SCM & ERP

Software
Implementati
on At Nike:
from Failure
To Success
 CONTENTS
• Introduction: NIKE
• NSC, SCM and i2
• i2’s debacle
• Reasons for i2’s software failure
• SAP AFS ERP Implementation
• Benefits
• Conclusion
 Introduction: NIKE
• Founded in Jan 1964 by Philip
H.Knight and his coach as Blue
Ribbon Sports
• Rechristened as Nike in 1978
• Manufactures:
– Sports equipment
– Sports wear
– Apparels
– Accessory products
• Sales in over 140 countries
PRODUCT
MIX
 Before i2/SAP
• Long (~9 months) manufacturing
cycle
• Questions on products remaining in
vogue
• Need for demand forecasting
• Manugistics SCM implementation and
limitations
• Legacy outdated systems –
impending competition
NSC PROJECT
 i2’s Software
Implementation

Cost of this project was US $40

million.
 i2 Trade Matrix Plan Solution
(SCM) Proposed Benefits
• Optimal Allocation of Resources
• Demand Forecasting for upto 6
months
• Production Forecasting
• Integrate all Business Processes
to reduce Costs
The What and Why

Main Reason
for Failure

Nike’s profit
dropped by
50% from US$
798 million to
US$ 399 million
 From Simple to e-Supply Chain
Suppliers Manufactur Wholesale Retailers
ers Distributor
s

SUPPLIER Customers
EXCHANGES
CUSTOMER
EXCHANGES

Virtual
Manufactur Logistics
Contract ers Providers
Manufactu
rers

Goods
Flow
Information
Categorized Problems during
Implementation
 Present
Scenario
3-6 Months’
Manufacturing Cycle
SAP Net Weaver
Replac SAP AFS ERP
ed R/3 Sieb
el
M i2 CRM
ANU SCM SAP
NetWeaver

Custom Composite
Apps.
 Benefits of ERP
Implementation
Nike investment from Dec
1989-03
Lessons Learned
 Recommendations
• Don’t take SCM Lightly
• Long Planning & Analysis of Core
Business Systems Required
• Digitizing the Firm can go Over
Budget, so keep Financial Buffers
ready
• Right ERP Implementation Ensures
High Returns
• Pilot Tests Important before
 By
• Pundri Kaksh -8147