Nike shifts production nearer to home to boost supply-chain flexibility
On October 2, Nike’s COO Venky Alagirisamy said the company will shift production nearer to home and use more partners to boost supply-chain flexibility, moving away from owning its fulfillment network for over 50 years. He added that Nike is pursuing more nearshore sourcing for North America and the Europe‑Africa‑Middle East region.
The plan involves reducing Nike’s direct ownership of fulfillment and distribution assets that it has held for the last half‑century. Nike said existing production bases in China and Vietnam will continue to play a significant role. Further details on the turnaround, including potential headcount reductions, are slated for an investor day in November. The move follows an April announcement in which Nike pledged to optimize its supply‑chain footprint and strengthen partner relationships. Nike said it will expand and strengthen its relationship with partners as it targets sports such as running and basketball. CEO Elliott Hill noted that the renewed focus on sports is paying off but that this segment is not yet large enough to offset challenges in the Nike sportswear business, Jordan brand, and Greater China. Hill, who turned 63 on the Friday before the October 2 meeting, acknowledged employee concerns about potential layoffs, saying the market’s reaction raises fair questions about performance and choices. The reorganization plan also includes consolidating Nike’s geographic regions into fewer units.
“shifting away from owning a large part of our fulfillment and distribution network that we have done so for the last 50-plus years,” Venky Alagirisamy, COO said.
In April, Nike said it would make changes to operations including “optimizing our supply chain footprint” and “strengthening our partner and supplier relationships.” The new plan includes consolidating the company’s geographic regions and reducing headcount.
What we know
COO Venky Alagirisamy spoke at an employee meeting on October 2
Nike’s earnings call occurred on October 1
Nike will move away from owning its fulfillment network for over 50 years
Nike is pursuing more nearshore sourcing for North America and the Europe‑Africa‑Middle East region
Existing production in China and Vietnam will continue to play a significant role