Nike was founded by Mr.
Phil Knight and his past manager Bill Bowerman in 1964 and they started Blue Ribbon Sports. Knights first shoe was called Tiger and so began distribution of places. Blue Ribbon got great success in 1971 and Knight changes the company name “ Nike ” . In 1971 it introduced Nike ‘s first trade name line. Nike launched its merchandise line in 1979. The new version of its Air shoe which was really successful and it was known as Air Jordan ; introduced in 1985.
Nike opened its first retail mercantile establishment in Portland, Oregon in 1990. In 1991 the company was really successful and its gross reached USD $ 3 billion. In 1999 company started selling its merchandises straight to clients from its web site. Nike is the universe ‘s prima athleticss and athletic places. Nike is the major maker of athleticss equipment with $ 18.6 billion USD in the twelvemonth of 2008.
Nike has 30000 employees in worldwide. ( Nikebiz: company overview, 2010 )Nike had generated net incomes of $ 97.4 million and its net income dropped down by 50 % in February 2001. Nike said that it was because of the failure of supply concatenation package produced by i2 engineerings. Both companies blamed each other.
This failure besides effected Nike ‘s repute. The supply concatenation package was the first section of NSC ( Nike Supply Chain ) undertaking from SAP and besides client relationship direction package from Siebel System. Analysts pointed out the mistake of customization of the package and over demand prediction. ( Koah, 2004 )Company successfully implemented ( NSC ) Nike Supply Chain undertaking by 2004. The ( NSC ) Nike Supply Chain undertaking is centralized be aftering traveling and fabrication. At last Nike got success in Implementing ERP and it became the coveted attack for those who want to implement the ERP systems in their company.
Christopher Koch ( Editor of CIO Magazine ) stated that “ If it was easy, everyone would merely make it. ” In the late 1990, most companies avoided to follow ERP because of the immense cost of ERP systems. ( Koch, 2004 )“ The lesson of Nike ‘s failure and subsequent recoil lies in the fact that it had a sound concern program that was widely understood and accepted at every degree of the company. Given that resilience it afforded the company, in the terminal the i2 failure turned out to be merely a velocity bump. ” ( Koah, 2004 )
Nike has broad scope of athleticss equipment, running places, and New Jerseies and may other merchandises as shown in figure 1.Figure Nike Products ( nike, 2010 )
ERP ( Enterprise Resource Planning )
ERP entitles a company ‘s information system which can convey more closely the company ‘s sections and maps like human resources, finance and stock lists. It besides creates the nexus between clients and manufacturers.
1 Introduction of ERP ( Enterprise Resource Planning )
Enterprise Resource Planning is the endeavor system tool which manages demand and supply. It has the ability to do nexus between clients and providers. ERP besides provides the high grade of integrating between buying, fabrication, selling, gross revenues, logistics and selling. ERP is the tool which can supply high degree of client services and productiveness and besides lower the cost.
( Wallace & A ; Kremzar, 2001 )Enterprise Resource Planning is a company which addition it gross revenues by 20 % because of ERP. The frailty president states that “ ERP has provided the key to going a truly planetary company. Design can be made with the accurate informations and with the procedure that concretes demand and supply across boundary line and oceans.
This alteration is deserving billion to us in gross revenues worldwide ” . ( Wallace & A ; Kremzar, 2001 )The Director of ERP “ For the first clip of all time, we have a good grip on our hereafter demands for constituents natural and stuffs. When our client demand alterations, we-ourselves and our suppliers-can manage alterations to our agendas on a really co-ordinated and controlled footing. I do n’t see how any company can make effectual supply concatenation direction without ERP. ” ( Wallace & A ; Kremzar, 2001 )
1.2 Beginning of the Term ERP
The Enterprise Resource Planning ERP developed from Manufacture Resource Planning ( MRP ) . The ERP was introduced by an analytical house Garner. Enterprise Resource Planning has all the maps of an endeavor except administration concern or charter.
