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NIKES LEAN PRODUCTION
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LEAN MANUFACTUING
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MANNAT, MUTHU, SELMAN & SHOBANA

LEAN PRODUCTION THROUGH SIX SIGMA

THE MANAGEMENT PROCESSES: UTILIZING LEAN THINKING
AND SIX SIGMA [6] TECHNIQUE EDUCATION IN SUSTAINABLE
METHODS, Dustin Bessette Marylhurst University, USA This lean
technique can be thought as being very similar to the six sigma
technique in the fact that it is proposed to send less waste materials to
the environment while still being able to bring the core of the customer
value up. According to the Lean Institute, A lean organization
understands the customer value and focuses its key processes to
continuously increase it (LEI, 2009). This thinking will not only be able to
bring about more reliable customers as well as a higher reassurance of
stability within the companys finances, but this will also make the
concepts for the standardization of customer reliability higher than
before. Inference: Strategic planning is not only a tool for the future, but
also one of survival
The aspect of the Lean deployment that impresses most is that other
0rganizations start Lean primarily in the Daily Management section of
the model and it is limited to that mostly. Commonly known and practiced
as shop floor management. But at Nike, they go deeper and higher and
more broadly. In their words, this is how training is done in order to help
their people notice the level of Lean Six Sigma Training conducted.
The curriculum contains 10 modules that each focus on a key area of the
Culture of Empowerment Model. Each module is designed to share HRM
best practices related to lean manufacturing, and contains interactive
exercises that allow factory managers to assess their current state and
identify improvement opportunities in areas including recruiting,
selection, employee development, performance management, workermanagement communication and retention. The curriculum also contains
instruction and exercises on lean problem solving and planning tools
including PDCA (plan, do, check, act) and A3 reports, which facilitates
knowledge sharing and collaboration in a concise document. These tools

are used throughout the capacity building to define follow-up projects

that factory managers implement after completing the training.

Reputation Management to Innovation

Opportunity
Nikes manufacturing footprint is huge. As of this writing, they have
manufacturing contracts with over 785 factories, across India, Vietnam,
Philippines, and South America. And, over the years Nike has been
criticized for its lack of oversight of its manufacturers. Initially, they
approached the problem as a way to manage reputation. But, now they
are seeing their oversight and relationship with contract manufacturers
as an opportunity to innovate.
But innovation isnt in a vacuum. Innovation at Nike must be within the
context of (a) serving the athlete, (b) grows the company, and (c) delivers
inspiration. While you wont see Lean lingo, the context matters. This is
effectively Nikes True North if we were to speak in terms of Hoshin
Kanri.
Nike has 2 overarching goals in their strategy:
1. Make Today Better
2. Design the Future
Pretty simple and can easily be remembered by all employees. Under
these two main pillars in their strategy, Lean begins to take context.
Design the Future: Nike Lean Manufacturing
Nike has determined that their finished goods manufacturing is where
they have the largest impact on people and the environment. Within that
context, they want to be a catalyst for positive change. Consider these
numbers:

785 Contract Manufacturers

Over 1 Million factory workers


More than 500,000 unique products
Those numbers are staggering and humbling at the same time.

Factory Sourcing
Quality begins at Factory Sourcing that is, the process a contract
manufacturer has to enter in order to be selected as a Nike
manufacturing partner. The sourcing process is more rigorous than it
was and Nike has improved the quality of the manufacturing partner and
the time it takes to select a partner.
In terms of time it takes to become a partner, it now takes Nike 152 days
versus 246 days. That means it takes Nike 38% less time evaluating a
manufacturing partner. This is a massive improvement.
In terms of quality, Nike has increased its requirements but doesnt leave
the partner hanging dry Nike actually spends time and energy and
resources helping the contract manufacturing partner reach Nikes new
standards. As of this writing, Nike has 0 manufacturers in Gold, 1
manufacturer in Silver, 535 in Bronze, 156 manufacturers in Yellow, 77
contract manufacturers in Red. As you can see, Nikes bar of excellence is
high and Nike actively not only audits its manufacturing partners, but
also helps them improve .

