Nike - Failure in Demand Forecasting*



Case Code : CLOM008
Publication date : 2006
Subject : Operations
Industry : Footwear
Teaching Note : Available
Length : 05 Pages
Price : Rs. 100

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Key words:

Supply chain, Demand forecasting, Nike, Footwear, Inventory, i2 Technologies Inc, Automated projections, Back orders, 'make-to-sell', 'make-to-order', order management systems, Gartner Inc, SAP, ERP, Fortune


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The caselet provides an overview of Nike as a company and how it grew up to be one of the premier footwear manufacturers of the world. It focuses on how the company failed to properly select a correct demand projection model. The problems that arose out of this failure to implement the new technique are also discussed in detail. Finally, the caselet presents the remedial measures taken by Nike.


   The importance of accurate demand forecasting to streamline inventory management
   Selecting an appropriate demand projection model
   Factors that must be kept in mind while implementing new modernized forecasting software


Established in 1964, Nike is one of the world's leading designer, marketer and distributor of athletic footwear, apparel, equipment and accessories for sports and other fitness activities. The wholly-owned subsidiaries of Nike include Converse Inc, Bauer Inc., Cole Haan, Hurley International LLC, and Exeter Brands Group LLC.

In January 2006, Fortune magazine listed Nike as one of the 100 best companies to work for in the US. 2005 was a record year for sales and profitability at Nike Inc. (Nike)...

Questions for Discussion:

1. What was the forecasting approach practiced at Nike prior to implementing i2's demand forecasting and supply chain management system? What reasons prompted Nike to change its demand forecasting techniques? What was the outcome of this change?

2. What were the likely reasons that resulted such a huge gap between demand and supply at Nike? What, in your opinion, could have been done to avoid this situation?