How Nike extends its digital transformation with ERP

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In July, Nike announced that it would launch an enterprise resource planning (ERP) system on its global network. The system, which represents the company’s biggest investment in digital transformation to date, is now operational in Greater China, with plans in place for a North American launch in 2024.

This investment comes as Nike seeks to better serve its online customers, accelerate its direct-to-consumer strategy and address today’s supply chain management challenges with a customer-focused supply chain strategy. digital.

“An ERP will be fundamental to increasing the speed and agility of our supply chain,” said Nike CFO Matthew Friend. “This will give us real-time visibility into inventory across our network, as well as dynamic transactional capabilities to optimize consumer demand and inventory productivity.”

What supply chain challenges does Nike face?

Like many companies, Nike has struggled with many supply chain challenges over the past two years.

Following the COVID-19 outbreak, the apparel and footwear brand quickly pivoted its service offering to drive digital engagement and serve its customers more directly. This included establishing several regional distribution centers in the United States. Prior to the pandemic, Nike operated almost exclusively through centralized national distribution centers in Memphis, Tennessee.

Nevertheless, the company has struggled to meet the ongoing challenge of supply chain and shipping delays, high transportation costs and plant closures. Transit times, for example, remain two weeks longer than pre-pandemic levels and show no signs of improving in the near future.

This slower flow of merchandise means seasonal product lines are arriving late and Nike must find ways to manage excess inventory. Nike responded by adjusting the life cycles of its products and increasing the number of non-seasonal product lines it produces.

The launch of the company’s ERP will be instrumental in supporting these efforts and enabling Nike to overcome current supply chain challenges.

What are the benefits of ERP systems?

ERP refers to the software used by organizations to integrate and manage their day-to-day business operations, whether procurement, supply chain operations, accounting, project management or risk mitigation.

How will Nike benefit from a new ERP system?

Company reports

ERP applications serve as sophisticated reporting tools. Not only do they provide organizations with real-time insights into all business operations in one place, but they also deliver actionable data-driven insights.

Customer service

Centralizing customer information means an organization like Nike can better nurture its relationship with the consumer, expanding and personalizing its service offerings, accelerating response rates, and improving order accuracy and timing.

Nike’s Express Lane strategy, for example, already seeks to leverage super-local consumer knowledge to create locally applicable products with shortened delivery times. In fiscal 2022, Express Lane generated 25% of brand revenue.

Additionally, the company is developing a variety of commerce and support business applications that will enhance customer experience and position its most popular products.

Inventory management

Nike uses demand sensing and inventory optimization technology platforms to help forecast customer demand and inform its inventory management strategies.

A sophisticated ERP system allows organizations to monitor stock levels in real time. This includes incoming stock, existing stock, and stock currently in transit.

Companies need visibility into product and component inventory around the world to better manage their product lifecycle, avoid stock-outs, reduce overhead, and meet customer expectations.

Armed with this data, Nike will be better prepared to meet and exceed consumer expectations, providing personalized services and varied delivery options. Nike customers in North America can already choose from delivery options including Buy Online, Pick Up In Store (BOPIS), Ship In Store, Non-Rush Ship and Drop Ship. No doubt the company intends to deploy these services worldwide.

Cost reduction

Better inventory and supply chain management, centralized business reporting, and improved customer service all contribute to operational efficiencies that ultimately reduce business costs. Additionally, ERP systems can streamline or automate mundane tasks like managing payroll and assigning invoices, freeing employees to focus on high-value tasks.

Supply chain management

ERP software applications often leverage artificial intelligence (AI), machine learning, or robotic process automation (RPA) to improve supply chain management processes. The tools can help with demand forecasting, bottleneck identification, inventory management, product tracking and risk mitigation to reduce lead times, improve customer experience and mitigate the risks.

The more information organizations have about potential supply chain disruptions, the better they can prepare or adjust their processes. Nike recently deployed about 1,000 cobots to its distribution centers to help sort, pack and move goods.

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Image Credit: kidney stones / Shutterstock.com

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