Manufacturing Excellence
According to Nike, in order to design the future, Lean Manufacturing
must be part of the solution for them. In their words,
Lean manufacturing has been a hallmark of our approach with
factories and is the foundation of how we advance sustainable
manufacturing. Lean manufacturing is a business system and
continuous improvement philosophy that aims to deliver the highestquality product while eliminating waste, including lost time and
material. At Nike, we also believe lean can empower workers and
teams. The success of the lean approach depends on the implementation
of physical changes to production processes, increased leadership
capabilities and the development of an empowered workforce. Lean
manufacturing seeks to engage the minds of those closest to the work to
solve the problems that prevent them from delivering quality product
on time, every time.
As we all know, people are at the heart of any operation. Nike has spent a
lot of energy in training and upskilling their contract manufacturers in
Lean. From their perspective, Lean helps their people in the following
ways:
Leadership: factory leaders use Lean to drive business
performance

People: workers are engaged and enabled to drive business success

through continuous improvement

Process: factory processes are predictable and agile in response to

customer demand
And, they believe that

The lean approach also seeks to engage the minds of those closest to the
work to solve the problems that prevent them from delivering quality
product on time, every time.
In fact, they use Jeffrey Likers model found in his book Toyota Culture,
the Heart and Soul of the Toyota Way as an example of how they need
to align people and strategy and lean in their training.

This is the aspect of the Lean deployment that impresses me the most.
Why? Most organizations will start Lean primarily in the Daily
Management section of the model and it stays there. Most of us know
this as Shop Floor Management, or even the Toyota Floor Management
Development System as I know it.
But at Nike, they go deeper and higher and more broadly. In their words,
this is how training is done in order to help their people notice the
level of Lean Six Sigma Training conducted 2:
The curriculum contains 10 modules that each focus on a key area of
the Culture of Empowerment Model. Each module is designed to share
HRM best practices related to lean manufacturing, and contains
interactive exercises that allow factory managers to assess their
current state and identify improvement opportunities in areas
including recruiting, selection, employee development, performance
management, worker-management communication and retention.
The curriculum also contains instruction and exercises on lean problem
solving and planning tools including PDCA (plan, do, check, act) and
A3 reports, which facilitates knowledge sharing and collaboration in a
concise document. These tools are used throughout the capacity
building to define follow-up projects that factory managers implement
after completing the training.

And, they also take temperature checks with their people, to see if the
Lean deployment is meeting their needs. In a survey conducted by an
outside firm, the results seem promising and Nike has also take this data
from survey results to help further improve their people operations:

And, as with most organizations that are focused on continually

improving, Nike is doing that and hold themselves accountable. As of
this writing, here is their assessment of their Lean journey so far:

1. The future of lean for NIKE is to deliver profitable growth through

sustainable manufacturing and sourcing. To do this, they are
making lean NIKE, Inc.s manufacturing standard. They require a
commitment to lean as part of being accepted into their source
base and a minimum commitment and progression for positive
ratings by including it in their Sourcing and Manufacturing
Sustainability Index, a component of Manufacturing Index which
assesses factories based on sustainability, cost, quality and ontime delivery. They are working with supply chain to demonstrate
the value of lean as a driver of sustained, improved business
performance where workers are engaged and enabled to drive
business success through continuous improvement. Some of the
standard metrics used to assess factory adoption include
productivity, human resources management assessments,
turnover, absenteeism, and factory implementation of and results
from worker engagement and well-being surveys. The innovation
and revolutionary practices are critical for sustainability and for
maintaining the brand value, but not the only criteria for being
recognized in the market as a successful lean practicing
organization. It requires all the employees to follow the same
standardized practices throughout all manufacturing units.