How Efficient Logistics Contributes to a Business Success

Introduction

Emerging and established companies such as Nike constantly seek a competitive edge to enhance their productive and profit margins as well as to distinguish their firm from the competition in the marketplace. From enhanced marketing and promotional initiatives to outsourcing of production, firms execute a variety of strategies and tactics to bolster their bottom-line. All of these approaches may well translated into better performance for the business. However, one of the more efficacious ways of distinguish is to enhance and refine their supply-chain logistical infrastructure. From partnering with superior vendors and suppliers to streamlining internal processes, addressing supply-chain issues have transformative potential for companies. Ultimately, by addressing this component of a businesses, entrepreneurs and executives have the potential to take their enterprise to new heights in terms of profitability and marketshare.

Supplier involvement is a component of supply-chain relational capabilities and it is a positive link to new product development. Additionally, through the involvement of suppliers in other strategic as well as operational efforts, the supply-chain partners will be able to develop a greater understanding that ultimately enhances their prospects for strategic viability. While the advantages of supply partnerships are many, integrating and aligning these relationships is never easy, some of the larger challenges are trust between partners, or lack of it. IT systems that allow real time information flow between partners, egocentric attitudes of supply chain partners vice holistic views of the supply chain to the benefit of all he members and the size, manageability the supply chain. Rationalization of the supply chain to a manageable level is always hard work and painful but, well worth the effort and pain.

The three levels of supply-chain that Nike has employed to survive and operate in business are strategic, tactical, and operational. Organization make high-level decisions at the strategic level to outline company’s mission statement, goals, and objective relevant to their operations. These decisions should state clear, concise, and measurable goals that the company can reach and or exceed. Unfortunately, this is not always the case, as many managers do not see the benefit of implementing a strategic plan into their supply-chain operational portions of planning. Some of the supply-chain processes are product development, inventory, costumer relations, vendors, and production, shipping and receiving that company must include in their strategic plan.

This paper shall discuss the opportunities that exist to improve supply-chain activities for Nike; how to better align logistics and the company’s strategic plan, to integrate the supply-chain; as well as how to continue to meet the labor rights issues the company continues to address within its supply chain. In order to improve the movement of goods; identify challenges in integration of suppliers and manufacturers in the logistics management; Nike must be willing to adjust their practices to current circumstances affecting supply-chain. Many processes exist on the market today that companies can adopt to increase their values, which affects the supply-chain management on organizational level; and financial implications by reviewing some of the best practices available on the market and improving their own supply-chain management.

Nike currently is positioned as the largest athletic shoe and apparel firm in the world (Locke, 2012). As it has developed its significant marketshare within the United Stated, the firm also has accumulated over 30 percent of the global athletic apparel and shoe market. The firm has transcended its origins as a shoe company to establish a strong position in both the apparel and sports equipment sectors (Locke, 2007). In terms of its suppliers, approximately 70 of its over 800 partners worldwide produce shoes (2007). By 2004, Nike had realized annual sales of $12.2 billion in revenues of which $6.5 billion stemmed from shoe products and $3.5 billion from athletic clothing (2007). In developing this marketshare, the company's 800 suppliers were responsible for employing in excess of 600,000 workers in more than 50 nations worldwide (Locke, 2012). At the same time, less than 25,000 direct employees exist on the payroll of Nike, whereby most of these professionals reside within the United States.

Despite the reach and production of its supply chain, Nike endured severe criticism of its supply chain conditions in offshore locations during the 1990s, namely because of the poor work conditions maintained by its partners around the world (Locke, 2003). Critics of the firm cited human rights violations, substandard wages, and failing working conditions as an issue for Nike and its overseas partners. Issues of poorly paid workers focused on nations such as Cambodia and Indonesia, while substandard working conditions were examined in countries like China and Vietnam (2003). This proved to be a challenging time for Nike in terms of its public relations; however, by the new decade the firm had implemented a set of protocols and other conditions that would ensure improved working standards were maintained by suppliers abroad (2003). Despite these challenges, the global supply chain has proven to be vital to its ability to develop its brand leadership position in delivering products rapidly at an efficient cost.

Product Development

Senior management responsibility at Nike is to develop and implement strategic mission, goals, and objectives for the entire organization in order to succeed for the products that the company intends to manufacture and offer to their customers. This process involves paying attention to the economy and costumer demands as product sales may decline. Furthermore, management’s duty involves strategic-management decisions to utilized innovative techniques to create and present new versions of existing products or services into the marketplace. Sometimes organizations may require the need to purchase other companies or outsource some of their services to save money. One thing to consider before making these type of decisions is to evaluate the overall health of the organization, product development or services that the company already provides before making a haste decision. This is especially important in the global market for a firm such as Nike because the pressure of international competition, financial status, and the importance of supply chain management (SCM) press many companies.

Procurement, production, marketing, inventory, sales, transportation, and services must exist across the well-designed confines of a company. As demand, supply, interaction increases between the buyer and seller the relationship must change accordingly. Organization that lack the strength and willingness to work together between their company’s functional activities within the supply-chain are setup for failure. Companies that implement the SCM process benefit from the rewards worldwide by reducing their production along with inventory while minimizing their delivery and distribution costs, which allows them to secure manufacturing flexibility, and drives higher productivity. “SCM synchronizes manufacturing processes in a supply chain, suppliers are able to participate in the product research and development (R&D) and reduce the lead-times and cost in R&D. With the use of SCM, enterprises can streamline manufacturing processes across functional or organizational boundaries, and possess up-to-date production schedules of suppliers and avoid the bullwhip effect and finally promote the product and service quality” (Li-Ling, 2010, p. 859). Having said that, the process is not that simple when it comes to suppliers on a global scale due to the undertaking, since individual organizations possess their own structure, information, and culture.

