NIKE’s Supply Chain And Manufacturing Strategies.

As the world’s largest sportswear brand, Nike has interest to maintain its edge when dealing with strong competitors like Under Armour or adidas. Nike’s corporate strategy rests in a supply chain that is lean, fast, agile, and centered on the consumer, having as target to take it from $30 billion in revenue today to more than $50 billion by 2020.

Nike_revenue-goals_2020

Nike revenue goals by 2020.

Strategy to reach 2020 revenue Goals

For the E-Commerce: 
From $1.2 billion (2015) –> $7 billion (2020)
Annual growth rate =>42%
Strategy:

  • Offering e-commerce to new markets
  • Online exclusives sales
  • Improve the e-commerce experience through size guides and return options

Women’s apparel:
From $5.7 billion (2015) –> $11 billion (2020)
Annual growth rate => 14%
Strategy:

  • Emphasizing the creation of apparel specifically for women
  • Opening of “women’s only” Nike stores and experiences
  • Tap into the athleisure trend that is growing in the fashion world

Jordan Brand:
From $4.5 billion (2015) –> $9 billion (2020)
Annual growth rate => 15%
Strategy:

  • Innovate in the performance of the products (foam ZoomX)
  • New Athleisure line that features innovation and style
  • Sponsorship of new athletes

Nike moves about 1.1 billion units of footwear, apparel, or athletic equipment across six regions and into multiple channels. It sells direct to consumers through its apps and website, through its own retail stores and outlets, and through multi-brand retailers of varying shapes and sizes. It relies on some 663 factories and a sourcing network that spans 43 countries around the globe.

The distribution of Nike’s Turnover

2016 Turnover = $32.4 B:

  • Footwear = $20 B
  • Apparel = $9 B
  • Equipment = $1.4 B
  • Other = $2 B
Nike_financial_anatomy_shoes

Nike financial anatomy of a 100 $ shoe

Even if their business model works, in terms of Supply Chain there is always room for improvements, which is why, they envision a future where Nike begins using data differently in order to shape, predict, and pivot both the supply and demand side of the business, providing flexibility all the way down to the manufacturing level to make and move products when and where they’re needed.

This is why  Nike has announced a strategic partnership with a private equity firm, aiming to increase the company’s manufacturing capabilities in the USA. As part of the partnership, Apollo Global Management has established a new apparel supply chain company and has begun acquiring Nike suppliers in North and Central America.

Under Apollo’s leadership the new supply chain company plans to invest in suppliers and expand by acquiring additional textile and apparel firms.

Nike and Apollo said this would create a more vertically integrated supply chain, resulting in an increase in regional manufacturing capabilities and quicker deliveries of more customised products.

Nike_suppliers_rating

Nike suppliers rating process

Before making a decision regarding its suppliers, Nike has put in place a strategy to analyse and By 2020, Nike plans on havind suppliers that meet 100% Bronze goal and above.

Did you know?

  • Nike sels 400 000 000 shoes per year
  • Which means 13 shoes sold per second

 

by Fashionista in Paris

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Fashionista in Paris

Fashion | Marketing | Personal Shopping

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