Enterprise Resource Planning of Nike

Nike was founded by Mr. Phil Knight and his past coach Bill Bowerman in 1964 and they started Blue Ribbon Sports. Knight’s first shoe was called Tiger and then began distribution of shoes. Blue Ribbon got great success in 1971 and Knight changes the company name “Nike”. In 1971 it introduced Nike’s first brand line. Nike launched its product line in 1979. The new version of its Air shoe which was very successful and it was known as Air Jordan; introduced in 1985. Nike opened its first retail outlet in Portland, Oregon in 1990. In 1991 the company was very successful and its revenue reached USD $3 billion. Company began selling its products directly to customers from its website. Nike is the world’s leading sports and athletic shoes. Nike is the major manufacturer of sports equipment with $18.6 billion USD in the year of 2008. Nike has 30000 employees in worldwide. (Nikebiz:company overview, 2010)

Nike Mission Statement

“To bring inspiration and innovation to every athlete* in the world * If you have a body, you are an athlete.” (nike, 2010)

Introduction

Nike had generated profits of $97.4 million and its profit dropped down by 50% in February 2001. Nike said that it was because of the failure of supply chain software produced by i2 technologies. Both companies blamed each other. This failure also effected Nike’s reputation. The supply chain software was the first segment of NSC (Nike Supply Chain) project from SAP and also customer relationship management software from Siebel System. Analysts pointed out the fault of customization of the software and over demand forecasting. (Koah, 2004)

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Company successfully implemented (NSC) Nike Supply Chain project by 2004. The (NSC) Nike Supply Chain project is centralized planning moving and manufacturing. At last Nike got success in Implementing ERP and it became the desired approach for those who want to implement the ERP systems in their company. Christopher Koch (Editor of CIO Magazine) stated that “If it was easy, everyone would just do it.” In the late 1990, most companies avoided to adopt ERP because of the huge cost of ERP systems. (Koch, 2004)

“The lesson of Nike’s failure and subsequent rebound lies in the fact that it had a sound business plan that was widely understood and accepted at every level of the company. Given that resiliency it afforded the company, in the end the i2 failure turned out to be just a speed bump.” (Koah, 2004)

Products Range

Nike has wide range of sports equipment, running shoes, and jerseys and may other products as shown in figure 1.

ERP (Enterprise Resource Planning)

ERP entitles a company’s information system which can bring more closely the company’s departments and functions like human resources, finance and inventories. It also creates the link between customers and producers.

Introduction of ERP (Enterprise Resource Planning)

Enterprise Resource Planning is the enterprise system tool which manages demand and supply. It has the ability to make link between customers and suppliers. ERP also provides the high degree of integration between purchasing, manufacturing, marketing, sales, logistics and marketing. ERP is the tool which can provide high level of customer services and productivity and also lower the cost. (Wallace & Kremzar, 2001)

Enterprise Resource Planning is a company which increase it sales by 20% because of ERP. The vice president states that “ERP has provided the key to becoming a truly global company. Design can be made with the accurate data and with the process that concretes demand and supply across border and oceans. This change is worth billion to us in sales worldwide”. (Wallace & Kremzar, 2001)

The Director of ERP “For the first time ever, we have a good handle on our future requirements for components raw and materials. When our customer demand changes, we—ourselves and our suppliers—can manage changes to our schedules on a very coordinated and controlled basis. I don’t see how any company can do effective supply chain management without ERP.” (Wallace & Kremzar, 2001)

Origin of the Term ERP

The Enterprise Resource Planning ERP developed from Manufacture Resource Planning (MRP). The ERP was introduced by an analytical firm Garner. Enterprise Resource Planning has all the functions of an enterprise except organisation business or charter. Many organisations like IBM, Dell and HP Microsoft, Intel and many other organisations are now using ERP systems. The ERP systems are typically for large and more broadly based applications although it is also used in small and medium sized businesses. The ERP systems provide standardization, lower maintenance and it can store all data in one database. So, we can say that it has greater reporting capabilities. ERP includes other applications like Manufacturing Resource Planning (MRP), Financials Resource Management (FRM), Customer Relationship Management (CRM), Supply Chain Management (SCM) and Human Resources Management (HRM). (Leon , 2008)

Overview of ERP

Many organisations choose to implement one part for ERP systems and stand-alone systems for the other ERP applications need to develop an external interface to the other ERP system. Because in an organisation one vendor choose to use human resource management system and the financial system choose another and integration between those systems. It is very common in midsized retailer and the retail sector will have a point of sale (POS) and financial application then they have a specialized application to handle other business requirements like logistics and merchandising. (Leon , 2008)

The quality of ERP system is that it provides a single database which contains all the data for the software module also shown in figure 3:

• Manufacturing
• Supply Chain Management
• Financials
• Projects
• Human Resources
• Customer Relationship Management (Leon , 2008)

Reasons for Buying ERP Software

In these days when the business environment is increasingly complex and highly competitive then the organisations need the IT system which is highly competitive with time management. The organisations need the outstanding performance in their business by utilizing the time in the correct way. Enterprise system utilize the company time correctly. Enterprise Resource Planning is the planning in which the business resources like material, employees and customers moved from one state to another state. An ERP system maintains the data which connects with the business functions like manufacturing, supply chain, Management, finance, human resource, customer relationship management. (Leon , 2008)

Reasons of ERP projects Failure

Sometimes ERP projects fail if you do not implement them well. There are some of the reasons for the failure of ERP failure.

The company selected the wrong software of ERP for the company. The training of employee is also very important and some organisations don’t train well their employees. Some software is heavily customized and if these are not match with the company’s IT infrastructure then there can be problem. If we do not implement the effective change management strategies then it can be the result of failure of the project. If the business merger leaves out the work in the process then it can be also a big loss.(Glenn, 2008)

There are also some factors from where we can achieve the successful ERP projects by selecting the right software for the company. Give the right training to employees. For implementing the ERP we have to manage each approach and utilize the best practices for implementing ERP software. (Starinsky, 2001)

I found some important realities about ERP are that there is no perfect ERP system exists. We cannot say that any ERP implementation is ever perfect. If two companies have the same ERP software but the implementation cannot be the same because every company has its own style of implementation. (Leon , 2008)

SUPPLY CHAIN MANAGEMENT

Supply Chain Management is a network that is involved buying, making, moving, selling and distribution. (Hugos, 2006)