Operational management plan of Nike Company

Nike Company
8 mn read

Introduction

The operational management plan refers to the focus of the practices that are designed to manage and monitor every process in the production and distribution of the products and services in the business. The main activities of the operational management aim at the creation of the products and development of the services, and efficiency of their distribution (Collins, 2018). Management of the purchases, monitoring of the inventories and preservation of quality are the key goals of the operational plan. The plan also includes an analysis of the internal processes of the company and, ultimately, the way the organization performs operational management, depending on the nature of the products and the services that are being offered. Therefore, in this paper, we are going to illustrate a simplified operational management plan basing our arguments on the Nike Company.

Nike Company is the American multinational industry that has been engaged in the designing, development, production, sales and marketing of apparel, footwear, accessories, equipment and services. The companies headquarter is located in Beaverton in America. The company is the largest supplier of athletics apparel and shoes, with a net income of over eight million per year. The management of the company works in unison where the Nike environment is collaborative, and the management often reports in two areas i.e. global and geography functions. This is because the company covers a wide area starting from North America, the Middle East, Europe and Africa. In regard to the company’s website (www.nike.com), it aims at helping consumers to thrive a sustainable economy in which the planet, the people and profit are in balance. Apart from the manufacturing of the sports wares and equipment, the company have been involved in the operation of retail stores in different towns and sponsoring proficient athletes and good sports teams in the world.

Demographic of customers

The customer demographics are the classifications of the consumers who are relevant to the business purposes like designing and marketing of the products. The classification of the customers can result to endless variable numbers. Therefore, the classification of the customers basing on the Nike Company includes gender, age, geographical location, hobbies, household income, educational level, marital status and occupation (usa.gov, 2018). The demographics are essential in identifying who are the customers of the company, where they reside, and the likeliness that they will purchase the products and services being sold. The analysis of the demography is important to the company since it helps Nike Inc to make decisions on the channels of communication that are valuable to the customers. It also helps in the identification of the potential and new customers and also locating the demographic region that has many potential customers.

Race Population Female Male
New York 8,175,133 4,890,026 3285107
Chicago 3,792,621 1,996,509 1796112
Texas 2,695,598 1,000,956 1694642
California 2,099,451 1,121,856 977596
Florida 1,307,402 890,467 416935
Georgia 1,445,632 795,351 650281
Virginia 945,942 546,203 399739
Philadelphia 1,526,006 713,956 812050

From the data, it can be illustrated that there are many people in New York as compared to the other States. Therefore, the company uses that demographic property to supply a lot of their products in the stores that are available in New York as compared to the stores that are in Virginia. Similarly, the company uses the demographic property of gender to determine the kind of products that could be supplied to the region and which customers to target. Therefore the analysis of the demographics of the customers increases personalized interaction, improvement of the customer’s services and also fostering the customer’s loyalty.

Design of the Supply Chain

The best way to consider supply chain management is to achieve the future needs of the organization. These are achieved through the development of new products, technological growth, channels of operation, strategies of marketing and intellectual capital brand. Nike Inc is a company that works properly for invention and innovation. The unique way of designing their products to suit the quality needed in the market makes the company lead in the production of the sporting products like athletics shoes etc. The company doesn’t design a product that is cosmetically pleasing, but they aim at performance. For instance, they aim at lightening, responsive increase, fit, injury protection, support and cushioning. The strategy of ordering the product from the company is effective since the customer needs to place the order on the company’s website. This increases the speed of processing via ERP and proper customer relationships. Therefore, due to good design to increase quality and faster processing, the company can easily meet its objectives and goals.

Material resource planning

Nike Inc has an Enterprise Resource Planning (ERP) which they are using to manage their demand and supply. The software is essential in providing integration between purchasing, marketing, manufacturing, logistics, and sales (nike.com, 2017). Therefore the ERP software is important in determining the raw materials that are needed in the production process for the company. The company makes use of the six major materials in the manufacturing process. They are polyester, rubber, EVA foam, cotton, synthetic leather, and leather.

Suppliers Relationship Management plan

Nike is an innovative company that plans and designs for a suitable tomorrow’s economy. The main goal of the supply chain in Nike Company is the reduction of carbon footprints, and therefore the companies are closely working with third-party logistics to provide the opportunity of optimizing the consumer and accelerate the use of alternative fuels. The business impact of Nike Inc is to improve the visibility of the supply and demand, the planner that empowers a better supply with the demand and better ROI for the existing SCM and ERP solutions.

Production

Nike Company is an iconic American multi-country cooperation that is involved in the production of footwear, equipment, apparel, and accessories. Nike products are produced in different factories worldwide. The company have revolutionized the production processes and developed innovative new products so that it can meet its goals. Despite the company’s headquarter being in Beaverton, Oregon, the shoes that the consumers purchase are produced by hundreds of firms in the world. The largest producer is in China, Indonesia and Vietnam. Nike Inc doesn’t directly own the factory but instead, the administrators have been involved in hiring the factory owners to produce their products by the use of the design and materials provided by Nike Inc. The company itself aims to design the shoes and other products, and after production, they are marketed and advertised in the most appealing manner.