Many administrations like IBM, Dell and HP Microsoft, Intel and many other administrations are now utilizing ERP systems. The ERP systems are typically for big and more loosely based applications although it is besides used in little and average sized concerns. The ERP systems provide standardisation, lower care and it can hive away all informations in one database. So, we can state that it has greater describing capablenesss. ERP includes other applications like Manufacturing Resource Planning ( MRP ) , Financials Resource Management ( FRM ) , Customer Relationship Management ( CRM ) , Supply Chain Management ( SCM ) and Human Resources Management ( HRM ) . ( Leon, 2008 )Figure: Information integrating through ERP ( ERP, 2010 )
1.3 Overview of ERP
Many administrations choose to implement one portion for ERP systems and stand-alone systems for the other ERP applications need to develop an external interface to the other ERP system. Because in an administration one seller choose to utilize human resource direction system and the fiscal system take another and integrating between those systems.
It is really common in midsized retail merchant and the retail sector will hold a point of sale ( POS ) and fiscal application so they have a specialised application to manage other concern demands like logistics and selling. ( Leon, 2008 )The quality of ERP system is that it provides a individual database which contains all the information for the package faculty besides shown in figure 3:ManufacturingASupply Chain ManagementAFinancialsAProjectsAHuman ResourcesCustomer Relationship Management A ( Leon, 2008 )Figure ERP Database ( Google, 2010 )
1.4 Reasons for Buying ERP Software
In these yearss when the concern environment is progressively complex and extremely competitory so the administrations need the IT system which is extremely competitory with clip direction.
The administrations need the outstanding public presentation in their concern by using the clip in the right manner. Enterprise system use the company clip right. Enterprise Resource Planning is the planning in which the concern resources like stuff, employees and clients moved from one province to another province.
An ERP system maintains the information which connects with the concern maps like fabrication, supply concatenation, Management, finance, human resource, client relationship direction. ( Leon, 2008 )
1.5 Reasons of ERP undertakings Failure
Sometimes ERP undertakings fail if you do non implement them good. There are some of the grounds for the failure of ERP failure.The company selected the incorrect package of ERP for the company.
The preparation of employee is besides really of import and some administrations do n’t develop good their employees. Some package is to a great extent customized and if these are non match with the company ‘s IT substructure so there can be job. If we do non implement the effectual alteration direction schemes so it can be the consequence of failure of the undertaking. If the concern amalgamation leaves out the work in the procedure so it can be besides a large loss. ( Glenn, 2008 )There are besides some factors from where we can accomplish the successful ERP undertakings by choosing the right package for the company. Give the right preparation to employees. For implementing the ERP we have to pull off each attack and use the best patterns for implementing ERP package. ( Starinsky, 2001 )I found some of import worlds about ERP are that there is no perfect ERP system exists.
We can non state that any ERP execution is of all time perfect. If two companies have the same ERP package but the execution can non be the same because every company has its ain manner of execution. ( Leon, 2008 )
Supply CHAIN MANAGEMENT
Supply Chain Management is a web that is involved purchasing, doing, traveling, selling and distribution. ( Hugos, 2006 )“ A supply concatenation is a web of installations and distribution options that performs the maps of procurance of stuffs, transmutation of stuffs into intermediate and finished merchandises and the distribution of these finished merchandises to clients ” . ( Hugos, 2006 )BuyingMakingTravelingWarelodgingSellingSellingBuyingMakingMovinWarelodgingFigure Supply Chain ( Supplychain, 2010 )
2 Nike ‘s Supply Chain
Nike ‘s supply concatenation subject is centralisation. All merchandises designs, doing and bringing is centralized from Beaverton, Oregon in the US.
Nike operations were divided into five parts USA, Middle East, Africa, Asia and America which included Canada, Mexico and Latin and American states. In 1975, Nike launched one plan which is known as future plan for pull offing its footwear merchandises. In this plan Nike ‘s retail merchants placed their orders before six months. Then these orders moved fabricating units around the Earth. The supply concatenation worked nicely at that clip. Nike Company became distributing more and more globally.
