Universidad Autónoma de Nuevo León

Facultad de Contaduría Pública y Administración

Negocios Internacionales

Unidad de Aprendizaje: Administración de Cadena de

Suministro

Evidencia 1.1: Reporte con 1 de los ejemplos investigados

de riesgos que ha enfrentado una industria en particular
realizando una propuesta de solución en las operaciones
de la cadena suministro

Profesora: Lourdes Fabiola Espinoza

Parada

Alumna: Erika Vasquez Andrade

[2095381]

Grupo: 4Fi

Ciudad Universitaria, Nuevo León, al 01 de febrero de 2025

Introduction
The purpose of this report is to compare a real-life case in which
a company was affected by the incorrect use of the principles of
the supply chain management administration. The case we are
going to talk about is Nike’s 2001 SCM failure, one of the
biggest mistakes related to the company that lead to almost $400
million dollars over the course of the year. To start this
discussion, we must introduce what the Nike company makes
and describe the causes of the problem in detail.

Company information and study case

Nike is one of the biggest companies in footwear and
sportswear, it has presence in over 180 countries in the world,
with fabrics in over 140 countries, its main strategy to cover
every demand population is to extend its workshops to the
places with most demand making the process of distribution a
complex and extensive operation.

Around the 2000’s Nike was in a renovation cycle, adapting its

production to innovative technologies and extending their
variety into related industries such as sportswear, and casual
footwear, such success made the company needy of a new
operational system and control over its production and logistics.

Nike came up with the implementation of Supply Chain

Management software or what we now know as an Enterprise
Resource System, based on the i2 technology, this software had
the objective to automate certain part of the supply chain for its
footwear division, including inventory and order management;
when the system went live, however, it was unable to match
Nike product inventories with customer demand. As a result, the
company experienced both excesses and shortages- both of
which cut bottom line. The failure caused i2 stock to drop 22%
and led to a public dispute between Nike and i2.
What has Nike changed to overpast this failure?
Some lessons the company learned were to keep in mind the
complexity of industry, since the company aimed to enter
multiple products with a vast variety and differentiation, they
should have thought of the complexity and time required to
integrate modern technology into the system. The second lesson
taught was to understand customization on SCM or ERP system
implicates more risks and costs to the company, Nike decided to
just utilize an i2 software not adapted to the industry template,
this strained the software beyond its capabilities and led to
issues in data transfer. Another point to take into consider when
implementing SCM technologies is to test and have pilot runs
according to what is planned to be produced, Nike’s error was
to not test the system so they couldn’t provide a rapid solutions
to problems caused by the overload of information to be
processed.

Since that year Nike has made a strong commitment to the

suppliers and vendors across the world, and it has implemented
tested SCM software’s adapted to its production demand.

Nike did not fall behind and was recovered from its failure
rapidly, what they have done since that was what defined what
Nike is all about in the present. Their aspirations for success and
exploring new opportunities did not diminish but grew through
the evolution of a strategic supply chain approach, now Nike’s
suppliers form part in the consideration of challenges and risks
in the industry.

Nike’s Supply Chain Optimization

First, Nike had to implement advanced data analytics, they
invested in building a robust analytics infrastructure that
provides real-time insights of every operational area. Secondly,
they had to implement advanced demand forecasting models
that can process every information relevant to the consumption
of Nike’s products, making demand predictions more accurately
reducing inventory excess and stockouts.
In other implementations Nike invested in supply chain
visibility tools that provided real-time tracking of products.
These tools allowed Nike to monitor inventory levels, track
shipments, and identify potential bottlenecks. They also
improved their streaming logistic and distribution. Making it
more agile and efficient to take rapid action to confront quick
changes in demand or supplier’s external risks.

At least but in a most important take, Nike consolidated its

distribution network by applying centralized distribution hubs,
this helped the company approach to focal demand points and
serving multiple markets according to its preferences. By
optimizing automation in their warehouses, they enhanced
efficiency in their distribution centers, reducing labor costs and
increasing the speed and accuracy of order fulfillment.

Nowadays Nike’s supply chain network is completely

transparent, letting the external industry apply to a
benchmarking standard. In its automation technologies Nike is
employing the latest technology such as advanced and
customized ERP’s that allows the company to provide
additional services such as regional centers, online shopping and
pick up stores, and no rush shipping,

Comparison of the case study with chapter 2

The chapter 2 of this learning unit explained in general

concepts what a company must aim in its business strategy,
either they are competing with a lower costs strategy, or they are
competing with a quality/ differentiation concept.

The case of study is a notable example of how an abrupted move

on a supply chain could affect the strategy of a company to meet
its goals. Nike, by not making a study on its best qualities and
opportunities, fall into changing a control system to one that was
not designed nor aligned with the supply chain activities,
leading the company with risks of disruptions that would impact
the ability of continuously supply products or services.

Specifically the chapter hits a point in the notion of trade-offs,

as described in the lectures, knowing that an operation cannot
meet simultaneously all competitive dimensions, in this case,
Nike should have known that if they wanted an profitable and
not that complete SCM system, they would have to sacrifice the
variety on its products and the supply to certain areas would be
reduced.

The focal problem on Nike’s automation of operations was that

they were not willing to spend more on an industry customized
SCM system, leading the operations to be degraded in
effectiveness and control causing the company to give up their
goals for third quarter of that fiscal year; such was the case of
Continental Lite they didn’t had a thorough analysis of the
consequences and market behavior.

Conclusion
This report concludes that whether in a company they sell goods
or services they must have a structured supply chain, adapted to
their needs, and prepared to afront the industry risks such as
quick changes in demand, supplier contracts and economic
recession. It is the job of a professional administrator to
understand the vision of its company and to pursue the best
strategies for achieving goals in a short-term and long-term
manner. Knowing what you’re producing and the resources and
efforts you’re working with make a difference in the decisions
you make over the supply chain, thus this chapter helped me to
get through the principles of a good supply chain management
and the activity in general was productive in the sense I was able
to identify lessons of past errors of real-life companies and how
they solved them.
Diagnostic forum

Bibliography
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consulting.com/nike-scm-failure/
Sekar, N. (2024, 16 noviembre). How Nike’s Process Change
Optimized its Supply Chain for Speed and Efficiency. Medium.
https://medium.com/@nareshnavinash/how-nikes-process-
change-optimized-its-supply-chain-for-speed-and-efficiency-
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Shaw, A. A. (2024, 13 julio). Supply Chain Analysis of Nike.
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nike/