+1-817-968-5551
+61-488-839-671
+44-7480-542904About Expert
Key Topics
Requirement
Consider an organisation you are familiar with, ideally this should be the organisation where you are currently or were previously employed. Select an operations problem to investigate and undertake a critical review of the identified problem. You should analyse the current situation, identify and analyse the problem within the context of its process, and develop a set of recommendations that when implemented, will overcome or improve the identified problem without creating new ones.
Solution
Introduction
The company ‘Nike’ is considered in the report as I was previously employed here. The operations problem that is investigated here is the issue in inventory management of the company. A critical review of the identified problem is presented here. The problem isanalyzed within the context of inventory management process, and a set of recommendations is developed that when implemented, will overcome or improve the identified problem without creating new ones.
Looking for someone who can help with assignment help online? Avail of the best operation management assignment help from the best experts of Allassignmenthelp.com. Give all of your worries to our immensely talented experts, and you will receive the best and most supreme student assignment help.
Inventory management of Nike
A business of selling sports shoes started in 1964 with the partnership of Knight and Bowerman. It was named as ‘Blue ribbon Shoes’ earlier and was later renamed ass ‘Nike’. The company has emerged to be the largest brand of equipment of sports today. At the starting of business, the company imported the shoes from Japan and sold them from the basement of Knight’s house. Then later, in around 1972, Nike entered into apparel business and started a ‘Futures' booking program. With this, the company forecasted the production to ‘make to order’ the products and also pre-financed it so that the risk of over inventory reduces. This enabled the company to become first among competitors that allowed retailers to pre-order the inventory. This step or the program was seen as a revolutionary decision in the business and was viewed as a standard among other businesses. This program enabled Nike to manage the inventory more effectively as the retailers were able to place their orders with Nike about six months before the required date of delivery(Doorey, 2011). These orders were forwarded by Nike to the manufacturing units all over the world.
Nike required a new supply chain system
Initially, the system was effective but with time and growth rate of Nike, the system became insufficient to tackle the increasingly complicated operations and the changing scenarios. The number of orders was increasing rapidly, and it was becoming complex. The product line of the company increased in length tremendously. The manufacturing units of Nike were spreading all around the world, and the company had to contract many manufacturers. It was difficult to deal with all of them in a single system, so it decided to modify the system on constant intervals with the help of technical workforce. The company made a lot of adjustments to make the system compatible with the changing demand and order manufacturing. But such huge adjustments posed a danger to the system of being susceptible tobreakdown(Lebron, n.d.). Nike then thought about transferring to a whole new system that could meet the future requirements as well as handle the pressure due to increased load.
Expectations from new system
Nike expected that the system would provide a streamline with the suppliers of raw material and its buyers and with other requirements too so that the operating costs of the company could be lowered. It was also expected that the system will be flexible, and it will provide an opportunity to work in collaboration with varied customers. The new system was created by the company so that a new supply chain system could be created and the whole cycle from order taking to delivery could be run effectively. To further make it more effective, the system was combined with CRM applications. Nike comes into a contract with i2 for the installing the main system and its supplements and for supportive CRM applications, it went for SAP AG and SiebelSystems Inc.The project was finalized for five years and at anestimated cost of $400 million. Overall, the i2 software did cost $40 million(Doorey, 2011).
The new system failed
The decision of Nike for not using the basic templates for the new system and the methods developed by i2 initiated the failure. The software that was developed had the capability to work alone and manage the demand systems for the company. But Nike customized it so that it could work with the existing system of demand management. The changes in the basics of the new system caused the applications of the new system to slow down and increased waiting time was faced by the users even for a single screen to get loaded. Then with the implementation of new system, the employee turnover increased. This was the second reason of failure. CIO of the company resigned before the installation of the new system, and he was involved in the decision to renovate the supply chain. Then the company avoided including a third party integration for implementing the new system. This was another reason for the failure. Problems arose when Nike tried to integrate the system with the running processes and when it implemented SAP software simultaneously(Jackson and Schantz, 1993). The troubles for the company increased when the usage of the immature system started by the company and it sent orders to far away manufacturers like in the Far East. Since the system wasnot properly developed, so the estimation of demand was done incorrectly. Nike overestimated the demand for those shoes that were in the least demand and underestimated the demand for those shoes that were in high demand at thattime. These incorrect estimates were compiled in the data of the company, andthat flawed data was sent by the systems to its manufacturers all around the world that caused some manufacturers to get double orders for same shoesand insufficient orders for popular shoes that were high in demand(Lebron, n.d.).
When this happened, the i2 officers did not start to use the new software as it was immature. After some time, the company found that it was manufacturing some models of shoes in greater number than other shoe models. So for some shoes, the company could not meet the demand of retailers that were in high demand. But the staff of Nike and i2 developed effective ways to solve those problems. They changed the operational procedures that were existing. With time, the problems were identified by the company, and they were able to rectify them but by that time, the huge time had already passed. Both Nike and i2 avoided the problem and did not take precautionary measures in respect to the project. Then the failure also occurred because Nike went into contract for implementation of the new system with i2 and this company did not have any prior experience in developing software systems for the apparel industry(Jackson and Schantz, 1993).