Nike felt that its supply concatenation needed rapid alterations. The fabrication procedure besides became really complex because some theoretical accounts like Air Jordan Sneakers required 130 stairss to fabricating. In 1998 Nike ‘s net income dropped down by 50 % besides shown in figure 5. Nike mentioned that they had jobs with the bing supply concatenation systems.
To get the better of this job Nike launched one undertaking known as NSC ( Nike Supply Chain ) undertaking. ( Koch, 2004 )Figure: Net income dropped down by 50 % ( investing, 2010 )This was a monolithic undertaking in which the planetary operations were operated centralisation to implement ERP, supply concatenation and client relationship direction on a individual SAP system as shown in Table 1. Many alterations were made assorted times to repair the supply concatenation and these alterations created serious jobs and in the consequence Nike had to travel a whole new system. ( Royal, 2001 )Table: ENTERPRISE APPLICATION IMPLEMENTATION AT NIKE ( CGT, 2010 )
SapERPi2PlaningSiebelCRMPeopleSoftHuman Capital Management ( HR Systems )PTCProduct Data Management, Product Life Cycle directionSee BeyondApplication IntegrationMarc GlobeWarehouse Management SystemsHorsepowerUnix Serves Supporting all supply concatenation systemsIBMSystems planimeters & A ; other professional services
1 i2 ‘s Software Implementation
Nike ‘s supply concatenation subject is centralisation. All merchandises designs, doing and bringing is centralized from Beaverton, Ore.
The job was that the supply concatenation was built for six month ‘s rhythm which is besides called future plan. This future plan was developed in 1975. At that clip Nike made its market infinite because people at that clip did non much attention about the manner or looks. Their attending was that they need technically advanced places which were steady and fit. ( Koah, 2004 )
1.2 Need the i2 package for better supply concatenation
Nike got the planetary demand and its supply concatenation broken down because of the high demand from all over the Earth. By 1998, Nike had 27 order direction systems all over the Earth which were ill linked with Beaverton.
Another job with these systems was that these were extremely customized. At that point Nike needed the ERP system which can manage the fabrication rhythm for up to six months. Nike besides decided that the needed the systems which were centralized. For that ground the ERP package like SAP ‘s R/3 package were better for the Nike ‘s supply concatenation scheme. The package was included with i2 supply, demand and coaction contriver package applications. In the beginning of 1999 Nike decided to implement i2 package. I2 package execution was the first portion of NSC undertaking.
The cost of this undertaking was US $ 40 million. ( Koch, 2004 )Table i2 SCM Proposed Benefits ( Industrial Supply Chain direction Solution -i2-Planning, 2010 )
StrategicPlaningMaximize profitableness by optimally allocating resourcesIll-defined parametric quantitiesOptimizationLong term profitablenessDemand directionAnticipate and influence demandAccurate demand appraisal is hardDemand planning, channel coactionImproved client serviceSupply planningDetermine what to do and when and how to productively administer supplySize and complexness of jobCollaboration, optimisation,SpeedGlobal visibleness and coordination, fast reaction to alterationsProductionDetermine what to bring forth and whenPull offing stuff & A ; capacity trade-offs is complexFast finite stuff & A ; capacity planning & A ; schedulingReduced stock list,Improved due day of the month public presentation
2.1.3 Reasons of i2 package failure
There were many grounds for i2 failure.
Nike did non demo forbearance during the execution of the first portion of its NSC ( Nike Supply Chain ) undertaking. Nike decided to put in its i2 package while Nike was utilizing its bequest systems. The bequest systems were extremely customized.
The i2 package besides needed to be extremely customized because they have to be operated by Nike ‘s Legacy systems. Even one entry took excessively much clip to be recorded by the i2 package. This job was the unexpected reverse.
