An outlook on the SCM process implementation issues of Nike

Abstract

Nike is one of the leading sportswear and athletic products manufacturer in the world and the brand value the company holds for multiple aspects like the quality products, customer service, value propositions, its marketing strategies and other factors only reflect the facts that the organization has phenomenal growth trends. However when the company had to envisage the issue of losses that are encountered due to the change management issues during the process of implementing SCM in the organization, the transition has not been so smooth and the outcome of the entire process is losses that are envisaged by the organization due to the technical glitches. Keeping in view the need for effective organizational   change management scenario, in this paper the focus has been on the issues and the challenges that have led to the complexities for the organization and how the company could have avoided certain issues if it had followed the Lewin’s Dynamic Stability Model for the organizational change management process.

Table of Contents

Abstract 2

Table of Contents. 3

1.0        Introduction. 4

2.0        Nike – Challenges of Change Management 6

2.1        New SCM system implementation. 6

2.2        Need for effective Process oriented approach. 7

3.0        Change Management theory. 8

4.0         Lewin’s Theory for Nike. 9

5.0         Conclusion. 10

6.0         References. 11

1.0       Introduction

Global developments in terms of consumer behavior, the changing trends, the expectations of the customers in terms of quick delivery process and the need for improving the quality of service and there are so many other reasons that are creating an imperative need on the organizations to upgrade themselves,  enhance the service standards, develop more effective business process management cycle, and event to the levels of organizational change management, there are various reasons why the companies spend millions of dollars in having that paradigm shift from its existing process. (John.P.Kotter, 1995)

Many organizations across the industry verticals envisage the need for effective change management process and make strategic attempt to have the required transformation. Depending upon the intensity of the process and the potential opportunities or the gaps that has been identified, the level of the change management in an organization takes place. It has also become usual practice that when the companies take up the change management process, majority of them fail in terms of successful change management. (ICMR, 2005)

Nike is a global brand in the sportswear and athletic wear segment and the company is valued across the world for the kind of quality products they provide to the customers and the value proposition in terms of brand value. When the company has identified the potential need for them to equip themselves with better supply chain management systems and have spent millions of dollars on the enterprise application system and the supply chain system integration. This part of the context appears to be in right dimension, whereas when the company has encountered some serious inventory issues in the following period that has resulted in a significant loss to the organization, the Nike management realized the damage that has been caused to the organization due to the lack of effective change management approach. (ICMR, 2005)

The problems that have been identified in the root cause for the organization is related to both the technical glitches and the other reason is about the lack of training and facilitation to the staff that are operating on the inventory systems and the other key supply chain points about usage of the enterprise application. Though the problem has been identified in a short time, the kind of computation issues and the combination of the lack of information processing has led to the scenario where the problem has cost the company millions of dollars of losses and also has created an market impact that the project of such huge investments on the SCM has turned to be a failure. (Nelson, 2007)

The reasons that could be attributed to the failure of the new implementation could be many, but the crux is that the impact it has on the organization is much wider and in one of the interviews, the CEO of Nike quotes that the issue of SCM system implementation failure in the company has become a poster subject for discussions and the research studies. In this research paper, the focus and emphasis is on why such failures are encountered by the organizations, the critical success factors that the company should have followed while taking up the organizational change management and the change management theories that could have been reflective to the change management scenario of the organization. (Koch, 2004)

 

 

2.0       Nike – Challenges of Change Management

2.1       New SCM system implementation

The challenges of change management are encountered by many organizations irrespective of their size, industry and the process management which the company is currently adapting. In the case of Nike, when the company has realized the need for an effective supply chain management system has planned for implementing the system, but  had to undergo the disaster. (Koch, 2004)

One of the predominant reasons why the company had to undergo such intrinsic change is that from the management perspective the companies have identified the need for effective supply chain system and has directed for the execution of the system. A small glitch due to the technical error has distorted the process and has caused millions of dollars of losses. It can be considered as a technical issue and can be ignored, whereas when the root causes for such a disaster is identified, it reflects that the inputs provided to the system is not right or its input error from the project design. In any given reason, it is very evident that the organization haven’t had enough focus in the case, providing right inputs to the system development, and secondarily the organization haven’t tested the project effectively in its work environment effectively before taking the system to live scenario. This has weakened the entire process. (Abbasi, Iqra Wajid, & et.al, 2014)

This only reflects the facts that the essential components of change which are very critical for the organizational change management process, are to be adapted by the organizations in an effective manner, where the companies can envisage potential results from such process oriented approach. (Nelson, 2007)

 

2.2       Need for effective Process oriented approach

When the company has been eying on implementing a new SCM system, the requisite care has been taken up by the company in choosing a right service provider, however the crux is that the stakeholder engagement that should have been in terms of providing effective inputs, and monitoring  the system development should have taken place in the organization.

