How the supply chain contributed to the theft of $800,000 worth of Nike products – ARCH-USA

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The thieves got away with $800,000 worth of Nike shoes and apparel after ransacking 20 trailers, according to the Memphis Police Department (MPD). Source: $800,000 worth of Nike shoes, stolen clothes

A few years ago, Nike started hiring gray market analysts. With the recent revelation of the son of a Nike VP using his family relationship to build a booming resale business, Nike had to improve loss prevention and gray market strategies due to internal issues. The heart and soul of Nike is in Memphis, TN. Memphis is the distribution capital of the world. The city is home to Fed Ex’s hub and Nike’s distribution, plus companies like TJX and even Louis Vuitton had a private warehouse in the city. The logistics of any large company probably go through Memphis. Warehouses dominate the commercial real estate landscape, and the city itself is dissected by rail lines and highways, each lane occupied by 18-wheelers.

Insider links: Why Nike keeps winning – Financial Post

Nike’s Consumer Direct Acceleration benefits greatly from its location in Memphis. I talked about it in the post above. What does this have to do with the recent theft of Nike products that flooded StockX, GOAT and eBay? There has been a considerable amount of false information about what happened. For years, Nike has dealt with loss prevention issues, but all retailers encounter these issues. Crimes are often within jobs and a matter of opportunity. For Nike, ongoing supply chain issues surfaced in this recent flight. Typically, Nike has been hit with smaller losses of 60-150K. This more ambitious theft happened not because Nike dropped the ball, but because of overcrowded rail yards and private tank yards. Nike has been doubly victimized by supply chain disruptions from China and Vietnam to ports. There is so much surplus product in transit that Nike’s millions of square feet around their distribution centers are overwhelmed with containers. The brand uses a standard “empty swap” process of bringing in new containers and unloading that product, then the trucker picks up an empty container. Safeguarding product in rail yards led to the use of tank yards, and the timing of Labor Day weekend provided an opportunity for this massive theft.

Just two months after the theft of the Nike distribution train, another attempted theft of $150,000 and more Nike products is happening again

While the supply chain is still slow on the west coast due to potential strikes due to unions preparing to fight for fairer wages, and ports on the east and south coast are now congested, Complemented by more facility closures in Asia due to ongoing issues around Covid, Nike is using overflow facilities. What does this mean and how does it contradict the commentary on what happened? In the sneaker media, the word is that Nike’s distribution centers have been hit. It wasn’t directly a Nike loss prevention issue. This is a problem that will continue to occur as West Coast ports are finally falling asleep, but East and South Coast ports are facing the same issues:

  • The theft did not take place on Nike property
  • The theft took place in a storage yard near the Nike Shelby Drive & Lamar facilities.
  • The facility has 1 security person at the gate and 1 rover
  • The crime took place at 1 a.m.
  • The trucks were in an overflow parking lot because Nike cannot accept delivery. Usually Nike does what’s called an empty swap, but they’re so backed up that these Nike trucks have been placed on a private storage yard.
  • There were no cut “padlocks”. Containers use bolt seals. (Bolt gaskets can be purchased at any roadhouse.) Below is a photo of a bolt gasket. It is essentially a one-time identifier that can quickly show if a container has been tampered with.
  • According to a truck driver who works near this storage area, it’s not just Nike that has problems with containers being handled before they arrive at the facility. A number of trucks arrive with partial loads and bolt joints replaced.
Bolt seals are used on containers, not padlocks. Bolt seals cannot be reused and carry unique identifiers. Many trucks arrive at facilities with incorrect bolt joints.
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The Railyard where the containers are unloaded
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Another photo of a Memphis tank yard
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It is impossible for construction sites to be supervised by two people
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A private storage yard
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