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Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
Nike: Collaborating for a Sustainable Supply Chain
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Nike: Collaborating for a Sustainable Supply Chain

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Dawn Vance, Director, Global Logistics, Infrastructure Sustainability, Nike Inc …

Dawn Vance, Director, Global Logistics, Infrastructure Sustainability, Nike Inc

From the 2010 Responsible Supply Chains Conference at Stanford Graduate School of Business: http://www.gsb.stanford.edu/scforum/ser/conference
For more resources from previous years:
http://www.gsb.stanford.edu/scforum/ser/conference/resources.html

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  • 1. Innovate For A Better World Collaborating for a Sustainable Supply Chain Stanford SER ConferenceGlobal Supply Chain Management April 29, 2010 1
  • 2. Agenda Innovate For A Better World• Profile of Nike Inc. – Supply chain size & complexity• Nike’s sustainability journey• Risk as opportunity• Translation to the business – Our North Star – Product – Global Logistics (Transportation & Distribution)• Collaboration models – Internal – External• Summary – Q&A 2
  • 3. NIKE, Inc. Innovate For A Better World• FY09 Revenue = $19.2B (+3% over PY)• Over 35,000 Employees Worldwide• We do business in 160 countries• We partner with 700 factories in 52 countries • 1,100 Factories including Affiliates • These factories employ over 800,000 workers 3
  • 4. NIKE Affiliates 4
  • 5. Product Diversity 5
  • 6. Premium Consumer Experience • NIKETown • NIKE.com • NIKE.net 6
  • 7. From Awareness to Execution Innovate For A Better World 2005 Nike exceeds WWF target of 2001 (October) Nike 13%reduction - reaches 18% CO2reduction joins WWF Climate Savers. Sets CO2 1997 emissions reduction targets for owned operations and business 2006 (June) Nike 2009 Nike develops 1992 (September) completes phase out of all f Nike first Nike commits travel carbon intensity gases in Nike branded to fully phase baselines in distribution learns about the footwear operations 2007 (May) SF6 out of 2003 global warming Inbound LogisticsNIKE footwear and potential of SF6 Nike achieves carbon begins to Nike sets new transition develops a containment (reductions public targets in carbon per unit and $ some models baseline of to Nitrogen inbound logistics Net Revenue) and subcontracted Nike publishes 3rd CR manufacturing Report (Jan ‘10) 2009 (June – US) EPA 1997 2001 includes CO2 under the Clean 2007 GLOBAL air Act (providing the 1988 The (December) Kyoto (September) The opportunity for executive action without specific World IPCC releases its (Feb) IPCC further legislation). EPA Protocol 4th 2005 Meteorological adopted. Third Assessment. outlines proposed reporting Organization and the United Nations 1995 The IPCC’s Reaffirms warming trend and human (February) The Kyoto Protocol begins. assessment requirements for GHG emissions. Waxman-Markey Environment Second Climate impact Bill outlining cap & trade for The United States, refuses CO2 emissions clears House Program establish Assessment is to ratify IPCC published,serving as the basis for Kyoto Protocol 7
  • 8. 8
  • 9. WHY?Maxim 0.8 Do the Right Thing 9
  • 10. WHY? The next billionconsumers will not look like the first billion. 10
  • 11. KEY TRENDS ARE ACCELERATING… WHY? Our current business model is impacted PLAYERS PLAYING FIELD School athletic budgets in the Carbon legislation on the horizon US alone cut by 25% in the past Oil & energy prices continue to rise year Stricter product legislation Sport participation in decline underway (e.g. basketball participation Re-use, Re-cycle becoming - 18% since 1998)* legislation Youth obesity and lack of Potential brand impact from access to sport threatens the factory closures, consolidation, quality of youth life globally. and shifts in supply chain Margin erosion from having to internalize the costs of these external events 11 *National Sporting Goods Association
