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NIKE ERP
IMPLEMENTATION
JUST DID IT
FROM FAILURE TO SUCCESS
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NIKE: INTRODUCTION
 Started in 1957 as an athletic footwear distribution company called
Blue Ribbon Sports

 By Bill Bowerman : Track and field coach

Phil Knight : Runner

 In 1978 renamed as Nike

 Product Range:
– Sports equipment
– Sports wear
– Apparels
– Accessory products
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NIKE: INVENTORY MANAGEMENT

 Mid-1980, demand management system managed inventory

 Gloabal operations from US, Europe, middle east and Africa, asia
pacific and LAC

 After mid 1970, products manufactured by contractors around the

globe

 Orders required to be placed 6 months before required delivery

date for 90% efficiency

 System was not equipped to deal with complications

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NIKE: I2 SCM
• Supply chain software implemented by I2 Technologies in 1999

• Expected Benefits

 To increase the scope of operations

 To help take orders from the customers and inventory

management

 To reduce order-to delivery time by about 50 percent

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NIKE: I2 SCM
 To always ensure that supply always meets the demand as per the
prevailing marketing conditions

 To reduce amount of rubber, canvas required to produce footwear

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WHILE IMPLEMENTING
 Nike refused to use templates & methodologies

 System was too customized

 Increased employee turnover affected the system

 No third party integrators

 Implementing both SCM & CRM

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NIKE & i2: ERRORS COMMITTED

 Customization

 Improper Implementation

 No Sampling Process

 Inexperience of i2
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NIKE: I2 DEBACLE
 Over estimate demands to some shoes and Under estimate
demand to some shoes

 System sent flawed data to Manufacturers

 Slowed down the application & complicated to use

 Resulted in users waiting long

 Nike couldn’t meet the retail demands

 Finally prices of Nike shares fell sharply

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NIKE: I2 DEBACLE CONSEQUENCES
 Not able to cater demands

 Reputation

 Lost Market Share

 Forced to sell in discounted prices

 Higher shipping costs

 Relations between nike and retailers was affected

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NIKE: SAP ERP TAKES OVER
 Implemented sap along with its variant R/3 specifically designed for
apparel and footwear industry

 Designed to streamline communications & lower operation costs

 Supply chain project combined with CRM

 Expected to reduce order to delivery date

 Main system implemented by i2

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NIKE: SAP ERP TAKES OVER
 SAP AG and Siebel Systems for CRM

 Pilot testing of sap netweaver platform

 Implemented for business information warehouse

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NIKE: SAP ERP Benefits
 Nike spent six years and $500 million on the project

 By 2004, the project was 80% complete

 Inventory levels declining

 Quicker design and manufacturing

 Gross margeings to 42.9% in 2004 from 39.9% in 1999

 Increased cash inflows

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FINALLY DID IT !