In one of the interviews that is provided by the CEO of Nike, he quotes that “while the rest of the world knows his company for its swoosh buckling marketing and its association with the world’s most famous athletes, the IT world thinks of Nike as the company that screwed up its supply chain?”. (Koch, 2004)

There are many instances where the companies encounter such challenges and this only emphasize the fact that an organization requires potential solutions in terms of effective outcome for the change management implementation and  still there are many organizations that do not exercise enough caution and meticulous approach of getting every possible thing right in terms of organizational change management. (Keller & Carolyn)

Though organizations invest huge volume of investments on the process development that could improve the overall performance, in certain conditions when the companies miss on few intrinsic issues related to the process of change management, then the kind of disasters that are experienced by Nike might be the outcome of implementation. (Koch, 2004)

 

3.0       Change Management theory

In the context of the failures that are envisaged by the organizations in terms of losing on the implementation plans, there are essentially certain key factors or the methodical approach which is being missed by the organizations during implementation. When the companies like Nike encounter such challenges and the resulting losses, then is very certain that in most of the cases the intrinsic insights that are provided by the management theories are ignored. (NHS)

The Lewin’s Dynamic Stability model is a kind of change management approach which emphasizes clearly on three stages during the change management process for an organization. The three stages are classified as Unfreeze, Implement the Change and Freeze.

In the first stage of Unfreeze the companies have to focus on the key factors that could influence the change, identify the potential teams who shall be handling the change management, make them understand the objective of the change management, the need, and the potential risk factors. Also make the entire stakeholders of the project understand the change process and enable an environment where change management can be carried out by the organization (NHS)

In the second stage where the key factors related to the change management are communicated to the stakeholders, the process of implementing the change can be initiated. There could be various queries that could come up from the departments or the staffs regarding the process, and the management should facilitate the system in such a way that any concerns or grey areas of the project have to be evaluated and communicated and the process of change management is initiated by the organization. (ICMR, 2005)

During the implementation phase, once the product or system is launched the companies have to understand the process of implementation, identify any glitches, errors or the rectifications that are required to the system and this process could even be on trial basis. (NHS)

Once the complete structure has been evolved and after ascertaining that the new system implementation is being productive and effective, then the organization shall freeze the entire process and ensure that hereafter in the organization the same process is adapted and no deviation in the process shall be encouraged. (NHS)

4.0      Lewin’s Theory for Nike

The change management process that has been initiated by the organization is aimed at enhancing the supply chain management system that could provide an effective process management in terms of inventory and the distribution management and also due to the integration application; the entire production schedule also could be automated. However the issue that has taken place is that before the adequate level of pilot test the process has been freeze and the real time utilization of the system has been carried out. This issue had a wide impact on the process of implementation and the kind of losses that the company had to encounter due to the technical glitches and the lack of understanding of the process by the staff is a costly affair for Nike. (Nelson, 2007)

According to the Lewin’s theory, In the unfreeze state, Nike should have prepared the internal and external stakeholders for the intended change and once the entire stakeholders are prepared for the change, then the second stage of implementation in terms of implementing the change should have been carried out by the organization. During this process, the new system should have been tested, and the team should have been given appropriate orientation and the new system should have been double checked for the accuracy and the expected results. (Abbasi, Iqra Wajid, & et.al, 2014)

Based on the tenacity of the new system implementation, Nike could have focused on the third stage of implementation where freeze of the new system is carried out in the organization.

Despite the fact that the implementation of SCM system has been carried out by the experienced team, still there could be certain occasions where the things might go wrong at one or the other end and it could cause significant impact on the organization. (John.P.Kotter, 1995)

Keeping in purview the impact of such failures, it is essential that the companies choose and follow the change management theories that could be resourceful to the organization in terms of taking positive results from the organizational change management. (John.P.Kotter, 1995)

5.0      Conclusion

Nike is known for its quality products of sportswear and athletic wear. Few years back when the company had taken the decision to invest in the enterprise application solutions for improving the SCM process, the change management that has been considered, keeping in view the growing trends and the need for process improvements is an appreciable factor. But the kind of issues and the challenges that the organization has encountered with the implementation of SCM has been very impacting on the organization. The technical glitches compounded with lack of operational idea of the working team on the SCM system has compounded the problems associated with the change management issue. It is very evident from the inputs and the analysis that had there been certain kind of cautious effects in terms of providing quality approach with some fundamentals like the Lewin’s Stability model put to practice for the organizational change management scenario, the outcome might have been positive for the organization. It is also a fact of concern that despite of using effective theories and models, if the execution of the system lacks the quality then the organizational change management facets could end up in failures.  (Nelson, 2007)

6.0      References

Abbasi, N., Iqra Wajid, & et.al. (2014). Project Failure Case Studies and Suggestion. International Journal of Computer Applications , 34-39.

ICMR. (2005). SCM and ERP Software Implementation at Nike: From Failure to Success. ICMR.

John.P.Kotter. (1995). http://www.cio.com/article/2439601/supply-chain-management/nike-rebounds–how–and-why–nike-recovered-from-its-supply-chain-disaster.html. Harvard Business Review.

Keller, S., & Carolyn. (n.d.). The Inconvenient Truth About Change Management. McKinsey .

Koch, C. (2004, Jun 15). Nike Rebounds: How (and Why) Nike Recovered from Its Supply Chain Disaster. Retrieved Dec 04, 2014, from CIO: http://www.cio.com/article/2439601/supply-chain-management/nike-rebounds–how–and-why–nike-recovered-from-its-supply-chain-disaster.html

Nelson, R. R. (2007). IT Project Management: Infamous Failures, Classic Mistakes, and Best Practices. MIS Quarterly Executive , 67-78.

NHS. (n.d.). Lewin’s Change Management Model. NHS NORTH WEST.

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