Nike was founded in 1964 by Bill Bowerman and Phil Knight in Beaverton, Oregon. It began
as Blue-Ribbon Sports (BRS). In 1972, BRS introduced a new brand of athletic footwear
called Nike, named for the Greek winged goddess of victory. The company employs 26,000
staff around the world with revenues in fiscal year 2005 of $13.7 billion.
It has facilities in Oregon, Tennessee, North Carolina, and the Netherlands with more than
200 factory stores, a dozen Nike women stores, and more than 100 sales and
administrative offices. Its subsidiaries include Cole Haan Holdings, Inc., Bauer Nike
Hockey, Hurley
International LLC, Nike IHM, Inc., Converse Inc., and Execter Brands Group LLC. As of May
31, 2004, manufacturing plants included Nike brand, with 137 factories in the Americas
(including the United States), 104 in EMEA, 252 in North Asia, and 238 in South Asia,
providing more than 650,000 jobs to local communities.
• OBJECTIVE
Nike grew from a sneaker manufacturer in the early 1970s to a global company selling a
large number of products throughout the world. Nike’s sneaker supply chain was
historically highly centralized. The product designs, factory contracts, and delivery are
managed through the headquarters in Beaverton, Oregon. By 1998, there were 27
different and highly customized order management systems that did not talk well to the
home office in Beaverton, Oregon. At that time Nike decided to purchase and implement
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MITS6004 Assignment 1
a single- instance ERP system along with supply chain and customer relationship
management systems to control the nine-month manufacturing cycle better, with the
goal being to cut it down to six months.
• PLAN
The company developed a business plan to implement the systems over a six-year period,
with multiple ERP rollouts over that time. The plan called for the implementation of the
demand planning system first while working through the ERP system and supply chain
implementation.
• IMPLEMENTATION
The demand planning system was implemented first for reasons that made a lot of sense.
The total number of users was small in comparison to the ERP system and was thought to
be relatively easy to implement; however, this turned out not to be the case. When the
system went live, there were a number of problems related to the software, response
time, and data. In addition, training was not adequately addressed, causing the relatively
small number of end users to use the system ineffectively. The single-instance ERP system
and supply chain implementation plan differed from the demand planning system and
called instead for a phased rollout over a number of years. The ERP system
implementation went much more smoothly. Nike started in 2000 with the
implementation of the Canadian region, a relatively small one, and ended with the
AsiaPacific and Latin America regions in 2006, with the United States and Europe, Middle
East, and Africa in 2002. This included implementing a single instance of the system, with
the exception of Asia-Pacific, and training more than 6,300 users. The total cost of the
project as of 2006 was at $500 million—about $100 million more than the original project
budget.
• CONCLUSION: WHAT WAS LEARNED?
The demand planning system interfacing to legacy data from a large number of systems
that already did not talk well with each other was a root cause for misinformation and
resulted in inadequate supply planning.
The demand planning system was complex, and end users were not trained well enough
to use the system effectively.
System testing was not well planned and “real” enough to find issues with legacy system
interfaces.
• The overall business plan for all the systems and reasons for taking on such a highly
complex implementation were well understood throughout the company. Thus, Nike had
exceptional “buy-in” for the project and was able to make adjustment in its demand
planning system and continue with the implementation. The goal was to ensure business
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MITS6004 Assignment 1
goals were achieved through the implementation, and not so much to get the systems
up and running.
• Nike exhibited patience in the implementation and learned from mistakes made early in
the process.
• Training was substantially increased for the ERP implementation. Customer service
representatives received 140–180 hours of training from Nike, and users were locked out
of the system until they completed the full training course.
• Business process reengineering was used effectively to clarify performance-based goals
for the implementation.
CASE QUESTIONS
1. How could Organizational Project Management (OPM3) have helped to identify the
problems with implementing the demand planning system?
2. What were the three primary reasons Nike was successful with the ongoing ERP
implementation?
3. Why was a phased rollout the correct decision for Nike?