The operational management plan refers to the focus of the practices designed to manage and monitor every process in the production and distribution of a business’s products and services. The main activities of operational management aim to create products, develop services, and efficiently distribute them (Collins, 2018).
Management of purchases, monitoring of inventories, and preservation of quality are the key goals of the operational plan. The plan also includes an analysis of the company’s internal processes and, ultimately, the way the organization performs operational management, depending on the nature of the products and the services that are being offered. Therefore, in this paper, we are going to illustrate a simplified operational management plan based on the Nike Company.
Nike Company is an American multinational company that has been engaged in the design, development, production, sales, and marketing of apparel, footwear, accessories, equipment, and services. The company’s headquarters is located in Beaverton, America. The company is the largest supplier of athletic apparel and shoes, with a net income of over eight million per year. The company’s management works in unison; the Nike environment is collaborative, and the management often reports in two areas, i.e., global and geographic functions. This is because the company covers a wide range of areas, including North America, the Middle East, Europe, and Africa. According to the company’s website (www.nike.com), it aims to help consumers foster a sustainable economy in which the planet, people, and profit are in balance. Apart from manufacturing sportswear and equipment, the company has been involved in operating retail stores in different towns and sponsoring proficient athletes and good sports teams around the world.
Demographics of customers
Customer demographics are classifications of consumers who are relevant to business purposes, such as designing and marketing products. The classification of customers can result in an endless number of variables. Therefore, the customers’ classifications based on the Nike Company include gender, age, geographical location, hobbies, household income, educational level, marital status, and occupation (usa.gov, 2018). The demographics are essential in identifying who the customers of the company are, where they reside, and the likelihood that they will purchase the products and services being sold. The analysis of the demographics is important to the company since it helps Nike Inc. make decisions on the channels of communication that are valuable to the customers. It also helps in the identification of potential and new customers and in locating the demographic region that has many potential customers.
| Race | Population | Female | Male |
| New York | 8,175,133 | 4,890,026 | 3285107 |
| Chicago | 3,792,621 | 1,996,509 | 1796112 |
| Texas | 2,695,598 | 1,000,956 | 1694642 |
| California | 2,099,451 | 1,121,856 | 977596 |
| Florida | 1,307,402 | 890,467 | 416935 |
| Georgia | 1,445,632 | 795,351 | 650281 |
| Virginia | 945,942 | 546,203 | 399739 |
| Philadelphia | 1,526,006 | 713,956 | 812050 |
From the data, it can be illustrated that there are many more people in New York than in other states. Therefore, the company uses that demographic property to supply a lot of its products to the stores that are available in New York as compared to the stores that are in Virginia. Similarly, the company uses the demographic property of gender to determine the kind of products that could be supplied to the region and which customers to target. Therefore, the analysis of customer demographics increases personalized interaction, improves customer service, and also fosters customer loyalty.
Design of the Supply Chain
The best way to consider supply chain management is to achieve the future needs of the organization. This is achieved through the development of new products, technological growth, channels of operation, marketing strategies, and the intellectual capital brand. Nike Inc. is a company that works properly for invention and innovation. The unique way of designing its products to suit the quality needed in the market makes the company a leader in the production of sporting products like athletic shoes, etc. The company doesn’t design only cosmetically pleasing products; it also aims at performance. For instance, it aims at lightweight design, responsiveness, fit, injury protection, support, and cushioning. The strategy of ordering products from the company is effective since the customer needs to place the order on the company’s website. This increases the speed of processing via ERP and supports proper customer relationships. Therefore, due to good design that increases quality and faster processing, the company can easily meet its objectives and goals.
Material resource planning
Nike Inc. has an Enterprise Resource Planning (ERP) system, which it uses to manage its demand and supply. The software is essential in providing integration between purchasing, marketing, manufacturing, logistics, and sales (nike.com, 2017). Therefore, ERP software is important in determining the raw materials needed for the company’s production process. The company makes use of six major materials in the manufacturing process. They are polyester, rubber, EVA foam, cotton, synthetic leather, and leather.
Supplier Relationship Management Plan
Nike is an innovative company that plans and designs for a suitable tomorrow’s economy. The main goal of Nike’s supply chain is to reduce its carbon footprint; therefore, the company is working closely with third-party logistics providers to optimize consumer service and accelerate the use of alternative fuels. The business impact of Nike Inc. is to improve the visibility of supply and demand, empower planners to better match supply with demand, and improve ROI for existing SCM and ERP solutions.
Production
Nike Company is an iconic American multinational corporation that is involved in the production of footwear, equipment, apparel, and accessories. Nike products are produced in different factories worldwide. The company has revolutionized its production processes and developed innovative new products to meet its goals. Despite the company’s headquarters being in Beaverton, Oregon, the shoes that consumers purchase are produced by hundreds of firms around the world. The largest producers are in China, Indonesia, and Vietnam. Nike Inc. doesn’t directly own the factories; instead, the administrators are involved in hiring factory owners to produce their products using the designs and materials provided by Nike Inc. The company itself aims to design the shoes and other products, and after production, they are marketed and advertised in the most appealing manner.
The production of athletic shoes in the factories is categorized into three different parts of the shoe. They are the shoe top or upper, the midsole, which protects the foot, and the outsole or sole. It’s the variation in the materials used in the three parts that brings a difference in the type and brand of the shoes. The midsole is made from a combination of materials such as Phylon, Polyurethane, Phylite, and EVA, which is a flexible and foam-like material. The sole is a blend of synthetic rubber compounds. Nike shoes are unique among many athletic shoes, and experimentation and design processes have shown that a model can take three years. The introduction of the midsole cushioning system, which was first implemented by Nike Inc., has led to a change in the way athletic shoes are produced. The company has frequently been criticized for being involved in child labor, flagrant abuse, abuse of wages, and overtime-law violations that go unchecked in factories found in third-world nations. However, Nike Inc. is responsible for the workforce, increased exploitation of factory workers, and the provision of unbiased working conditions.