The chief mistake was that the system ignored some orders and made double the other orders. The ordered information was besides deleted after six to eight hebdomads when it was entered. It was impossible for the company to remember the order had asked to bring forth. The complications of NSC undertaking are besides one of the grounds of the failure. The i2 package failed in demand prognosis as shown in the figure 6. In some topographic points Nike has extra stock list and in deficit of stock list in other topographic points. Because of i2 package failure Nike ‘s net income dropped down by 50 % from USD $ 798 million to US $ 399 million.
( Koah, 2004 )Figure i2 package failure ( Koah, 2004 )
2.2 IMPLEMENTING SAP APPAREL AND FOOTWEAR SOLUTION ( AFS )
Nike had decided to implement the SAP Apparel and footwear solution. AFS is a portion of SAP ERP undertaking. This package is based on SAP r/3 and particularly for footwear industry. Nike chose to implement other SAP applications like SCM and ( B/W ) Business information warehouse. Nike is besides sing the SAP Net weaver platform in close hereafter.
Figure 7 shows the sample construction of SAP Net Weaver Implementation. ( Koah, 2004 )Figure SAP Net Weaver Implementation ( Koah, 2004 )Nike did non implement the first version of AFS although Nike had purchased SAP AFS in 1998. This new version of SAP AFS was the base of NSC Project. The SAP faculty executions at Nikes were Financial & A ; Control ( FICO ) , Gross saless & A ; Distribution ( SD ) , Material Management ( MM ) and Production Planning ( PP ) . These interfaced to the full with Nike ‘s i2 demand-planning and Siebel CRM package. ( Koah, 2004 )
2.1 Strategy for implementing ERP system
Nike adopted the “ Big Bang ” attack for implementing ERP package by put ining all SAP constituents like be aftering order entry financials etc. all at one time. This undertaking had a high grade of integrating between its footwear and dress sectors. Because of SAP ( AFS ) the company took full control on both country footwear and dress of supply concatenation from natural stuff until bringing. ( Sussman, May 2004 )In 2000, Nike Canada became a company which implemented SAP ( AFS ) along i2 applications and Siebel CRM. The package was used multiple HP endeavor waiters because on HP-UC ( 1 ) 11 runing environment. HP was chosen because it had experience in SAP and i2 applications.
( Sussman, May 2004 )
NSC Project allowed the company to do build-to-order supply concatenation.
Before implementing NSC undertaking Nike purchased merchandises from makers about 9 to 10 months before and on the other manus Nike ‘s retail merchant ‘s ordered for merely 6 months. The undertaking enabled Nike to shorten the clip for footwear merchandises from nine to six months because of implementing this NSC undertaking. Now Nike can purchase from spouse mills on the base of existent demands instead than calculate alone. Another benefit of this undertaking was that it had straight benefited on the fiscal direction. This undertaking gave better integrating between sections. ( Barrett, 2003 )Harmonizing to Shelley Dewey, Vice president, Nike Supply Checain, “ The passage of concern squad members into IT savvy persons and IT squad members into concern procedure experts was an unexpected fillip of the undertaking attempt. We are a much stronger squad for holding done this work.
” ( Clark, July 2004 )
During late 1990 most companies avoided to implement ERP systems because of the immense cost and the undertaking was clip consume. But Nike has invested on ERP system and they proved that although they paid a immense cost for implementing ERP system but it worth a batch. We can besides detect the composite of implementing ERP system from that if it was easy to implement ERP system so everybody did it at that clip. Nike has implemented the NSC ( Nike Supply Chain Project ) .
But for this success Nike has paid a immense sum and clip.Although the company has implemented SAP system but there was still job that it did non accept direct point of sale ( POS ) information in integrating with retail merchant ‘s informations. The prediction map is besides less accurate because company knew merely about the retail merchants purchasing and non hold any information that what the client purchasing. Nike has invested a batch on this undertaking and now Nike has to do this system perfect because little bugs became a immense job to repair.In the beginning of ERP execution Nike had faced troubles but now Nike has those attacks that many companies to follow that attack.
But Nike has to aware systematically about the job in ERP sectors and besides makes alterations its scheme in the hereafter with market environment.