Nike is the dominant company in the US athletic shoe and apparel market, enjoying a 42% market share. Its main competitor is Adidas, which has a 22% share of the global athletic footwear and apparel market. In 2010, Nike earned a 42% rise in net income compared to the previous year, while Adidas' sales were significantly lower. Nike manages its large global inventory effectively with an inventory turnover ratio higher than industry average, and employs forecasting and logistics software to match supplies with demand across its worldwide regions.

1. NIKE CORPORATION
Introduction
NIKE, world’s major public trader of athletic footwear and apparel, currently enjoys a 42%
market share of the domestic footwear industry, with sales of $3.77 billion is dominating the US
athletic shoe market.It designs and sells wide range of footwear and uniforms for variety of
sports. The company has more than 700 retail stores worldwide and about 23000 retail accounts
in US. Most of the manufacturing units are located in Asia, including Indonesia, China, Taiwan,
India, Thailand, Vietnam, Pakistan, Philippines, and Malaysia.
Major Competitor
Adidas AG is the major competitor of Nike Inc. Adidas, is not completely different from Nike in
terms of products they offers.Adidas is into the manufacturing and marketing of athletic as well
as non-athletic footwear and apparel. Nike has a notable advantage when it comes to economies
of scale. Adidas Group is second only to this company in terms of sales and market share. It
enjoys 22% of the worldwide athletic footwear and apparel market.
Source: Daily Finance
Nike earned 42% rises in its total net income in the year 2010 from 1486.7 to 1907.7M
respectively (Nike income statement, 2010).On the other hand, Adidas Group had total sales of
$15,889.1M in 2010 (Adidas income statement, 2010) which was remarkably low as compared
to the sales of Nike Corporation.
Inventory Management

2. Nike’s inventory turnover ratio is 4.4 (Nike Inc,NYSE:NKE)which exceeds the industry average
of 4.34 (Weygandt, 1996). A slight Reduction in the inventory level is required. Inventory
turnover management will benefit Nike greater cash flows, reduced storage costs and less
product spoilage. It can also reduce Nike’s inventory of out-of fashion shoes and clothing. Nike
employed MRP software helps the store managers to keep the track of the materials to be
purchased through an online exchange result in significant cost and time saving to the company
(Shah, 2009).
Demand Forecasting
Nike’s global operations were divided into 5 geographical regions which made the
Supply Chain practices at Nike highly inadequate. Nike implemented the Supply Chain Software
to forecast the demands. Its main purpose was to match the supplies with demand. But the
company announced fall in company profits in the third quarter of fiscal year 2001 blaming
entirely the supply chain software implemented in June 2000.
The system of demand management was a collective effort of over hundreds of
information specialists within the company. It was designed to run the future program of Nike
introduced by Nike in 1970’s to manage the inventory more efficiently. The system managed the
retail partners of Nike who placed the orders six month prior to the delivery date. Trying to
forecast too far out ahead, was the major reason of this system’s failure, followed by inadequate
information and centralized processes.
The software company reengineered the existing processes at Nike and by the end of
2003 the processes made considerable progress. Nike shifted its focus to SAP and ERP system
which depends on order and invoices than. Current system at Nike closely monitors the
movement of goods from raw materials to the finished products. Nike converted its supply chain
processes from make –to-sell to make-to-order that resulted in the record sales in 2005.
Logistics
Logistics at Nike is of multiplex nature which involves three product lines; footwear,
apparel and equipment that are managed via four company’s logistics service providers’ network
within four regions. This setup is a collaborative process between the regions and Nike’s logistic
group.
APL Logistics and Maersk Logistics are responsible for all the processes ranging from
handling to unloading of cargo and the collection of documents.Nike controls its logistics in-
house rather than outsourcing to the third party.Large volume of cargo is shipped directly to the
customers than to Nike facilities in US region, making Nike in constant contact with customers
regarding dates and freight movement.

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