Sportswear giant Nike has cut lead times for orders from 60 days to just 10 days by installing over a thousand automated machines at supplier factories across manufacturing processes. The machines handle cutting, cementing, shoe assembly and solemaking, helping to increase efficiency and reduce labor times. Nike has also developed methods to produce footwear with 30% fewer production steps, and 50% less labor.
These “supply chain responsiveness” innovations are part of what makes the company a retail supply chain “changemaker”, that is, a firm bringing new technology to its supply chain operations. Retailers and brands are trying to overcome the turbulent backdrop of rapid inflation, shifting geopolitical disruption, and fragile global supply chains, writes Supply Management (July 18, 2023).
Nike has adopted radio-frequency identification and QR technologies over the past four years as part of efforts to create a single view of stock across global operations, which helped boost inventory visibility throughout the organization. The switch to more digital-led customer relations granted the company tighter control of its supply chain – now, its product distribution operations are centered around just 40 retail partners, compared to 30,000 at its peak.
Nike has aspirations to compete with Amazon’s delivery model by speeding up delivery times. The premise is of consolidating inventory from stores, retail partners and warehouses – meaning, for example, if a retail partner does not have stock it could connect with a Nike store nearby that does.
“Consumer preferences have changed forever, which will continue to send shockwaves up and down the supply chain. One day it’s out-of-stocks, the next month a glut of inventory is on the books. To get ahead of these supply chain shocks and manage unforeseen black swan events, complete supply chain visibility with trusted data has become a modern mandate,” says one industry leader.
Aldi and Tesco are two other top retail changemakers thanks to their investments in logistical efficiency, their integration of digital solutions, and their focus on reducing waste and emissions across their supply chains.
Classroom discussion questions:
- What is a “changemaker” in the supply chain world?
- What are some of the challenges of managing supply chains in today’s global economy?