Nike was founded in 1962 as Blue Ribbon Sports by current CEO Phil Knight and the late Bill Bowerman (formally Knight’s track coach at the University of Oregon). They started the company by selling athletic shoes at track meets out of the back of their truck. In 1972, the company became Nike (named after the Greek goddess of victory).
At the 1972 Olympics, the swoosh became an icon when several winning distance runners wore Nike shoes. In 1974, the waffle sole was invented when Bill Bowerman put rubber onto a waffle iron looking for a shoe with better traction and less weight.The resulting “Waffle Racer” took off, and Nike commanded over 50% of the US running market by 1979 (Hoovers).
The eighties saw the rise of the “Just Do It” ad campaign, Air Jordans, Cross Trainers, and the purchase of Cole Haan dress shoes. Today, Nike is the largest seller of athletic shoes in the world. CEO and co-founder Phil Knight still owns more than 80% of the firm. Nike’s supply chain provides a clear view of the extent of the global nature of the company. Nike’s headquarters are in Beaverton, Oregon; however, virtually all of its production takes place outside of the United States.In addition, consumer sales outside of the United States exceeded sales in the United States in 2003 with only 43% of the company’s sales coming from the US.
Nike’s supply chain upstream begins with the materials used in the production of its products. The materials used in the production of Nike shoes are rubber, plastic compounds, foam, cushioning materials, nylon, leather, canvas, and polyurethane films. Materials used in production of Nike apparel are natural and synthetic fabrics and threads, plastic and metal hardware, and specialized performance fabrics.Many of these materials are available in the locations at which the manufacturing takes place, but some specialized materials have to be imported to the manufacturing company. Nike’s primary business is not the manufacturing of its footwear and apparel. Instead, the company focuses on “design, development and worldwide marketing.
” (10-K) This means that Nike uses contract manufacturers to make its products. In fact, almost all shoe-manufacturing activities take place outside of the United States with the exception of the proprietary air bag.Apparel and equipment manufacturing take place in both the United States and around the world. After Nike products are manufactured, they are sent to distribution centers throughout the globe. US distribution centers are located in Wilsonville, Oregon, Memphis, Tennessee, Greenland, New Hampshire, and Costa Mesa, California.
Outside of the United States, Nike operates 24 distribution centers in Europe, Asia, Australia, Latin America, Africa, and Canada.Nike also distributes through independent distributors, licensees in developing countries, and has subsidiaries and branch offices outside the US. Nike sells its products through about 18,000 retailers (Hoovers) in the United States, which includes everything from sports specialty stores such as FinishLine and Footlocker to smaller family footwear stores. Globally, Nike sells its products through an additional 30,000 retailers. The needs, capabilities, and demand of these retailers are as diverse as the locations in which they sell. Nike also operates and sells products in 161 retail stores in the US and 175 retail outlets abroad.These stores range from the NIKETOWN flagship stores, Employee-only stores, to factory outlet stores.
Overall, the supply chain currently takes approximately six months from beginning to end. According to Nike spokeswoman Joani Komlos, product orders take a minimum of six months to process. The current system forces the company to speculate on demand which causes more financial risk.
Since the product shelf-life is usually around three months, product supply can run short and it will generally take too long to re-supply before the product is out of style.