Virtual Supply ChainsA Look at Nike.ppt

Virtual Supply ChainsA Look at Nike Virtual Supply Chain Virtual Supply Chain Virtual Supply ChainBenefits Costs Outsource non-core activities Allows Nike to focus on their core competencies of: Product Design Marketing AIR SOLE Technology Virtual Supply ChainBenefits Costs Having a virtual relationship with suppliers and the companies who assemble Nike products allows them to: Reduce administrative costs Payroll costs Switch to companies that provide low labor costs and a quality product Virtual Supply ChainBenefits Speed Having a virtual supply chain, Nike can increase the speed their product flows through the supply chain Send new designs to suppliers who produce shoe parts Suppliers send these shoe parts to the assembly companies Ship the finished products to distributors worldwide This allows them cut down on the amount of time required from the initial design, to production and then distribution Virtual Supply ChainBenefits Diversity of suppliers A VSC allows a company to search for and use a wider range of suppliers Although geography may separate them they can still communicate electronically Having multiple suppliers that you can trust allows you to avoid emergencies in your supply chain With more suppliers available a company is more flexible Virtual Supply ChainDisadvantages Very costly to implement technical components of a VSC Integration with suppliers is complex and timely Building relationships with certain suppliers can be difficult because of geography Control can be lost Small glitches could equal huge losses Effects of miscalculations can take years to reverse Trust issues can cause delay in processes Trend predictions Virtual Supply ChainDisadvantages Nike and i2 Technologies Five lessons to learn Be patient Define a business goal Understand process limitations Don’t be discouraged by failures Do not lose focus on goals Virtual Supply Chain Technology Electronic Data Interchange (EDI) The transfer of data between