VALUE CHAIN OF

NIKE

Just do it!
Prepared by:
Hemali anadkat (2)
Banty haldhruwala (35)
Monica mota (57)
Hiral Parikh (61)
Nishra Shah (94)
Amita Ganava
What is value chain?
• The network of firms that bring products
to market, from companies that produce
raw materials to retailers and others
that deliever finished products to
consumer. Economic value is added
through the coordinated management of
the flow of phisycal goods and
associated information at each stage of
the chain.
• We can say that a value chain is “a
string of companies working together to
satishfy market demand”
 THE VALUE CHAIN:

FIRM’S INFRASTRUCTURE

SUPPORT HRM

M
AR
ACTIVITIES

GI
PRODUCT DEVELOPMENT AND TECHNOLOGY

N
PROCUREMENT

INBOUND OPERATIONS OUTBOUND MARKETING

M
SERVICES

A
LOGISTICS LOGISTICS AND SALES

R G
IN
PRIMARY ACTIVITIES
NIKE ‘s Introduction:
• Nike means the greek goddess of victory
• Major publically traded sports wear and equipement
supplier base in the U.S
• Head quartered in the portland metro politen area of
oregon, near beaverton.
• World’s leading suppliers of athletic shoes and apparel
and a major manufacturer of sports equipments with
revenue in access of $16 billion USD in 2007.
• Employed over 30,000 people world wide.
Contd…
• Nike markets its products under its own
brand as well as nike gold, nike pro, nike
plus, air jordan , nike skate body,jeam
starter, and subsidaries including cole
haan, hurley international, umbro and
converse.
 Support activities:
1. Infrastructure:
 Diversify business portfolio with new acquisitions
 Empowerment of top management.
 Structure of matrix.
 Focus on key countries, key factors, critical
compliances.
 Drive a lean effective compliance process through
strategic knowledge, remediations and varification.
 Drive a shared accountability and work place
ownership of CR compliance.
 Encourage work ethics.
 Financially decipilne.
 Calculate risk taking.
 Strong financial position with minimal long term debts.
Contd..
2. Human Resource:
 core values of the companies are honesty,
competitiveness and team work.
 Operates with minimum of hierarchy.
 Lot of collabration and consensus decision making.
 Use matrix organisation.
 Balances creativity with structure and decipline.
 Strong management team and good corporate
strategy in both north american and overseas
market.
 Socializing
 Mix of new hires and promotions
Promotions= consistency / company
knowledge
New hire employees= business minded
Contd…
Network structure.
Athelete management.
Monetoring labour audit, compliance visit, brand
audits.
Contd…
3. Technology:
First mover advantage in E-Commerce.
Diversity and variety in products offered on
the web (footwear, apparel, sporting
equipments etc).
Innovative designs in footwear enabling
customers to design their own shoes online.
AIR SOLE technology- specially used.
Contd….
4. Procurement:
 Just in time strategy.
components arrive as they are needed.
finished goods shipped after leaving assembly
line.
 Safety stock
buffer for lack of flexibility in supply chain.
 Bullwhip effect
information about product demand gets distorted
as it passes from one entity to next across supply
chain.
Role of Inventory in the Supply
Chain:
Improve Matching of Supply
and Demand
Improved Forecasting

Reduce Material Flow Time

Reduce Waiting Time

Reduce Buffer Inventory

Supply / Demand Seasonal

Economies of Scale Variability Variability

Cycle Inventory Safety Inventory Seasonal Inventory

Figure Error! No text of
 Inventory Classification:
INVENTORY

PRODUCTION ABC DEMAND OTHER

APPLICATION ANALYSIS TYPE

Raw Materials A Items Independent MRO

Components B Items Dependent
WIP C Items
Sub-assemblies
Finished Goods
 Primary Activities:
1. Inbound logistics:
 Low production cost.
 Outsource non-core activities.
 Focus on their core-competencies of
• Product design
• Maketing
• AIR SOLE Tech.
 Due to virtual relationship with the companies
who assemble nike products allows them to
switch to companies that provide low labour cost
& a quality product.
 Worldwide supply chain project used by nike help
it to reduce inventories and investment risk.
Contd…
• Shared process through a wholly owned
subsidiary called nike. In house manufacturing
( Nike IHM) produces many of specialized
rubber, foam and plastic components used in its
products.
• Nike IHM’s primary facilities are located in
portland oregon and st. louis, missain.
Contd..
2. Operations:
 Centralisation of R&D in oregon.
 Application of NSRL.
 Nike requires manufacturing partners to devote
environmental resources.
 Nike provides technological resources to its resources
centre such as R&D centres, laboratories.
 Nike personnel in each factory to assist factory
management.
 working on low and no packaging options.
• reduce box styles from 18 to 2.
• Corrugated card board.
• 100% post consumer content.
Contd…
• No heavy metal inks.
• no glues or solvents
• Boxes manufacture in zero net discharge
facilities.
Contd…
3. Outbound logistic:
 Strong control over its own distribution channel.
 Powerful suppliers one company is producing 40%
of worldwide shoes.
 Ability for forward integration.
 Due to virtual relation with suppliers.
• Reduce administrative cost.
• Reduce pay roll cost.
• Can increase the speed their product flows through
supply chain
• This allows them cut down on the amount of time
required from the initial design to, production and
then distribution.
Contd..
• Nike is using HP servers , software and
consulting service to run their new supply chain
project.
Contd..
4. Marketing and sales:
Brand recognisation and reputation.
Higher allocation of marketing budgets.
Use endorser in every sport.
Emerging brand name.
Strong customer base.
Diversity and variety of products offer on the
web.
Ecommerce reduce the cost of good sold thus
improving the “bottom line”.
Contd..
5. Services:
Improved service to meet customer/consumer
needs through the use of the technology.
Improved process , information & product quality.
Provide customize shoes for customers.
A company called planner has installed touch
screen system in nike stores to allow customers to
build their own shoes.
Nike also allows customers to order customize
shoes online through their company web sites
 Thank You
“Real leadership is not about
prestige,
power or status.It is about
responsibility.”