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Nike's Plan To Tackle Supply Chain Issues

Not a day has gone by in the last year where we haven’t heard about a shortage of products ranging from toilet paper to chicken wings. The sneaker world hasn’t been spared these issues either, with lengthened delivery times and overseas shipping issues forcing delayed releases and small releases while stock is sitting on ships, trucks, and planes. Nike is addressing these issues in four. major ways.

One: New Regional Service Centers Increase Capacity, Speed and Precision More Sustainably.

One decision helping to alleviate these issues is the speedy development of multiple distribution centers. Previously, Nike operated all of their shipping through Memphis, TN to reach the entire US. Opening new centers in LA, Pennsylvania, and Dallas to service their respective regions will help consumers get their products quicker. Continuing their direct-to-consumer goal, the use of technology can help predict where to put stock throughout the nation's distribution centers.

Two: Automation and Technology Are Changing How Nike Operates in Service of the Consumer.

Continuing on the technology front, AI and machine learning are used to, according to Nike “...helping ensure consumers have what they want, when and where they want it.” On top of the use of AI, over 1000 automated machines have been deployed, being used to help pack, sort, and move products through distribution centers. Questionable as Nike increases retail prices yet is replacing workers in these distribution centers with machines.

Three: Efforts to Package, Ship and Refurbish Product More Sustainably Benefit the Consumer and the Planet.

Nike also claims that using packaging that is comprised of 65% recycled content and packaging multi-item orders together at once can help alleviate supply chain problems. However, in the briefing put out by Nike, they state that the new pop-up boxes the company has been using to ship are beneficial to the consumer when we have heard horror stories of delivery companies and drivers peeking in and taking products before they reach the customer. Their Nike Refurbished program is also helping take care of the environment by taking slightly used or imperfect products and restoring them to then offer at Nike Outlets.

Four: Nike Focuses on Powering the People Who Power Nike.

The company's final point in addressing these issues is “...Powering the people who power Nike.” In other words, investing in individuals who work for the company. While offering paid sick leave and resources for workers to focus on “...personal achievement and career development.” is nice, tying that back to the replacement of over 1000 workers with machines makes this kind-hearted gesture seem less genuine.

Nike’s efforts to alleviate its supply chain issues have proven to be beneficial to the consumer in some ways. While opening more distribution centers takes care of some of the problems, replacing workers with robots while at the same time charging us consumers more money seems to only help Nike’s bottom line. The global pandemic may have jammed up supply chains, but the demand for sneakers has skyrocketed since 2019. Nike’s revenue for 2021 was up 21% compared to 2019. This also coincides with the after-market on sneakers increasing yearly, estimated to be upwards of $30 billion by 2030. Hopefully, as time goes on, Nike makes more efforts to keep both their bottom line and consumers happy.

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