Operational management plan of Nike Company

Nike Company
9 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 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 Nike Company.

Nike Company is the an America multinational industry that have been engaged in the designing, development, production, sales and marketing of the apparels, footwear, accessories, equipments and services. The company’s headquarter is located Beaverton in America. The company is the largest supplier of the athletics apparels and shoes with a net income of over eight million per year. The management of the company works under unison where Nike environment is collaborative, and the management often report in two areas i.e. global and geography functions. This is because the company covers a wide area starting from North America, Middle East, Europe and Africa. In regard to the company’s website (www.nike.com), it aims at helping the consumers to thrive a sustainable economy in which the planet, the people and profit are at balance. Apart from the manufacturing of the sport wares and the equipments, the company have been involved in the operation of the retail stores in different towns and sponsoring of the 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 the endless variable numbers. Therefore, classification of the customers basing on the Nike Company include 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 decision on the channels of the communication that are valuable to the customers. It also helps in 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 the 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 the supply chain management is achieving the future needs of the organization. These are achieved through the development of the new products, technological growth, and the channels of operation, the strategies of marketing and the 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 the product that is cosmetically pleasing, but they aim at the performance. For instance, they aim at lightening, responsive increase, fit, injury protection, support and cushioning. The strategy of the 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, the cotton, the synthetic leather, and leather.

Suppliers Relationship Management plan

Nike is the 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 the carbon footprints, and therefore the companies are closely working with the third party logistics to provide the opportunity of optimizing the consumer and accelerate the use of the alternative fuels. The business impact of Nike Inc is to improve the visibility of the supply and demand, the planner that empower 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 the footwear, equipment, apparel, and accessories. The Nike products are produced in different factories worldwide. The company have revolutionized the production processes and developed the innovative new products so that they can meet their goals. Despite the company’s headquarter is in Beaverton, Oregon, the shoes that the consumer’s purchase are produced in 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, they administrators have involved in the hiring the factory owners to produce their products by the use of the design and materials provided by the Nike Inc. The company itself aims at designing the shoes and other products, and after production, they are marketed and advertised in the most appealing manner.

The production of the 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 the combination of the materials like Phylon, Polyurethane, the 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 experimentation design processes have shown that the model can take three years. The introduction of the midsole cushioning system that was first done by the 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 labor, 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 details. 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 these 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 the cardboard that offer 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

The 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 the stores in different nations. When it comes to the transportation of Nike products, the company aims at reduction of CO2 emission into the environment and also reduction of the carbon footprints. For the transportation process, their creativity is not only reducing carbon footprints and CO2 emission but also its an effective way of saving some money. The company has been mostly involved in the transportation of their products from continent to the other via cargo ships instead of an airplane. For the small distances vehicles are being used to carry the products.

Cost of Goods Sold

The cost of goods sold in 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. The 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 its high the company have a light inventory, and thus a company spends few amount of money on storage, absolute inventories, and the 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 are 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. By 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 the Nike Inc enable 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 reputable taking into deliberation the social responsibility of a company. The sustainability strategies are required to ensure that every company gets a stable supply of the raw materials, manufacture the products, market products and sells the products at the favorable prices. Some of the sustainability innovation in Nike Company is as follows. The first one is that Nike management performance aims at reduction of the 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 the emission 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 which benefits and compensation systems that positively affects the workers. The companies have the leverage to help kids get moving and ensuring 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 that challenges and the weaknesses so that the company can grow their brand and also improve the 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 in 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 labor practices, competition, and protection of a patent. Therefore, I may recommend that the company should come up with 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 the other nonsporting venues since the line concerning entertainment sports look blurred. The paper has illustrated that operational management plan as 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 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 bringing a new direction to the Nike brand a greater benefit to the running of companies.

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