Nike Lean Manufacturing Process Improvement Operations

Lean manufacturing commonly refers to the ability of a company to optimize assets and process to help minimize waste. For Nike, this includes optimizing the flow of products throughout the value chain. This issue is heavily complicated by Nike’s status as a leading global apparel operation throughout the world. Here, lean operations must be adapted to properly address issues from both a geographical and legal standpoint. Without regard to these issues, process improvement initiatives may become outdates or out of touch with economic reality. For example, in , Nike’s brand was heavily tarnished due a sweatshop scandal. The operation itself was completely legitimate as it complied with all applicable laws and regulation prevailing at the time. Likewise, the operation was very lean resulting in very optimal profit margins and product productivity. However, the lean operation was conducted in such as way that women and children were susceptible to very inhumane working conditions. These conditions, albeit lean, where disastrous for the image of Nike and what it’s brand. As a result, lean operations and process improvement from the standpoint of Nike not only need to be view from a quantitative lens, but they also must be viewed from a qualitative perspective as well. Today, nearly 30 decades after the scandal, the company appears to be flourishing through model adaptions to its lean operating practices and process improvement procedures (Dennis, 2002).

To begin, Nike’s current process borrowers heavily from the Toyota Way management system. Here, the Nike process is predicated on two core strategic pillars: Respect for People and Continuous Process Improvement. This process at Nike is used to help empower and encourage employees to identify methods in which to improve overall production. This in term helps the employee improve their overall skill set while also increasing the value they contribute to Nike.

To accomplish this, Nike first hires managers at each level of the organization designed to spearhead and review all lean manufacturing processes throughout the organization. In addition, the company has also changed each of its factory layouts to be better comply with lean manufacturing guidelines. According to independent third-party audits, this has reduced labor non-compliance of Nike by 15%. The process saw productivity rates increase nearly 20%, 40% faster delivery times, and a 50% reduction in defected products. Nike has continually improved this process over years, and even publishes an annual list of contract factors that have converted to lean factories. In conjunction with this report, the company also publishes an annual CSR report to detail employee satisfaction numbers within the lean factories. This report includes information on pay scales, working conditions, and even has a section detailing problems the factory is facing along with mitigation efforts (Abilla, 2014). An excerpt from the 2020 impact report noting the target waste goals and measurement is below

Nike has also looked to improve the supply chain throughout the process as well. To accomplish this, the organization looked to first establish longer term and more intimate relationship with factors and suppliers. In addition, all suppliers are subject to very rigorous compliance and appraisal standards. The appraisal for example, consists of a risk analysis of the country, a review of the ability of facilities to comply with its lean methodology, and overall financial ability of the facility to improve processes. Here, to improve the lean process, the company has committed to using 100% renewable energy in owned and operated facilities. The company has also improved operations by changing the overall materials in used to manufacture its shoes. This includes all elements of the manufacturing process such as dyeing, chemical makeup and more. Figures 2 and 3 show how Nike targets these areas in the manufacturing process and the metrics it uses to evaluate success of the lean operation.