Case Study: Nike’s Supply Chain: Failure and Eventual Success

What factors led to the i2 Technologies implementation being highly complex project? Were the increased complexities really necessary?

What was wrong with Nike relying heavily on automatic statistical forecasts generation by the i2 technologies’ software?

After reading the article on Nike’s supply chain process of the late 1990’s and early 2000’s, it is simple to conclude that the complexity of the demand and supply became increasingly overwhelming. The growing need of variety within its products was not effectively planned, leading them to being unable to manage its orders and in turn failed to achieve timely and efficient deliveries to its customers.

In my opinion, the reason why Nike opted for such an intricate forecasting system was due to the large number of SKU’s. The firm is known for being a global phenomenon and it comes as no surprise, like any other business of its size, to have product segmentation for its different markets. The article mentions that management had a larger concern for all of the different variations, models and styles, without really taking into account its need for raw materials and equipment. Furthermore, the implementation of such a complex forecasting system was due to the very large number of order possibilities in order to satisfy its global demand in a timely and effective manner.

Nike did make a mistake in its belief that a complicated algorithms and the use of technology would allow them to stay ahead of the curve to meet the demand of their customers. In any business, the human factor is usually key to a successful enterprise when its put together with the proper technological appliances. As I have already mentioned, it was nearly impossible for a piece of software to determine when and how much of anything were to be produced; considering its vast number of styles, color combinations and their sizes. Hence, the ambition was too great and it lead them to having a significant fault within their supply chain, that would take them six years to bounce back from.