Focusing on the Nike costumer is the key element in the strategic management planning where the emphasis is on the product and provider’s product. This is where the supplier strategic mission statement identifies the customer needs, satisfaction, and distinctive competencies in their strategic mission statement. Focus on the customer is more effective than being product-oriented because it offers Nike a more robust basis for value creation and value capture. By staying costumer oriented, mangers are capable of effectively placing their supply-chain partners to meet customer needs thru reconfiguring their supply-chains operations.

Two shifts must take place for firms to evolve toward end customer focus. First, firms like Nike seeking to develop strong customer relationships should recognize that all customers do not have the same service expectations and do not necessarily want the same overall level of service. They must, therefore, identify, and rationalize core customers that are best suited to be their business clients and then meet or exceed expectations by providing unique value-added services. These services may include assignment of specific focus teams to identify, design, implement, and refine specialized offerings. Additionally, firms must develop the ability to satisfy not only existing needs but also those that may emerge in the future. By continuously matching service capabilities with changing customer expectations, providers can stay ahead of the competition.

Second, firms seeking to enhance customer relationships must develop operating systems capable of quickly reacting to change rather than depending upon anticipatory deployment of inventory to handle planned requirements. This is facilitated by gathering and exchanging information throughout the supply chain as contrasted to guessing what may happen. The focus must be on efficient and effective accommodation of unique customer requests as well as on the ability to react to unexpected operational circumstances.

Customers place an increasing demands on manufacturers in regards to options, styles, different features, and delivery time. Therefore, companies like Nike that are capable of emerging and provide the customer with the greatest and the latest possess a competitive edge over their competitors when one talks about the manufacturing quality and delivery thru efficient supply- chain management. Maintaining competitive advantage likewise forces constant redirection and enhancement of product features, quality, cost, options and services. “Supply-chain effectiveness has therefore joined product quality and time-to-market as a key competitive differentiator. Success for many companies now depends on their ability to balance a stream of product and process changes with meeting customer demands for delivery and flexibility. Optimally managing supply-chain operations has therefore become critical to companies’ ability to compete effectively in the global marketplace” (Gordon, 1997, para. 1).

In today’s world, Nike leverages an impactful supply chain to compete effectively without a well-developed supply chain. Emphasizing the importance of supply chain operations will develop value by eliminating non-value added steps. To develop an efficient supply chain that adds value to the company and shareholders as well as meeting the needs of today’s customers and supply chain partners all sections of the supply chain must share common goals, (alignment) and concentrate on the end customer. At the strategic level, manufacturing decisions define the manufacturing infrastructure and technology that is required. Based on high level forecasting and sales estimates, the company management has to make strategic decisions on how products will be manufactured. The decisions can require new manufacturing facilities to be built or to increase production at existing facilities. These are all strategic decisions made on the operations side of the house for production.

Conclusion

Investing in superior supply-chain logistics unleashes impactful results for the profitability and marketshare for established and emerging enterprises. Though this component of an enterprise may not be the first place an entrepreneur or team of executives may consider as an area to unleash greater profitability and growth, supply-chain logistics have the potential to transform the prowess of a venture. When approached in a judicious manner whereby executives seek superior supplier relationships and enhanced infrastructure to streamline processes, enhanced logistics have the capacity to bolster a firm’s bottom line relatively quickly compared to other approaches that may require more time and higher costs that may erode profit margins.

Nike continuously strives to align its supply chain operations, customer service and level of investments with market opportunities. They must also be able to meet greater customer expectations, manage risks and costs, and deliver sustainability. To do all of this, organizations must quickly sort through information that covers every aspect of the supply chain. This requires automation and systems integration.

Furthermore, data analytics have proven to be transformative across a bevy of industries. Political campaigns have used the technology to better predict voter trends, while marketers have employed the technology to drive sales for the businesses they serve. The technology has the potential to facilitate the development of superior supply-chain logistical processes and approaches to enhance the profitably and efficiency of a business. At the same time, firms should not rely strictly on the data provided to decide whether a capital investment should be made to bolster supply chain matters. Rather, they should integrate data-driven approaches with their first-hand knowledge of the marketplace and their internal company capabilities.

Using business analytics that address today’s environment, companies are always tempted to begin any business analytics project with a conversion of standard reports that they have used for years; do not let them do that. Though these reports alone do not necessarily address how business is being done today, nor provide much competitive advantage, companies should develop new metrics that can really tell them how the supply chain is working right now and which areas they can act on in immediate, short-term and longer-term situations.

Moreover, managers and entrepreneurs must seek to capitalize on ever-evolving technological trends that transform business on a daily basis. Whether it be data analytics approaches, social media platforms or new nano-technological innovations, executives must remain vigilant to new advances that impact the supply-chain approaches in their industry. Lack of knowledge or willingness to capitalize on new advances may set a business back in the marketplace or worse, thereby leading to its demise.