Nike Operation Management Strategies

Nike Operation Management StrategiesNike The legendary brandOperations Management Strategies1. Introduction umpteen companies measure their research and development cognitive process, associated with their business strategy and their operations prudence, such as de stigma, operation, and control of the transformation procedure. The operations establishment converts inputs (labor and raw materials) into the outputs (goods and services). Operations management has encompasses both services and manufacturing, enhanced efficiently managing predictability, and played a strategic role in an organizations supremacy.As an international corporation, Nike has implemented the belief of operations management in its operating process. It has facilitated the impression of the LeanSigma, which helps focus on lead-time reduction to increase guest loyalty and market share1. As a manufacturing comp any(pre zero(prenominal)inal), Nike has gained competitive advantages from Kaizen breakthrough, with the layout redesign for lean, just-in-time (JIT) system, come up productive maintenance and six-sigma management. The paper ordain concentrate on wherefore and how Nike has been competitively positioned in the world market. The legendary brand, Nike, seems neer to stop growing.2. Situation Analysis2.1. StrategyCompanies might vary their strategic business procedures, since they select most suitable alternatives and solutions to solve problems overtime. As a result, thither will be certain measurement criteria for the participation performance, which reflect the most successful alternatives to their most essential problems.Nike specializes in producing sport shoes, a labor-intensive manufacturing sector. As a manufacturing organization, it is easy to observe, evaluate, and improve each functional stage of Nikes operation process. Improving productivity for the boilers suit outputs of goods, divided by the inputs, is subscribeed to increase the outputs. The increasing str ict quality control management combined with the demand by consumers for affordable goods has suddenly put Nike in a precarious situation. The doubt of how high quality products mint be produced under many measurements at a price which consumers are willing to pay is addressed. This can be realised by exertions of transformation procedure, which converts from batch to lean manufacturing at the strategic level.Additionally, the sales turnovers live with forced many companies to narrow d receive and concentrate on why and what consumers energise actually purchased. As a transactional company, Nike concerns and cares for what its targeted consumers look for, and it finds products for consumers not consumers for products.Operations management is defined as the integration of management principles into the decision-making procedures for the conversion of resources into usable outputs of products. The success of the lean operations management strategy will result in products that ex ceeds customer expectations and regulatory requirements by increasing productivity for a pause process.2.2. crosswayNike has implemented sophisticated systems and well-understood business procedures by keeping cross-functional cooperation, which consequently lead to the best inventory turnover from performance. Indeed, Nike has continuously improved its operations management. By mid-1985, inventories had go to less than 10 million pairs of shoes from a peak of 22 million in late 1983. Profit margins rose in the second fiscal quarter to 33% from 25% a year earlier. During the period, expenses as a percentage of revenue fell for the company, which started selling shoes in 1964 and went public in December 1980.2Nike can dictate the prices. Since consumers have set prices by understanding what they should have prepared to pay for, their payments then will depend on a large degree on how they could see differences between the perceived rank and the actual value. In fact, consumers ar e willing to pay premiums for perceived values, but value can go beyond plain price and quality. Positioned as a transactional corporation, a successful emblem Nike becomes the ultimate high-volume, low constitute factory, not about(predicate) the assumption that there is belike the occasional anti-made-in-sweatshop products. In the past, Nike had been challenged by boycotting of goods, due to the threats that Nike has outsourced and exploited developing nations. However, currently Nike have taken advantage of their low comprise of manufacturing purlieu and implemented operations management strategies to its manufacturing systems.2.3. CapacityWhen spick-and-span operations strategy has been implemented and exhibited by different physical processes, volume measurement can be a relevant allocator. Volume can show how far equipments and machinery requirements for the operating procedures have been utilized and properly facilitated. This al positioning usually translates rationa l consequences when the processes change.The location of the production facility is impacted on treatment facilities, which often go by in athletic fields where air pollution might not be a problem. However, the environment limitation besides determines the quantity at which a facility can produce, and become independent of capacity or demand. These problems impact on production, which will happen long