100%(2)2 out of 2 people found this document helpful
This preview shows page 14 - 16 out of 26 pages.
organizational change efforts, product creation employees had scarce time for implementing Considered. Above these standard pressures, staff in the Women’s Training (WT) category were even further constrained. WT had been struggling to shift its design focus from a late-20s dance-oriented 19 Nike+ was a small chip inserted into the sole of Nike running shoes that tracked running performance, information to compare via the runner’s iPod andinternet with other runners’ data. January 21, 2009 14
NIKE CONSIDERED: GETTING TRACTION ON SUSTAINABILITY Rebecca Henderson, Richard M. Locke, Christopher Lyddy, Cate Reavis consumer to a mid-teens sports-oriented consumer, leading to upheaval in its product line. WT experienced continual personnel losses in its development function, leading to persistent understaffingin the triad role with greatest Considered responsibilities. One WT developer reported that she once needed to create 40 BOMs in two days on a deadline – 20 or 25 a season was more typical – just to meet her regular product responsibilities. During those very late days, she had no time to add the task of identifying and specifying EPMs, especially since these were not flagged in Nike’s materials’ databases and WT had not compiled an EPM palette. Profit Margins The potential erosion of profit margins from developing greener footwear was another challenge facing Considered. Alongside the increasing cost of petroleum, adding EPMs put even more downward pressure on profit margins. Large categories like Core and Running had some success negotiating price reductions based on volume, but categories that were unable to do so struggled to overcome margin pressures. For example, the Pico toddler shoe, released in Fall 2008, was one of the Kids category’s highest volume models. The product team’s attempt to make it the unit’s first Gold shoe fell short when it realized specifying an EPM outer material would not only mean badly missing the Pico’s margin target, but would significantly harm the category’s margins. The team was forced toreplace the EPM material with a non-EPM material, dropping the shoe to Silver. Supply Chain Partners Categories relied heavily on their value chain partners for product creation and marketing. Some factories were highly responsive to category requests for help implementing Considered, but others, either because of their size, prior capital investments in less-efficient machinery, management focus, or lack of technical capacity, were not able to nimbly and successfully execute Considered. For example, the Spring 2009 Zoom Start running shoe was produced in a factory lacking expertise in water-based cement bonding, leading to some solvent usage. The developer was confident the most technically sophisticated factory groups would have achieved satisfactory bonds with only water chemistry. Materials suppliers were often hesitant to engineer EPMs and invest in the needed reverse supply chain without confidence they would receive profitable volumes, which Nike categories were often unwilling or unable to promise. Retailers were not always eager to promote shoes’ Considered