  • 12. WHY?Business Risk <=> Business Opportunity THREE POSSIBLE SCENARIOS HITTING THE WALL OPTIMIZATION REDESIGN FOR RESILIENCY 12
  • 13. How NIKE looks at Risk Climate change Water scarcity The TNS Funnel Peak soil Food BiodiversityThe margin foraction narrows... Materials Energy escalation Consumption Population growth PRESENT FUTURE 13
  • 14. 3 Potential Scenarios“Hitting the Wall”The growth strategy comes to an abrupt stopForces us to rethink our growth plan“Optimization/less bad”Radical resource productivity within existing modelDeceleration, but still need to rethink our growth plan“Redesign for resiliency”• Radical redesign of business model •Create diversity• Pursue a range of options • Allow innovation• Expect the unexpected 14
  • 15. How might this impact the Business? Impact to the Climate Business Labor Oil H2 O Energy Food Cost / Margin Erosion Availability Compliance Product Flow Product Quality On-time Delivery Brand Reputation Economy 15
  • 16. How does thistranslate to Productand Supply Chain? 16
  • 17. INNOVATEINNOVATE 17
  • 18. Innovation Closed Loop 18
  • 19. WE T H20 2 19
  • 20. CONSIDERED INDEX CONSIDERED INDEXENVIRONMENTALLY PREFERRED MATERIALSWASTESOLVENTSINNOVATION 20
  • 21. CONSIDERED INDEX CONSIDERED INDEXENVIRONMENTALLY PREFERRED MATERIALSWASTESOLVENTSINNOVATION 21
  • 22. HOW DO WE SCORE CONSIDERED PRODUCT? Community Compliance Climate Considered Investment CATEGORY EVALUATION SCORE Product chemistry Use of solvents 10 POINTS Reduce waste Manufacturing process 30 POINTS Use Considered Materials Average material score 35 POINTS Change Agents # of problems solved 20 POINTS TOTAL 95 POINTS CONSIDERED GOLD GOLD GOLD PINNACLE PINNACLE SILVER CONSIDERED SILVER SILVER ACHIEVEMENT ACHIEVEMENT BRONZE BRONZE PARTICIPANT CONSIDERED BRONZE PARTICIPANT REDUCE TOXICS REDUCE WASTE USE EPM’S CHANGE AGENTS 22
  • 23. 23
  • 24. RE USE A SHOE:NIKE GRIND SPORT SURFACING Compliance Climate Considered Community Investment INDOOR WOOD BASKETBALL TENNIS COURTS ATHLETIC TRACKS COURTS NIKE GRIND FOAMNIKE GRINDUPPER NIKE GRIND RUBBER 24
  • 25. Sourcing & Manufacturing • Sourcing model continuously assessed • Optimized network across 7 Brands with 1,100 factories • Working with Factory Partners: • LEAN Manufacturing • Green Factory of the Future 25
  • 26. • Laakdal, Belgium• Memphis, TN• Shanghai, China Nike’s visible commitment to sustainability - Distribution 26
  • 27. Getting trucksoff the road 27
  • 28. TO GROW* OUR WORLD OF SPORT WE MUST... PROTECT OUR PLAYING FIELD WASTE ENERGY WORKERS PROTECT OUR PLAYERS’ ACCESS TO SPORT We know there is a direct correlation between: • Consumption of Resources $ • Waste * COACHES • Operating Expense INSPIRATION • CO2 Emissions • Efficiency 28
  • 29. • How does Nike Collaborate to achieve business results? 29
  • 30. SUSTAINABLE BUSINESS AND INNOVATIONWE RESET OUR CAPABILITIES TO DELIVER LAB INTEGRATE MOBILIZE Educate, inspire &  Design create innovative  sustainable products Create lean, green,  Manufacturing  empowered and  & Sourcing equitable supply  chain Expand access to  sport and create a  Marketplace marketplace for  sustainable product Enterprise &  Integrate  Amplify &  Industry level  sustainability in  scale solutions innovation the DNA of the  business 30
  • 31. Internal Collaboration • Redefine teamwork into operating networks • Subject matter expertise found anywhere / everywhere • Orient networks around capabilities for the future • Reconnect around SME • Fully leverage COPY/PASTE – Use technology to communicate without travel 31
  • 32. TRANSLATING CLOSED LOOP FOR LOGISTICS No product to landfill - Reduce consumption A shoe becomes a shoe of oil and energy (Re-Use-A-Shoe X20) (LEED DC designs, LOWER CARBON high output lighting) FOOTPRINT Shift to LOWER NET ZERO Waste from a Renewable Energy WATER OPTIMIZE TODAY’S ZERO DC to a landfill (wind turbines / FOOTPRINT VALUE CHAIN WASTE solar) + INNOVATE CLOSED-LOOP NO Optimize the LEAN & GREEN BUSINESS MODELS TOXICS Recycle Existing Logistics or Re-use MANUFACTURING Network(container utilization, & LOGISTICS EMPOWERED AND modal shift) Packaging Innovation EQUITABLE SUPPLY CHAIN (Package-less Product) WORKFORCE 100% Transparency Measure Source of Oil & Electricity & Report 32 Emissions