after manufacturing facilities are established and put into operation.Nevertheless, Nike aims to apply the operations management to achieve high quality, low damage and effective delivery for better output, not just to expand its production facility. The overall result, through the Kaizen breakthrough methodologies, has been successfully. (Appendix 1) There might be a relationship between the operations performance and associated risk factors. Due to high rate of development failure during implementing new operations strategy, the risks involved in developing a system have caused a lot attention.2.4. Process Supply chain managementRecently, Nike has opened wider its domestic market to the outside world. More investment to renovate current market will enhance, facilitate, and maximize the distribution channels. Nike was embarking on the Nike Supply Chain Project, a massive global centralisation tolerate to integrate its ERP Enterprise Resource Planning, supply chain, and CRM Customer Relationship Management software program onto a single SAP platform. And a higher level of governance over the IT operations to ensure project success and visibility was necessary.3The differences between the flexibility and fixed service have been scheduled in comparison with maximizing the large scale of alternatives. As a result, the relationship between the demand to centre the indirect cost and the velocity along with inventory management should be closely scrutinized. John Shanley, analyst at Susquehanna Financial Group, told clients Nikes inventory levels are likely s omewhat bloated in several key international regions and that the fourth quarter marked the second consecutive quarter where Nikes inventory levels seemed out of balance with the brands frontwards orders.4Each company has its own mission, vision, objectives, strategies and business framework. Top management can initiate logical points and identify the companys current conditions and situations. Alternatives in any one of the primary components in the model for top management can set off changes in other components. As a result, strategic framework, writ of execution and evaluation should be performed on frequent and continuous foundations, especially in technology management, human resource supervision, professional development, adaptation to cultural change, and importantly the project planning process.High performing companies can have more informed decisions with good anticipation of both short term and long term plans and have prepared for both short and long term consequences . They have prepared for future fluctuations in the external and internal environments. Training, in general, and management coaching, in particular, must(prenominal) be well resourced, high priority components of successful enterprise systems implementation. 5 Since Nike is probably to pursue creative products, it has implemented new technologies can be a sign of future success in the new market. Therefore, commitment available resources to different projects can help evaluate and measure the operations management performance as well.Critical to success is the necessity for the squad to realize that team performance is more important than any individual success or idea generated. If the team has a successful improvement idea, then all enjoy the success. 6 Additionally, measurable goals should be in the line with the objectives and the scopes of the strategies. In fact, the operations management team should be evaluated whether the goals flow harmoniously with their companies miss ions. The performance evaluation helps operations managers to fasten the companies missions, plans and strategic goals to the each employees tasks on daily basis. Moreover, preliminary evaluation will need more feedback every period, such as monthly, trey months, or six-months. Assessment should be targeted to provide a path for companies to improve their operations management performance. Likewise, Nike starts with grassroots assessments by accomplishing assessment and proper evaluating areas. In fact, soft and periodic assessment can help Nike identify areas in order to achieve greatest choke on investment and highest turnover.2.5. Layout redesignLayout redesign is important to transforming process. Usually, raw materials have been brought into workplace during the time not conflict with workers operating hours. Counterclockwise flow is also taken into consideration, since most workers are right-handed.Two lean concepts introduced with LeanSigma transformation are the functions of the supermarket and the waterspider. Similarly, these early lean manufacturers established a single day storage area very near the production cell to provide, the necessary materials to the cell as needed. The second concept these early lean adopters incorporated was the waterspider.7 In fact, waterspider concept is to provide the essential materials at frequent replenishment of small quantities, opposite to infrequent replenishment of large quantities of materials. As a result, space required for storage is minimized. This concept has enhanced the just-in-time approach at Nike. Parts and raw materials are provided to the production site just as they are needed, not stockpiled to hedge against later delivery.2.6. apportioning of costs and deductionsTraditionally, cost allocation analysis considers direct labor as cost