Nike Inc. Operations Management: 10 Decisions, Productivity

Nike Inc 10 strategic decisions of operations management and productivity areas, sports shoes, case study analysis
A pair of Nike Zoom Elite 2 shoes. Nike Inc. operations management includes standards and policies to support optimal productivity in all strategic decision areas of the global business. (Photo: Public Domain)

Nike Inc. is a leading global manufacturer and seller of sports shoes, apparel and equipment. This market position is partly a result of effective and efficient operations management (OM). To ensure success, Nike’s managers must continually examine and improve strategies and approaches used in the 10 strategic decision areas of operations management. These areas pertain to the main decisions in managing streamlined operations that effectively address business goals and objectives. Nike’s operations management considers talent management, product development, and total quality management as some of the most important variables in these 10 strategic decision areas.

The 10 strategic decisions of operations management (OM) at Nike Inc. cover a wide variety of issues, considering the company’s global market for sports shoes, apparel and equipment. Nike effectively addresses these decision areas through standards consistently applied in operations management throughout the global organization.

Nike’s Operations Management, 10 Decision Areas

1. Design of Goods and Services. This strategic decision area deals with the design of Nike’s athletic footwear and other products. The operations management objective is to ensure that product design aligns with organizational capabilities and business goals. In this case, Nike Inc. focuses on designs based on advanced technology and current market preferences.

2. Quality Management. Nike emphasizes quality in its processes and products. The objective in this strategic decision area is to satisfy consumers’ expectations about product quality. The company’s operations management addresses this concern through high quality standards and the application of total quality management (TQM) in the production of sports shoes, equipment and apparel.

3. Process and Capacity Design. This strategic decision area requires that Nike’s operations management must prioritize streamlining and efficiency of production. The objective is to ensure adequate, effective, and efficient production. At Nike, operations managers apply continuous improvement strategies to support the company’s production goals and needs based on market dynamics.

4. Location Strategy. Physical location is the typical concern in this strategic decision area of operations management. The objective is to optimize costs and efficiency through proximity to employees, suppliers and the target market. In the case of Nike Inc., the operations managers apply a corporate strategy that chooses production facility locations based on costs and nearness to the most significant markets. For example, Nike Inc. has sports shoe suppliers in Southeast Asia because of the cost advantage based on cheaper labor in the region.

5. Layout Design and Strategy. Nike’s operations management deals with the layout design of its facilities. The objective in this strategic decision area is to optimize workflow based on human resources, capacity requirements, technology, and inventory requirements. Nike’s operations managers apply corporate layout design and strategy to company-owned facilities only. For example, the firm uses office layouts where employees can move easily. The factories that produce the athletic shoes, apparel and equipment are not under Nike’s control in terms of layout design and strategy.

6. Job Design and Human Resources. Human resource adequacy and maintenance are the objective in this strategic decision area of operations management. Nike Inc. satisfies this concern through internal leadership development, along with coaching and mentoring. The company also has regular evaluations of job assignments to ensure person-job fit.

7. Supply Chain Management. Nike has excellent supply chain management, which facilitates efficient production to support the global sports shoes, apparel and equipment business. The objective in this strategic decision area of operations management is to align the supply chain with the company’s overall strategic aims. Nike Inc. satisfies this objective through supply chain automation and optimization of transport distances among suppliers, production facilities, distributors and retailers.

8. Inventory Management. The objective in this strategic decision area is to maintain operations management that minimizes inventory costs while maximizing its effectiveness and efficiency. Nike’s operations managers apply the perpetual method of inventory management, which involves continuous monitoring and movement of inventory from the supply chain to the distributors and retailers.

9. Scheduling. Nike’s scheduling approach is primarily concerned with corporate operations and the coordination of the supply chain with distribution and retail operations. In this strategic decision area of operations management, the aim is to maximize resource utilization. Nike Inc. managers satisfy this aim through automation. Corporate office schedules are standardized, while supply chain schedules are adjusted according to the conditions of the market. Nike applies changes to the supply chain based on market demand for its athletic footwear, equipment and apparel.

10. Maintenance. Nike’s maintenance strategy considers adequacy of all resources. Adequacy of human resources, facilities and capacity is the objective in this strategic decision area. Nike’s operations management implements continuous recruitment programs to support HR needs, as well as reward programs and career development strategies for maximum retention of employees. For facilities, the company has dedicated teams to regularly evaluate facility and equipment integrity and requirements. The companies that manufacture Nike shoes, apparel and equipment are responsible for their own maintenance.

Productivity at Nike Inc.

Nike Inc. operations management supports maximum productivity of corporate offices, the supply chain, distribution network, and company-owned retail facilities. There are a variety of measures applied to determine actual productivity levels. In this case, Nike uses the following criteria to measure productivity in some business areas:

  1. Revenue per square foot (Productivity of Nike’s retail stores)
  2. Pair of shoes per hour (Productivity of Nike suppliers)
  3. Items per day (Productivity of inventory personnel)
  4. Documents per day (Productivity of Nike’s corporate offices)
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