Nike says ‘one-train’ helped ease supply chain disruption

Diving brief:

  • Nike on Wednesday presented a series of steps – including ramping up rail and expanding its distribution network – it has taken since the pandemic to improve product flow and shipment resilience amid systemic supply chain disruptions.
  • In August, the footwear and apparel giant secured a dedicated train from Los Angeles to Memphis which it calls the “one train”. The direct rail link between the nation’s largest container ports and the company’s facilities in Tennessee includes partnering with local drayage carriers for expedited unloading.
  • Nike has also added regional distribution centers in the United States and Europe and 1,000 new “collaborative robots” to help with sorting and packing as workforce constraints across the industry continue.

Overview of the dive:

These initiatives are part of the company’s move towards “building a digital supply chain to power Nike’s more direct, faster and more accurate consumer service, while prioritizing to sustainability,” chief operating officer Andrew Campion said in a statement.

Nike lost three months of production due to COVID-19-related factory closures in Vietnam during the first quarter of fiscal 2022. More than half of Nike’s shoes and about 30% of its apparel were made in Vietnam, during the last fiscal year. The closures “have had a significant impact and are expected to continue to have a significant impact on our previously planned inventory production,” the company said in a statement. a quarterly filing earlier this month.

The company expanded its operations in response to widespread disruptions and increased e-commerce orders. Distribution centers in Los Angeles; Bethlehem, Pennsylvania; and Dallas have created a “multi-node network,” a transition from Nike’s previously centralized national distribution facilities in Memphis, Tenn., the company said.

Centers in Memphis became omnichannel facilities and Nike added a facility in Madrid to diversify its European operations beyond its Belgian logistics campus.

Transportation delays, port congestion and container shortages affected product availability in the second quarter and first six months of fiscal 2022, the company said in its Form 10-Q filing.

Nike, which joined Home Depot and others to find alternative transportation for his goods, told sister publication Supply Chain Dive that he launched the “one-train” due to freight backlogs ahead of the holiday season.

“To ensure we were able to meet consumer orders, the one-train was implemented to expedite products to our fulfillment centers,” a spokesperson said in an email. “This included partnering with our local drayage carriers, where they committed to unloading the train as soon as it arrived, making product available within 24 hours.”

Fulfillment center robots speed up order processing, alleviate physical challenges and allow employees to focus on higher value activities, the company said. Additionally, Nike’s technology capabilities include advanced demand sensing and inventory optimization platforms supporting its regional facilities.

The robots helped the company triple its digital ordering capacity in North America, Europe, the Middle East and Africa over the past two holiday seasons, Campion said.

“The challenges and constraints imposed by the pandemic have driven our teams to transform the way we serve consumers through the implementation of new technology platforms, automation and process improvements in our operations,” Campion said.

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