Nike is reassuring consumers and investors that it will manage through supply chain problems moving forward.
The company on Wednesday outlined advancements and investments that have set up the company for success and will keep it running if supply chain issues turn sour once again.
Like other major brands that rely on regions like China and Vietnam for production, Nike was hit hard when lockdowns and factory shutdowns swept through both regions over the summer. Nike had two months of almost no unit production in Vietnam when two of its footwear suppliers there stopped manufacturing in July. The halt in production continues to impact inventory and sales in regions like Greater China.
Now, major lockdowns across China suggest a potential for another slew of supply chain disruptions along the way. It is unclear what the impact of these shutdowns will be at the moment, but analysts, experts and brands are closely monitoring the situation as it develops. And Nike believes it is in a good place to weather the storm.
“From early in the global pandemic, we knew that our recovery and return to growth would neither be linear nor intuitive,” said Nike COO Andrew Campion in a statement. “We believed that the immediate and significant shifts we were seeing in consumer engagement would be systemic. So we took decisive action and began building a digital-first supply chain to power Nike’s more direct, faster and precise service of consumers, all while prioritizing sustainability.”
Nike first highlighted its new regional service centers across the U.S. Europe to help expand and speed up its distribution network. The company also called out its use of AI and machine learning to help understand what the consumer wants to deliver product to them in the easiest way. Nike is also using over 1,000 robots in its distribution centers to help sort, pack, and move product more quickly.
Within its efforts to improve efficiency and product distribution, Nike said it won’t compromise on sustainability or the safety and well-being of its teammates. To that end, Nike has invested in packaging made from partly recycled products and ground-only shipping options to reduce the carbon emissions from air freight.
Nike believes that these efforts, which equip team members with the tools to be successful, will set up the company to manage through potential supply chain challenges moving forward. It will also help Nike better serve consumers in the long run.
“Today our teams are fueling a supply chain and technology transformation that will enable Nike to more directly serve consumers over the next 50 years,” Campion said. “Their resiliency, strength and creativity will continue powering Nike. Our teams at Nike have been and continue to be our single greatest competitive advantage.”