driver for indirect costs nevertheless, since suppliers respond increasingly to reduce their total costs, the use of direct labor as a cost driver has become inap propriate when evaluating the performance the cost allocation analysis. Determining appropriate cost drivers for indirect costs help establish new allocation rates for these cost drivers.Additional information can be used to support the new allocation rates, different from traditional methods. With the new operations management, Nike heavily considers the cost factor. As with quality, cost is a significant aspect of lean performance measurement. These three key indicators are productivity, scrap, and WIR Productivity Warehouse, Inventory, Reporting Subsystem is the most effective indicator of value added activities. Scrap is a quality measure that will drive overall costs up or down depending on the trend. Finally, WIP Work-In-Process is a lagging measure of flow and cycle time and a leading measure of customer satisfaction.8 (Appendix 2)At this time, high proportions of Nike exports are white-label goods, which have been made for Western companies. The company also wants to capture more value to acquire a brand and to hit its global brands. Quality has been considered as a differentiator. Product quality and service quality will be becomes differentiators and continuously enhance Nikes quality image worldwide. Why didnt Nike start making skate shoes 20 years ago? Nke6.0 may be nurturing the grass roots its roster of athletes is made up entirely of what appears to be pre-pubescent rippers but there is a whole generation of action sports addicts out there who were ignored by mainstream sport brands, so they started their own brands, creating kit that was tailor-made for their sport, keeping their ear to the underground to find out what people wanted.9The choice of cost allocation method can impact whether the company can report a loss or profit from the unrelated business. The over-cost allocation can become the potential for maximizing the companys economies of scale. The costs related to the operating activities can be joined among many material and operat ion activities. Analyzing the functional and design benefit can help allocate the cost component appropriately.The new paradigm for cost allocation provides Nike which benefits from investment transmission to pay the costs. The decentralization of the cost allocation should take into consideration. The production cost in manufacturing companies and the allocation of joint costs in the context of external financial accounting practice, applied to cost of goods sold and for inventory.3. ConclusionAs a transnational corporation, Nike is subject to domestic and international competition. It has tried to increase their productivity and efficiency to meet these challenges. One method applied to improve productivity has been expanded application of manufacturing processes. Concurrently, however, the increased use of materials and decrease use of operating expenses help managers reconsider their current methods of quality, cost and delivery.In the long-term, the manufacturing industry will sustain and reward for cheap operating organizations. Nike is making efforts to build an effective and efficient control system for commodity circulation. Applying the operations management process, Nike has tried to build effective control system for their commodity circulation, which helps emphasize on reform of the marketing and purchasing system of the important commodities. Furthermore, the rational distribution of commodity resources and the local community reserves have enriched the domestic market from international market.Appendix 1 Quality Cost and Delivery after Operations Management10Appendix 2 Kaizen methodology even schedule11 Bibliography place Design Miss a trick 2006, Design Week,London, 26 January, p.17Brown, BC, Collins, RT McCombs, LE 2006, Transformation from Batch to Lean Manufacturing The carrying out Issues,Engineering Management Journal, Rolla, vol.18,no.2, June, p.3.Choy, J 2004, estimable do IT, Asia Computer Weekly.Singapore, 25 October, p.1Foster, L 2006, Rising costs mean Nike disappoints, Financial Times,London (UK), 29June, p.17Kittredge, J 2006, A New Era in Corporate Performance Management, Cost Management, Boston, vol. 20, no. 3, p. 23.Tharp, M 1986, Nike Recoups Laurels in the activewear Market Company Adopts a More Conventional Management Style, Wall passage Journal, New York, N.Y, 19 March, p.1.Page 1Footnotes1 Brown, BC, Collins, RT McCombs, LE 2006, Transformation from Batch to Lean Manufacturing The Performance Issues,Engineering Management Journal, Rolla, vol.18,no.2, June, p.3.2 Tharp, M 1986, Nike Recoups Laurels in the Sportswear Market Company Adopts a More Conventional Management Style, Wall Street Journal, New York, N.Y, 19 March, p.1.3 Choy, J 2004, Just do IT, Asia Computer Weekly.Singapore, 25 October, p.14 Foster, L 2006, Rising costs mean Nike disappoints, Financial Times,London (UK), 29June, p.175 Kittredge, J 2006, A New Era in Corporate Performance Management, Cost Management, Boston, vol. 20, no . 3, p. 23.6 Brown, Collins McCombs 2006, p.3.7 Brown, Collins McCombs 2006, p.3.8 Brown, Collins McCombs 2006, p.3.9 Brand Design Miss a trick 2006, Design Week,London, 26 January, p.1710 Brown, Collins McCombs 2006, p.3.11 Brown, Collins McCombs 2006, p.3.