Packaging
As a form of marketing strategy, no one can underestimate the power and need for product packaging. The company spends most of its time designing the packaging and the tape blogs. It reiterates the packages so that the company doesn’t go into a lot of detail. However, there is no doubt that the packaging of the products drives sales, and in fact, this is a strategy that Nike understands very well.
Most modern packaging is simple, sustainable, and also easy to use, and these requirements have been met by many brands so that they can remain competitive. Nike has outperformed in every aspect. The common modern and iconic Nike packages are made of recyclable cardboard materials that offer a clean, better-known display of the conspicuous tick. These characteristics are also applicable to other aspects of packaging materials, such as recyclable paper bags.
Transportation
Nike products are mainly produced in four different nations, i.e., China, Indonesia, Thailand, and Vietnam. After a complete manufacturing process, the products are distributed to stores in different nations. When it comes to the transportation of Nike products, the company aims to reduce CO2 emissions into the environment and reduce its carbon footprint. For the transportation process, its approach not only reduces its carbon footprint and CO2 emissions but is also an effective way of saving money. The company has been mostly involved in the transportation of its products from one continent to another via cargo ships instead of airplanes. Vehicles are used to carry the products over small distances.
Cost of Goods Sold
The cost of goods sold by Nike Inc. is directly linked to the profit of the company through gross margin. It’s also linked to the company’s inventory turnover. Therefore, the cost of goods sold is the total inventory cost of the goods and services that are sold during a particular period. Through calculation, the cost of goods sold for the trailing twelve months, which ended in November 2017, is $19,520 million. Nike’s gross margin for the three months that ended in November 2017 was calculated (Gross margin = (Revenue – Cost of Goods Sold) / Revenue) and found to be 43%. The company can expand its gross margin through an increase in the price of the goods it sells while the cost of the goods it sells remains unchanged. It may also reduce the cost of the goods while leaving the sales price unchanged. Also, the cost of goods sold in the company is directly linked to the aspect of inventory turnover. Inventory turnover is calculated by dividing the cost of goods sold by the total inventories. Nike’s inventory turnover for the three months that finished in November 2017 is 0.93. Inventory turnover is essential in illustrating how fast Nike Company turns over its inventory. When it is high, the company has a light inventory, and thus the company spends a small amount of money on storage, obsolete inventories, and write-downs. When the inventory is light, it affects sales and the company’s relationship management plan.
Nike Inc. has been concerned with customer relationship management for many years so that it can generate profit with customer satisfaction. The company makes use of the online site (www.nike.com) to track valuable information that can optimize customer relationship management and customer information. The order allows the customer to insert a name, location, and contact information, and therefore, the information is used to track the customer’s buying habits. The use of the online blog on the site is essential for customer-centric utilization so that the company can improve services and products. The browser-based application that is being used by Nike Inc. enables someone to join the Nike community and also invite others to the community. This makes the company gain profit and creates customer trust and satisfaction.
Sustainability And CSR Plan
Nike Inc.’s sustainability is based on the prospects for the future so that it can maintain its profitability and reputation, taking into consideration the social responsibility of a company. Sustainability strategies are required to ensure that every company gets a stable supply of raw materials, manufactures products, markets products, and sells the products at favorable prices. Some of the sustainability innovations at Nike Company are as follows: The first one is that Nike’s management performance aims at the reduction of waste and water use. This is done through the recycling of polyester materials used to make Nike football kits. The company is also involved in the reduction of emissions and the use of less energy.
The company has offered a greater investment in the transformation of the manufacturing process. It has piloted research programs that target uncovering the way technology, services, and changes in benefits and compensation systems positively affect workers. The company has the leverage to help kids get moving and ensure that there is zero waste. The last strategy is reaching more customers through social media advertisement and customer care services.
Recommendation And Conclusion
The recommendations to Nike Inc. will allow the company to face challenges and weaknesses so that it can grow its brand and improve its financial performance. Since Nike Company is an international supplier and it is difficult to create loyalty all over the world and hence expand quickly, I recommend that the company concentrate on the creation of domestic fields for the brand and the products. The analysis shows that the company’s strength is in supporting world leadership concerning footwear, apparel, and equipment. The company needs to address concerns about labor practices, competition, and patent protection. Therefore, I recommend that the company come up with reforms concerning its strategies in these areas.
The third recommendation is that the company use its money efficiently. This can be accomplished by expanding promotion to involve entertainment and other nonsporting venues since the line between entertainment and sports looks blurred. The paper has illustrated that an operational management plan is a process of focusing on the practices that are designed to manage and monitor every process in the production and distribution of products and services in the business. In the paper, we have illustrated the demographics of customers, the design of supply, production, transportation, customer relationship management, and sustainability of Nike Inc. Therefore, from the paper, we can conclude that the operational management plan will be helpful in bringing a new direction to the Nike brand and greater benefits to the running of the company.
Bibliography
Collins, P. (2018). What are some examples of operations management in healthcare? Investopedia, 1-10.
nike.com. (2017, December 6). NIKE SUPPLY CHAIN DISCLOSURE. Retrieved from Nike Company: www.nike.com
usa.gov. (2018, January 19). Industry data. Retrieved from USA.gov: https://www.usa.gov/statistics
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