues affected its bottom line negatively. One significant issue was simply a function of poor inventory management and demand forecasting, coupled with the ongoing and dramatic slump in Asian sales. Nike had anticipated a doubling of Asian revenues, but saw instead a decline (Karpinski 1). Nike also had recurring problems managing the flow of goods from manufacturers to retailers. Finally, Nike's competitors, most notably Rebox, New Balance, Adidas and Fila, were copying much of the look of Nike's advertising campaigns, making its image projection much less effective (Karpinski 1).
Problems with the Implementation of i2
Perhaps the biggest challenge facing deploying the i2 e-business app for Nike was balancing speed-to-market vs. customization. E-business vendors have an extremely low tolerance for customization, however Nike pursued strenuous customization. Nike also failed to use the vendor's implementation methodology and templates, which contributed to the problem (Wilson 1). i2 did not go through the process system development completely and Nike did not do its job of monitoring and checking the data outputs as they occurred, in order to ensure usable documents. Finally, Nike rushed into implementation and cut over to the new system without proper verification and without doing any dry runs of the software.
Roles in the Fiasco When a company is in
Introduction: Nike's Value Chain and Competitive Forces
In 1984, Nike owned just 16% of the athletic-shoe market, and for much of the 1980s it was running neck-and-neck with Reebok (Wilson 1). Now, with somewhere between 43-47% of that market, Nike is the undisputed leader. However, things are not perfect with the company. In the late 1990's, Nike began to see the results of many unresolved issues concerning competitive forces exterior to the company and a value chain, unrepresentative of its marketplace and enormous growth, interior to the company. Both issues affected its bottom line negatively. One significant issue was simply a function of poor inventory management and demand forecasting, coupled with the ongoing and dramatic slump in Asian sales. Nike had anticipated a doubling of Asian revenues, but saw instead a decline (Karpinski 1). Nike also had recurring problems managing the flow of goods from manufacturers to retailers. Finally, Nike's competitors, most notably Rebox, New Balance, Adidas and Fila, were copying much of the look of Nike's advertising campaigns, making its image projection much less effective (Karpinski 1).
Problems with the Implementation of i2
Perhaps the biggest challenge facing deploying the i2 e-business app for Nike was balancing speed-to-market vs. customization. E-business vendors have an extremely low tolerance for customization, however Nike pursued strenuous customization. Nike also failed to use the vendor's implementation methodology and templates, which contributed to the problem (Wilson 1). i2 did not go through the process system development completely and Nike did not do its job of monitoring and checking the data outputs as they occurred, in order to ensure usable documents. Finally, Nike rushed into implementation and cut over to the new system without proper verification and without doing any dry runs of the software.
Roles in the Fiasco When a company is in
Cited: Laudon, Kenneth C. and Laudon, Jane P. Essentials of Management Information Systems. Upper Saddle River, New York: Prentice, 2003