The undeniable roar of a Harley-Davidson, the unmistakable Nike swoosh on the equipment of sports stars from Tiger Woods to Lance Armstrong to Maria Sharapova, and the now-ubiquitous red-and-white DVD envelopes of Netflix are all perfect examples of companies combining great product development with flawless brand marketing to consistently take over, redefine, and dominate their respective businesses. But behind the slick media campaigns and the paradigm-shifting ideas is a core attention to supply chain management: a focus on the technology, processes, and people that keep the corporate machine efficient, productive, and responsive to change, enabling solid growth and sustained success in the marketplace.
“These are pretty visionary companies that are constantly questioning the basics of how they operate,” says Stefan Thiel, a product manager for supply and demand planning and collaboration at SAP, a Waldorf, Germany–based provider of business software that helps improve relationships with customers and partners, streamline operations, and achieve efficiencies throughout the supply chain. “Think about Nike. They might have to order product for China six months in advance, which is pretty typical in the industry, but [instead of just figuring out how to order product] they approach the question of ‘How can we change this for the future?' They attack the basic assumptions of their business, and by this they are the visionaries and fighting at the forefront of their industry.”
Among SAP's more than 34,600 customers, Thiel points to Nike as a “highlight” client that looks to the future and expects its vendor and customer partners to do the same when it comes to solving supply chain management issues and creating new systems and technologies to address both ingrained industry challenges and new conundrums that appear on the fly. “The future-oriented customers in particular are the best customers for us to work with,” Thiel says of the Nike/SAP relationship that began in late-1999 and has grown into a partnership that sees SAP provide a full suite of supply chain management and enterprise resource planning (ERP) software across the company's footwear, apparel, and sports equipment businesses. “They help us in the thinking of what type of software we will need to create for the future, and Nike is one of the examples of a company that has decided to go with us. We have been working together with them for years.”
In particular, SAP's supply chain management projects with Nike subsidiary Cole Haan have resulted in efficiencies that include a 10 percent reduction in resources used for credit and collections, delivery optimization that helps to increase return on invested capital by 50 percent, and improvements to SAP's Apparel and Footwear supply chain optimization software (AFS), a program now used within several of Nike's corporate divisions.
Several keys unlock those types of benefits, according to Cole Haan CFO John Hannon and director of information technology Bob Cheney, both of whom feature largely in an SAP/Cole Haan case study provided to PROSALES by SAP. First and foremost, supply chain efficiencies are more acutely realized when systems across the organization—in Cole Haan's case, accounting, sales, and distribution—are integrated onto a single platform. “We wanted to close [our daily financials] faster, and we wanted to get better information into the hands of our business leaders sooner,” says Hannon in the case study. “But inaccuracy and inefficiency are almost inevitable when you have to reconcile information from multiple systems.”
With the SAP implementation, including cross-corporate ERP software for covering back-end financials and AFS systems for front-end sales projections and logistics optimization, Cole Haan is enjoying a “single integrated system that delivers data in real time,” Cheney says in the case study. Specifically, he explains that it “allows IT to be more proactive in supporting the business with new development and by creating new reports. It's given us a solid platform to grow our business, and I anticipate that we'll continue to grow with SAP for years to come.”
According to Thiel, Cole Haan's SAP migration (the company completed its transition to ERP over the course of nine months in late-2000 and has added increasing AFS functionality over the past five years) is typical of most companies in the primary adoption of a back-end ERP system before the bolt-on of integrated complex supply chain management software. “Transportation management, for example, is more and more important to so many businesses dependent on delivery because it is a cost center,” Thiel explains. “Optimization algorithms can find cost- and profit-optimal delivery solutions for a transportation network with multiple delivery sites and multiple distribution centers, producing the most cost-effective route for supplying material to customers. Typically, an ERP solution in and of itself cannot solve such a problem.”
Thiel also agrees with Cheney's expectation that the firms will be partners in supply chain management efforts for some time to come. “With the help of Nike, we have already improved our supply chain management systems to improve AFS in our next software release,” he says, adding that sales, inventory, and procurement reporting that already offered real-time data to management by color, size, and quantity will also feature reporting based on seasonal purchasing trends, a direct result of SAP's Nike collaboration.