A new partnership has entered the supply chain industry. Nike Inc., the athletic apparel company, recently struck a deal with private equity firm Apollo Global Management LLC., The Wall Street Journal reported. This move comes amid calls for more efficient and effective supply chain management from retailers and rising popularity of the Nike brand.
Details of the Partnership
According to The Wall Street Journal, Apollo bought out two of Nike's former apparel suppliers, New Holland and ArtFX, located in North and Central America respectively. This move was meant to better align the supply chain, bring it closer to Nike's Beaverton, Oregon base and promote sustainability, according to Forbes.
The Need for a New Supply Chain Strategy
Nike's partnership with Apollo is the latest move in its recent revamp of supply chain management. As FX News Call explained, the apparel company recently faced logistics issues, as deliveries were not making it to retail stores in a timely manner. The implications for customer satisfaction and supply chain cohesion drove Nike to create a distribution center spanning 28 million square feet in 2015.
According to WSJ, this and other initiatives led to a revenue increase of 6 percent, raising the quarterly income to $8.24 billion in May this year. However, to be poised for future growth, Nike must prepare for its boom in popularity thanks to the Olympic games in Rio.
Nike has a long history of making products for athletes competing in this international event. In fact, the megabrand provided equipment for 1,500 athletes during the games in Rio, focusing on creating aerodynamic and breathable items.
This has led to increased demand for products from the public. Speaking with CNBC, Nike's senior director for athlete innovation Tobie Hatfield explained that the products he creates are designed specifically to enhance performance and have done wonders for track stars like Allyson Felix and Christian Taylor. Now, everyday consumers want a piece of the action.
"By working with the best athletes around the world, it authenticates the product and then trickles down to the consumer," said Hatfield.
Now, he is tasked with revamping the products to meet that increased demand, which requires efficiency in the supply chain.
How to Make the Supply Chain More Efficient
There are several tactics brands like Nike can employ to increase efficiency, ensuring they tackle logistics issues and meet rising consumer demand. Companies can take a page out of Nike and Apollo's book by better aligning the supply chain. Apollo bought out the North and Central American suppliers, but other businesses can improve alignment with automated data collection.
Having data flow seamlessly throughout supply chain management is perhaps the most effective way of boosting collaboration. When everyone has access to the same information, they can accurately and efficiently communicate, avoid errors and backtracking, and find the best solutions for supply chain success.
Adopting a mobile strategy can help. According to the RFgen white paper, "The Power of Adopting an Enterprise Mobile Strategy," this allows IT executives and managers, who may have minimal background knowledge on ERP software, to meet the changing requirements of customized projects and mobile application upgrades. RFgen's mobile suite of products is a great option considering it has various deployment options from a single platform. This gives supply chain management all the benefits of flexibility and mobility in one unified strategy.
The Role of Reverse Logistics
As with Nike, logistics is often an area in need of improvement when it comes to efficiency. According to Supply Chain 24/7, companies can quicken the pace of their operations by better managing reverse logistics. Improvement in this facet of the supply chain can also lead to cost containment, as reverse logistics accounts for as much as 10 percent of total cost.
First, it's important to look at all that can go wrong in reverse logistics. As Supply Chain 24/7 explained, some of the most common issues include misloading, damaged product, delivery delays and customer returns. Brands must narrow down what occurrences most frequently happen in their supply chain.
Next, supply chain management must learn from these mistakes by identifying the cause of the mishaps. For example, was there a product surplus? Did suppliers poorly package the items? After determining the reason behind issues with reverse logistics, those in the supply chain must come up with ways to prevent the incidents from happening again or to mitigate risks when problems arise.
Whatever policies supply chain managers come up with must be adhered to by all stakeholders. Speaking with Supply Chain 24/7, Wilson Lester, supply chain senior vice president at Rite Aid, explained that certain technologies can help. He highlighted the example of using a device that scans the barcode then populates with term rules. This type of instruction and data collection is crucial for ensuring all constituents along the supply chain can tackle any issue that arises in reverse logistics.