  • 33. External Collaboration • Launched at DAVOS in Jan 2010 • The GX is Nike’s new web-based innovation marketplace • Participating Members: • Best Buy • Creative Commons • IDEO • Mountain Equipment Co-Op • nGenera Insight • Nike • Outdoor Industry Association • salesforce.com • 2Degrees and Yahoo! • Nike will place 400 patents in the GX for research purposesTHEGREENXCHANGE 33
  • 34. Global Logistics Infrastructure Sustainability Partner Field of Play CERES Coalition BSR VALUE to Nike Carbon Disclosure Project Carbon Trust SB&I Manages these Advocacy / Policy / Risk WWF TCG Corporate Relationships Clean Climate PEW Center Deloitte • Risk Assessment2020 • Policy Issue Leadership World Resources Institute (WRI) (GHG Protocols) • Early Access to Regulatory Requirements • Stakeholder Feedback World Economic Forum (WEF) (Emissions Modeling) • External Reporting • Alignment of risk & opportunity w/SB&I Carbon War Room (Logistics Retrofits) Collaborative Partnerships H JITI Consumer Climate • Facilitate Transparent Dialog w/PartnersV O Sterling Planet Counts • Insight to long range goals & strat plans • Innovation roadmap (5-10 yrs)A R AMR Research RILA • External Benchmarking (Best in Class)L I Euro Centric BSR Clean Cargo EPA SmartWay WFSGII • Consulting for competencies we lack Working Group • Carbon Footprint Metrics & ReportingU Z • Joint Ownership of reduction goals • Community Partnerships (i.e. TN)E O Wal-Mart IKEA Pepsi-Co Starbucks Dell J&J N Business Results Casella / SOEX WM • Key Sustainability Initiatives Drive Retail Partners Reductions in Operating Expense and CO2 IDS Prologis JCPenney • Proving the Business Case - ROI2 Menlo Kohl’s • Business Results supported by contract Maersk UPS FinishLine APL DHL FedEx agreements with key Partners Dick’s Schenker YRC 2010 NYKLine Interstate All Partners MUST have • Global Credibility Design Sourcing & Mfg Logistics Infrastructure Retail Consumer • Ability to address the Gaps • Defined Deliverables 34 Waste VOCs Energy Fuel Packaging • Direct Business Benefit to Nike
  • 35. Industry CollaborationBSR Clean Cargo Working GroupFall Meeting 2008 New York, NYEnvironmental Performance Assessment• Tools for inputting and analyzing data• Agreed upon measures• Evaluation methodology (Point system)• Analysis and reporting of data (scorecard)• Commitment to report • 100% owned fleet for CY 2008 • 100% owned & chartered fleet CY 2009 35
  • 36. Business Partner Collaboration Innovate For A Better World• Apparel Magazine Sustainability All-Star awarded to Nike – March 2010 – Measuring the company’s environmental footprint “and then doing something about it” – The innovative Sustainability Collaboratory – The Northridge DC and the Laakdal DC were cited for their sustainability initiatives – The Considered product line and its steps toward waste reduction and materials reuse – The efforts to reduce the carbon footprint of your transportation and logistics operations through work with the BSR Clean Cargo Working Group• Nike was nominated by one of our key logistics service providers - Maersk 36
  • 37. Inbound Transportation 2020 Modeling Absolute CO2 Emissions 2020 Modeling Inbound Emissions vs. Units Shipped (000s) 450,000 1,200,000 Absolute MeasureCO 2 E m issio n s (M etric T o n n es) 400,000 1,000,000 350,000 Un its S h ip p ed (000s) 300,000 800,000 250,000 600,000 200,000 150,000 400,000 100,000 200,000 50,000 0 0 FY03 FY05 FY07 FY09 FY11 FY13 FY15 FY17 FY20 Goal of 30% Absolute Reduction from 2003 Baseline CO2 Emissions Units Shipped • 12% emissions reduction in FY09 • Largely due to a 39% reduction in air freight (47k tCO2) and reduction in volume 37 • Small reductions from all other projects combined (<15k tCO2 total)
