Feb 04, 2022
by Carolina Sandeman
Nike Innovates Supply Chain for Sustainability
by Carolina Sandeman
Feb 04, 2022

The past two years have definitely been a tumultuous ride for everyone. Although they have brought on plenty of negative aspects, the pandemic has also provided multiple companies with the opportunity to develop new business strategies and implement new, innovative concepts. That’s exactly what Nike did during these difficult times.

With the pandemic afoot, Nike took the opportunity to move up the overhaul of its operating systems. Since consumers were moving onto digital engagement, a consequence of the pandemic, the company started changing its supply chain to cater to clients more directly. From opening multiple regional distribution centers in both Europe and the United States to creating a dedicated train system called Nike’s “Sole Train,” Nike has been busy innovating its internal processes to accommodate the customer’s needs in a faster and more efficient way, aiming to promote long-term growth.

“From early in the global pandemic, we knew that our recovery and return to growth would neither be linear nor intuitive,” says Andrew Campion, Nike Chief Operating Officer in a press statement. “We believed that the immediate and significant shifts we were seeing in consumer engagement would be systemic. So we took decisive action and began building a digital-first supply chain to power Nike’s more direct, faster and precise service of consumers, all while prioritizing sustainability.”

Before the second half of 2020, Nike’s North American operations were mostly centralized in Memphis, TN. Nowadays, besides turning this center into omni-channel facilities, the company has started using a multi-node network that includes regional service centers, one located in Bethlehem, PA, that caters to the East Coast, one in the outskirts of Los Angeles, for servicing the West Coast of the country, and another in Dallas taking care of the South. Across the Atlantic, it also expanded its regional service by adding a center in Madrid to start developing its network outsidebesides the European Logistics Campus in Belgium.

This multi-node regional distribution network is possible through the development of innovative, demand-sensing and inventory optimization technology platforms. These help the brand predict and plan ahead for the consumer demand in each region.

Through the use of AI and machine learning, Nike has been able to forward-position the products consumers are more likely to purchase, creating a more efficient and faster delivery service, that doesn’t hinder sustainability. It has also implemented services like Buy Online, Pick Up in Store, Ship to Store and No Rush Shipping options for sustainably-minded consumers. It also offers Direct Order Drop that guarantees consumers have what they want, at the time and place they want it.

In these new distribution centers, Nike has also implemented the use of more than 1,000 “cobots,”, aka collaborative robots, to help its employees sort, pack and move products, making it a quicker process, decreasing the physical strain and letting them concentrate on higher-value activities.

The changes at Nike also included turning to more sustainable packaging solutions. It has reduced the number of split packages and leveraged pop-up cartons made from 65% recycled content, improving the company’s packaging both on a sustainable and customer level.

At the same time, it has launched sustainably focused initiatives like Nike Refurbished that prolongs the life of gently worked and imperfect products, and refinishing them by hand to sell at select locations.

Due to the nature of the catalyst for these changes, Nike has also been prioritizing health, safety and the well-being of its employees, creating an advanced COVID protocol, including sick leave and pay continuity for essential workers at all levels of the company structure.

This care for workers has now been expanded to include investments in career development, training and community volunteering opportunities. It has also started a partnership with the University of Memphis for its US-based workers, that gives them access to online degree programs focused on personal achievements and career development

“I have always believed that at Nike, it’s both business and it’s personal,” says Campion. “Simply put, the global supply chain is all about people and at Nike our supply chain is powered by an extraordinarily talented and diverse team around the globe.”