Supply Chain Management
Nike i2 failure: strategic or tactical
Nike the world leader in sports apparel manufacturer with a market share of 32 percent and market cap at $20billion decided to implement i2 demand planning engine to manage its supply chain at a cost of $400million. It was supposed to help Nike with its supply chain and to reduce the lead time for the manufacturing of sneakers from nine months down to six. The i2 system worked on the principle of using the data from the previous sales figures and predicting the productions numbers for the future.
The i2 system failed and resulted in duplication and missing orders. The consequence was a loss of around $100million and drop in the stock prices by 20 percent. This case study analyses various factors which resulted in this situation and highlights how Nike dealt with the problem and moved ahead with its plan to implement supply chain project
1. What characteristics about Nike contributed to their troubles with i2 becoming nothing more than a speed bump?
Nike introduced the i2 demand planning engine so as to help Nike with its supply chain and to reduce the lead time for the manufacturing of sneakers from nine months down to six.
Nike was hasty in its implementation of the first part of its supply chain strategy: i2’s demand and supply planner software applications. Nike decided to install i2 beginning in 1999, while it was still using its legacy systems. i2’s predictive demand application and its supply chain planner used different business rules and stored data in different formats, making it difficult to integrate the two applications and the system frequently crashed. But these problems would have remained only glitches had they not spilled over into factory orders resulting in orders being dropped or duplicated. The consequence was a loss of around $100million and drop in the stock prices by 20 percent
But inspite of these troubles of i2 was nothing more than a speed bump
Nike is the world leader in Sports
Nike the world leader in sports apparel manufacturer with a market share of 32 percent and market cap at $20billion decided to implement i2 demand planning engine to manage its supply chain at a cost of $400million. It was supposed to help Nike with its supply chain and to reduce the lead time for the manufacturing of sneakers from nine months down to six. The i2 system worked on the principle of using the data from the previous sales figures and predicting the productions numbers for the future.
The i2 system failed and resulted in duplication and missing orders. The consequence was a loss of around $100million and drop in the stock prices by 20 percent. This case study analyses various factors which resulted in this situation and highlights how Nike dealt with the problem and moved ahead with its plan to implement supply chain project
1. What characteristics about Nike contributed to their troubles with i2 becoming nothing more than a speed bump?
Nike introduced the i2 demand planning engine so as to help Nike with its supply chain and to reduce the lead time for the manufacturing of sneakers from nine months down to six.
Nike was hasty in its implementation of the first part of its supply chain strategy: i2’s demand and supply planner software applications. Nike decided to install i2 beginning in 1999, while it was still using its legacy systems. i2’s predictive demand application and its supply chain planner used different business rules and stored data in different formats, making it difficult to integrate the two applications and the system frequently crashed. But these problems would have remained only glitches had they not spilled over into factory orders resulting in orders being dropped or duplicated. The consequence was a loss of around $100million and drop in the stock prices by 20 percent
But inspite of these troubles of i2 was nothing more than a speed bump
Nike is the world leader in Sports