Results of failure
Nike was adversely affected by the breakdown of the new system. The failure affected all parts and departments of the company, and the company faced a serious danger of loss. Due to the poor estimation of demand, the inventory became difficult to manage at various locations of manufacturing units. It was in deeper problem whenit failed to cater to the patterns of demand for different models of shoes, and the high demand models of shoes were also estimated wrongly. This came as an advantage to the rivals of Nike, who took away a huge percentage of market share of Nike. The reputation of the company was hurt to a great extent. The company sold those extra model shoes that were wrongly produced at low prices(Torudonkumo and Everestus Obinwanne, 2014). To manage the inventories, the company had to sell those shoes at less than half of the prices in the market. The shoes that were in high demand, Nike manufactured than in less than the ordinary time by increasing its workforce and machinery. High costs were paid in transporting those models to the retailers. With many retailers, the company lost its good relations, and they negatively publicized the products of Nike(Distelhorst, Hainmueller and Locke, 2016).
If any company wants to convert its operations from existing to a new system, then it is not an easy task. There are various factors that can mislead the operation of the new system, and the entire system can be distracted. The project components must be studied by the company carefully before implementing any new system and through research must be carried out about the consequences of implementing the new system.
Recommendations
1. For every new project in a company, the support of top management is essential. They are involved in the financial support, and they justify the financial resources. They are interested in the returns that will be earned by investing in new schemes and projects. The support lacked here. The managers could have shared the details about the project with the management that what the project would yield and what benefits will be reaped with the implementation of the system. It is very necessary that the top executives believe in the new system, and they feel that it will give a competitive advantage to their company. They will become capable in serving the customers in a better way. This belief lacked in the company, and the success of the project could not be attained. So it is recommended that Nike should attain the support of top management before starting any new endeavor in the future.
2. The teams and groups from various departments should be represented broadly, and it should be ensured that they develop a sense of being accounted for all the perspectives involved with the design and implementation of the project. It is needed that the operations department led the project. When the projects and new systems are implementedwith the leadership of members of a specific department, then the job performance becomes better and is improved over time. When the system is led by operations department, the ownership would increase, and the chances for success would also multiply thereby reducing the risk of failure of performance.
3. Functioning of the new system can be ensured if the systems are tested in advance and the relevance of design is considered in advance. The inspection and the performance test before the implementation should be detailed. A Proper plan should be made for testing and after the completion of the designing job, the plan should be finalized. Resources should be allocated to the phenomenon of testing that should be timely focused on the assessment of the principal functionality of thenew system being implemented. The procedures for testing are sensitive to time, and a common error that happens repeatedly is the concentration of complex working components and diversefunctionality that does not require more than a small percentage of time so such mistakes must be avoided.Also, the final users of the new system should be given permission toperform the main testing because this wouldequip them with identifying the problem and rectifying skills.
4. Proper training should be provided so that the basic functionality can be focused on a daily basis and a friendly and effective use can be ensured by the users. The technical staff and trouble shooters should be properly trained so that they can keep the new systems the system in focus right from the start so that if any trouble arises in the testing phase, they can troubleshoot it and ensure smooth functioning of the system.
5. The new systems are put in place so that they can improve the current functional performance of the company on the whole. For this baseline, metrics should be validated before the implementation of new system. When the baseline is valid, it gives the exact success levels, and the success of system or project is hiddenin the effective and equally efficient performance of the other key components.
6. The company would be able to recover its monetary losses, but the negative impressions and the bad reputation has affected the firm very badly. One way to clean their image is by conducting ethical business practices. The company should understand their ethical duties, and they should follow them by taking full responsibility for their actions. The company should not speak ill of i2 in front of the media and should not blame it as it will ruin the image of the company further. Since the company i2 is inexperienced in working in the apparel industry, it should take a third party so that someone else looks over the system which has more experience. i2 should take effective cautionary measures to tackle the problem. Also, i2 should not speak ill of Nike's management in media andshould not hurt its reputation being its project partner.
Place Order For A Top Grade Assignment Now
We have some amazing discount offers running for the students
Place Your Order7. Conclusion
The detailed view of issues is provided in the report of Nike, and a major focus of the report has been put on the recommendations part. The existing systems that were set to conversion to the new systems should have been done carefully, and no haste should have been made in this. The involvement of customers was needed so that the conversion decisions can be implemented properly.
References:
-
Jackson, J. and Schantz, W. (1993). Crisis management lessons: When push shoved Nike. Business Horizons, 36(1), pp.27-35.
-
Torudonkumo, J. and Everestus Obinwanne, E. (2014). On Solution to Traffic Flow Problem by Method of Characteristics. IOSR Journal of Mathematics, 10(2), pp.60-66.
-
Lebron, W. (n.d.). The Best Fashionable Nike Shoes – Nike Air Rift. SSRN Electronic Journal.
-
Special Topic Forum on Resources and Supply Chain Management. (2013). J Supply Chain Manag, 49(2), pp.137-137.
-
Distelhorst, G., Hainmueller, J. and Locke, R. (2016). Does Lean Improve Labor Standards? Management and Social Performance in the Nike Supply Chain. Management Science.
-
Doorey, D. (2011). The Transparent Supply Chain: from Resistance to Implementation at Nike and Levi-Strauss. J Bus Ethics, 103(4), pp.587-603.
-
Forrester, P. (2006). Operations & Process Management: Principles and Practice for Strategic Impact20061Nigel Slack, Stuart Chambers, Alan Betts and Robert Johnston. Operations & Process Management: Principles and Practice for Strategic Impact . Pearson Education Limited, 2006. 531 £44.22, ISBN: 0?273?68426?4. Int Jrnl of Op & Prod Mnagemnt, 26(8), pp.940-940.
-
Krajewski, L., Ritzman, L. and Malhotra, M. (2007). Operations management. Upper Saddle River, N.J.: Pearson Prentice Hall.
Give your grades a boost
Just share your requirements and get customized solutions on time.
-
1,168,768 Orders
-
4.9/5 Overall Rating
-
5,052 Experts
Our Experts