  • 38. Opportunities to Reduce Carbon In the Supply Chain Innovate For A Better World Emissions Emissions Potential Feasibility Reduction Reduction Things we can do Opportunity Abatement Index (1-10) Potential (% of total) 1. Clean vehicle technologies H 8 18% Potential Focus Areas 1. Enable cleaner sourcing/manufacturing 2. De-speeding the Supply Chain H 8 18% 2. Lower emissions in transit 3. Optimized networks H 8 13% 3. Enable cleaner warehouse operations 4. Reduce transit distances 4. Energy efficient buildings M 9 5. Remove nodes / legs 5. Packaging reduction H 7 14% 6. Reduce total volume and/or mass shipped 7. Consolidate Movements 6. Low carbon sourcing – 16% H 6 8. Contribute to reductions elsewhere manufacturing 9. Increase recycling/re-use 7. Training * communication M 8 8. Modal switches M 7 12% 9. Reverse logistics / recycling M 6 9% 10. Nearshoring L 7 <1% 11. Increase home delivery L 5 12. Reduce congestion L 3World Economic Forum – Supply Chain Decarbonization – the Role ofLogistics and Transport in Reducing Supply Chain Carbon EmissionsAlso Adopted by US EPA SmartWay Program 38
  • 39. Prioritizing the Sustainability Portfolio Global Logistics Infrastructure Innovate For A Better WorldHigh 1. LEVERAGE MORE De-speeding the Supply Chain Clean Vehicle (18%) Technologies Energy Packaging Reduction (18%) 1. Maersk (N. Am) Efficient (14%) 2. INVEST TO SAVE & ENABLE Buildings (tbd %) Optimized NetworksFEASIBILITY INDEX Systems & Tool Low (13%) Collaboration Reverse Carbon w/Logistics Logistics Modal Switches Sourcing & Manufacturing Delivery Partners Logistics (9%) (12%) (16%) CR Scenario 1. Factory of the Future Reporting Planning 1. Scale RAS to 20X & Tools transparency Near Shoring (?%) 1. West Coast Transload (NA) add Apparel FY10 2. Geography Deconsolidation (NA) 3. Zone Skipping (NA) 4. Northridge Re-location (NA) 1. Design, Build Operate LEED Equivalent DCs 5. Pool Distribution (NA Retail) 2. Retrofit LEED designs to existing DCs 6. Increase Container Fill Rate (NA/Europe) (including LSPs) 7. Shift to larger containers (NA/Europe) 3. Eliminate Waste from DC operations 8. Deep water port Vietnam 1. Lightweight FW cartons ----------------------------------- ------------------------------------------------------------------ 2. Redesign FW inner carton 4. Shift to renewable energy (as % of total) 9. X-Brand delivery (co-loading) 1. Carbon Check Pilot Global Roll-out (In & Outbound) 3. Recycle/Reuse cartons in DCs ** SEE LIST ** 2. Enablon Emissions for DC Energy, Waste & Water 4. Reduction of Dunnage ---------------------------------------------------------------- ------------------------------------- Retrofits to existing fleets (38-56%) 3. SAP Integrated Carbon Accounting (Future) 5. Carton-less delivery 1. LNG Trucks (N. Am.) 4. Traceability Scope 1,2,3 2. Wind power (sails/kites) (<20%) 3. Air Lubrication (<15%) 4. CRP Propulsion (<12%) 1. Air Freight Reduction (All GEOs) 5. Waste Heat Recovery (<10%) 2. Rail Optimization (Europe) 6. Efficiency of Scale (<4%) Tonnes CO2 e FY09 3. Inbound Barge (Europe) 7. Propeller Tip Winglets (<4%) Inbound Transportation = 355,800 -------------------------------------------------------- Distribution Operations = 47,296 8. Ocean Vessel 2030 (70% emissions) reductionLow Low ABATEMENT POTENTIAL High World Economic Forum – Supply Chain Decarbonization – the Role of Logistics and 39 Transport in Reducing Supply Chain Carbon Emissions
  • 40. What Challenges our Current Business Model? Innovate For A Better World• Our business model is built upon consumption of non-renewable resources• Our success is tied to material consumption• We will be forced to internalize growing amounts of external cost & risk• An inflexible supply chain does not satisfy customer needs • Where and when they want it We will optimize our existing network While simultaneously creating disruptive innovation With trusted business partners to create a collaborative future 40
  • 41. Innovate For A Better WorldThank You 41

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