The production of athletic shoes in the factories is categorized into three different parts of the shoe. They are the shoe top or upper, the midsole, which protects the foot and the outsole or sole. It’s the variation of the materials used in the three parts that bring a difference in the type and brand of the shoes. The midsole is made by a combination of the materials like Phylon, Polyurethane, Phylite and EVA, which is a flexible and foam-like material. The sole is the blend of the synthetic compounds of rubber. The Nike shoes are unique in many athletic shoes, and experimental design processes have shown that the model can take three years. The introduction of the midsole cushioning system that was first done by Nike Inc has led to change in the way athletics shoes are being produced. The company has frequently been criticized for being involved in child labour, fragrant abuse and abuse of the wages and also overtime law that go unchecked in the factories found in the third-world nations. However, Nike Inc is responsible for the workforce, increased exploitation of the factory workers and provision of unbiased working conditions.

Packaging

As a form of marketing strategy, no one can understand the power and the need for packaging of the products. The company spends most of their time designing the packaging and the tapes blogs. They reiterate the packages so that the company doesn’t go into a lot of detail. However there is no doubt that the packaging of the products drives sales and in fact, this is a strategy that Nike understands very well.

Most of the modern packaging is simple, sustainable and also ease of use, and they have been met by many brands so that they should remain competitive. Nike has outperformed in every aspect. The common modern and iconic Nike package are made by the recyclable materials of cardboard that offer a clean, better-known display of the conspicuous tick. These characteristics are also applicable to the other aspects of packaging materials like recyclable paper bags etc.

Transportation

Nike products are mainly produced in four different nations, i.e., China, Indonesia, Thailand, and Vietnam. After a complete manufacturing process, the products are distributed to stores in different nations. When it comes to the transportation of Nike products, the company aims to reduce of CO2 emissions into the environment and also reduction of carbon footprints. For the transportation process, their creativity is not only reducing carbon footprints and CO2 emissions but also its an effective way of saving some money. The company has been mostly involved in the transportation of its products from one continent to the other via cargo ships instead of an aeroplane. For small distances, vehicles are being used to carry the products.

Cost of Goods Sold

The cost of goods sold by Nike Inc is directly linked to the profit of the company by gross margin. It’s also linked to the inventory turnover of the company. Therefore the cost of goods sold is the total inventory cost of the goods and services that are sold at a particular period. Through calculation, the cost of the goods sold for the trailing twelve months ended and it ended on November 17th is $19520 million. Nike’s Gross margin for the three months that ended in the Nov 2017 was calculated (Gross margin= (Revenue – Cost of Goods Sold)/ Revenue) and found to be 43%. The company can expand or maintain the gross margin through the increase in the price of goods that it sells, and the cost of the goods that it sells remains unchanged. It may also reduce the cost of the goods and the sales price unchanged. Also, the cost of the goods sold in the company is directly linked to the aspect of inventory turnover. The inventory turnover is calculated by dividing the cost of goods sold and total inventories. Nike’s inventory turnover for the three months that finished on Nov 2017 is 0.93. The inventory turnover is essential in illustrating how fast Nike Company turns the inventories. When it’s high, the company have a light inventory, and thus a company spends few amounts of money on storage, absolute inventories, and writedowns. When the inventory is light, it affects the sales, and thus a company cannot meet its demands.

Customer Relationship management plan

Nike Inc has many years in which they have been concerned with customer relationship management so that they can generate profit with customer satisfaction. The company makes use of the online site (www.nike.com) to track valuable information that can optimize customer relationship management. Placement of the order allows the customer to insert the name, location and also contact and therefore, the information is used to track the buying habits of the customer. The use of the online blog on the site is essential for the utilization of customer-centric so that they can improve services and products. The browser-based application that is being used by Nike Inc enables someone to join the Nike community and also invites others to the community. This makes the company gain profit and creates customer trust and satisfaction.

Sustainability and CSR plan

Nike Inc’s sustainability is based on the prospects for the future so that it can maintain its profitability and reputation, taking into deliberation the social responsibility of a company. Sustainability strategies are required to ensure that every company gets a stable supply of raw materials, manufacture the products, market products and sells the products at favourable prices. Some of the sustainability innovation in Nike Company is as follows. The first one is that Nike’s management performance aims at reducing of waste and water use. This is through recycling of the polyester materials used in making Nike football kits. The company is also involved in the reduction of emissions and the use of less energy.

The company has offered a greater investment in the transformation of the manufacturing process. They have piloted research programs that target uncovering the way technology, services, and changes benefits and compensation systems that positively affect the workers. The companies have the leverage to help kids get moving and ensure that there is zero waste. The last strategy is reaching more customers through social media advertisement and customer care services.

Recommendation and conclusion

The recommendation to Nike Inc will allow the company to face the challenges and weaknesses so that the company can grow their brand and also improve its financial performance. Since Nike Company is an international supplier and it’s difficult to create loyalty all over the world and hence expand quickly, I may recommend that the company concentrate on the creation of the domestic fields for the brand and the products. The analysis shows that the company’s strength needs to support the leadership of the world concerning footwear, apparel, and equipment. The address of the company concerns labour practices, competition, and the protection of a patent. Therefore, I may recommend that the company should come up with a reformation concerning the strategies of the area.

The third recommendation is that the company should make efficient use of the money. This can be accomplished by expansion of the promotion to involve entertainment and other nonsporting venues since the line concerning entertainment sports look blurred. The paper has illustrated that an operational management plan is a process of focusing on the practices that are designed to manage and monitor every process in the production and distribution of the products and services in the business. In the paper, we have illustrated the demographic of customers, the design of supply, production, transportation, customer relationship management and sustainability of Nike Inc. Therefore, from the paper, we can conclude that the operational management plan will be helpful in bringing a new direction to the Nike brand and a greater benefit to the running of companies.

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