Nike

SCM & ERP Software Implementati on At Nike: from Failure To Success

CONTENTS • • • • • • •

Introduction: NIKE NSC, SCM and i2 i2’s debacle Reasons for i2’s software failure SAP AFS ERP Implementation Benefits Conclusion

Introduction: NIKE • Founded in Jan 1964 by Philip H.Knight and his coach as Blue Ribbon Sports • Rechristened as Nike in 1978 • Manufactures: – Sports equipment – Sports wear – Apparels – Accessory products

• Sales in over 140 countries

PRODUCT MIX

Before i2/SAP • Long (~9 months) manufacturing cycle • Questions on products remaining in vogue • Need for demand forecasting • Manugistics SCM implementation and limitations • Legacy outdated systems – impending competition

NSC PROJECT

i2’s Software Implementation

Cost of this project was US $40 million.

i2 Trade Matrix Plan Solution (SCM) Proposed Benefits • Optimal Allocation of Resources • Demand Forecasting for upto 6 months • Production Forecasting • Integrate all Business Processes to reduce Costs

The What and Why

Main Reason for Failure

Nike’s profit dropped by 50% from US$ 798 million to US$ 399 million

From Simple to e-Supply Chain

Suppliers

Manufactur ers

Wholesale Distributor s

Retailers

Customers

SUPPLIER EXCHANGES CUSTOMER EXCHANGES

Contract Manufactu rers

Virtual Manufactur ers

Goods Flow Information

Logistics Providers

Categorized Problems during Implementation

Present Scenario 3-6 Months’ Manufacturing Cycle SAP Net Weaver Replac ed

M ANU

i2 SCM

SAP AFS ERP R/3

Sieb el CRM SAP NetWeaver

Custom Composite Apps.

Benefits of ERP Implementation

Nike investment from Dec 1989-03

Lessons Learned

Recommendations • Don’t take SCM Lightly • Long Planning & Analysis of Core Business Systems Required • Digitizing the Firm can go Over Budget, so keep Financial Buffers ready • Right ERP Implementation Ensures High Returns • Pilot Tests Important before

By • Pundri Kaksh -8147