Nike partnership with Flex producing innovation coupled with digitization

I spent the last two days meeting with members of the Global Supply Chain and Manufacturing team at Nike, in Beaverton, Oregon.  Nike has developed a partnership with NC State’s Supply Chain Resource Cooperative, and we are working together to explore new approaches to creating a sustainable supply chain.

The visit comes on the heels of my visit to Flextronics, discussed in my last blog.  Not surprisingly, Nike and Flex have the same DNA when it comes to working on supply chain innovation.  In an article on Flex’s website, Recoding the Run, there is a great description of the partnership between the companies as they seek to re-design the process for producing shoes.  This partnership is moving towards the ideal of “mass customization” – using new technology and approaches to do so.  Nike already lets consumers customize select sneakers through its NikeID website, where you can choose between various graphic prints and colors, including adding your name or a personalized message.Once you place your order, however, it can take up to four weeks for your special kicks to travel from the factory to your door. In an age where the “real time” supply chain is emerging as dominant paradigm,  that long lag can be a turnoff.

This idea of driving visibility and flow is a theme a lot of people at Nike are talking about these days.  With massive growth aspirations, Nike is thinking a lot about improving flow and reducing friction in its end to end supply chain.  In one area, Nike wants to slash the wait time for custom orders from weeks to days. To do that, it is working with Flex to develop efficient methods for making orders of one, rather than 1,000—something its factory partners already do well. Flex is experimenting with new laser cutting technology, that allows one-off production  – with no setup changes in between!  The machine can go from cutting size 13 pieces to size 7 pieces without interrupting the factory-line flow, bringing Nike closer to its goal of faster turnarounds for custom orders. “We think that unlocks a lot of growth,” says Eric Sprunk, Nike’s COO. “It’s just a very different way to think about the supply chain that our industry has built over 50 years, where the order goes for a thousand pairs of size 9’s, and they ship in a container to a warehouse to be distributed to a store where you can buy one if you like the color.”

Flex is also working in other areas of Nike’s supply chain, to introduce  other innovations while speeding up the process. Flex hasn’t disclosed what those tweaks will be, but they could involve sensors embedded in equipment to feed back data that could be used to optimize the whole operation.

In my discussions with executives, we talked about whether automation would ever replace the factory network that exists at Nike today.  It is clear that traditional manufacturing methods, and the factories that use them, continue to be an essential part of Nike’s supply chain. These factories will benefit massively from the Flex partnership, too, and benefit from learning how visibility and transparency can be adopted in the global supply chain..