Nike and I2 Technology Case Study
Nike and I2 Technology Case Study
Nike claims that the problems with its i2 demand-planning software were tactical and therefore fixable. It was too slow, didnt integrate well, had some bugs, and Nikes planners were inadequately trained in how to use the system before it went live. Nike says all these problems were fixed by fall 2000. And the company asserts that its business wasnt affected after that quarter. Indeed, at press time, Nike had just announced that its third-quarter 2003 profit margins were its highest ever.
If there was a strategic failure in Nikes supply chain project, it was that Nike had bought in to software designed to crystal ball demand. Throwing a bunch of historical sales numbers into a program and waiting for a magic number to emerge from the algorithm—the basic concept behind demand-planning software—doesnt work well anywhere, and in this case didnt even support Nikes business model. Nike depends upon tightly controlling the athletic footwear supply chain and getting retailers to commit to orders far in advance. Theres not much room for a crystal ball in that scenario.
Indeed, Nike confirms that it stopped using i2s demand planner for its short- and medium-range sneaker planning (its still used for Nikes small but growing apparel business) in the spring of 2001, moving those functions into its SAP ERP system, which is grounded more in orders and invoices than in predictive algorithms. “This allows us to simplify some of our integration requirements,” says Nike CIO Gordon Steele.
Wolfram says Nikes demand-planning strategy was and continues to be a mixture of art and technology. Nike sells too many products (120,000) in too many cycles (four per year) to do things by intuition alone. “Weve