Nike is speeding up its time to market

Nike is speeding up its time to market

US sporting goods giant Nike is looking to speed up its supply chain process and deliver products to market quicker through the scaling up of a new 'Express Lane' manufacturing initiative.

The process, which is currently being used on Nike's footwear lines, reduces creation-to-market timelines from months to weeks, working as "an important competitive advantage" for the sportswear group.

Specific details on the new programme were not given on the group's second-quarter earnings call, but CEO Mark Parker admitted to analysts there are areas where Nike hasn't executed as precisely as it would have liked.

"We've always given consumers high energy product in the right place at the right time. We're now leveraging and creating capabilities on a much larger scale. The investments we make in manufacturing revolution and throughout the supply chain are going a long way [to] helping us realise that. Editing to amplify and driving speed and agility are keys to winning now. They also help set the foundation for growth in the future."

Express Lane manufacturing is already has already helped Nike to develop its LunarCharge comfort shoe, limited numbers of which were released earlier this month.

"We've always had the ability to move quickly and respond," says Trevor Edwards, president of the Nike brand. "What we're doing now through Express Lane, particularly as we scale this capability, is to make this a sustained season-in season-out part of what we do and how we operate. The LunarCharge is a great example on this last quarter of product that literally went through that complete start from scratch to completed products, went out to the market; and the sell-throughs have been incredibly positive."

Edwards says Nike will continue to use Express Lane as "muscle" for a "more complete competitive advantage," with manufacturing set to move across to its apparel lines eventually.

"I am personally, as a product nerd, incredibly excited, not just by the ability to do this but to take it to significantly higher scale.

"Our investments and manufacturing revolution, and [our] speed and agility initiatives all enable us to bring product creation closer to the consumer while also enhancing labour productivity and reducing materials waste. As the world becomes increasingly dynamic, we could not be more pleased with the head start that we have in terms of supply chain innovation."

This week, Nike revealed higher second-quarter earnings on stronger demand in China and its domestic market, while indicating a potential rebound in its basketball business.

Net income in the three months to the end of November grew 7% to US$842m from $785m a year earlier, while revenues increased 6% to $8.2bn.

Nike said it "attacked" opportunities across its portfolio in the quarter to strengthen and extend its leadership position. In particular, the company experienced a rebound in its basketball business, which has come under pressure recently, particularly from rival Under Armour's NBA-star Stephen Curry's signature shoe line.

The company also pointed to its "tremendous progress" aligning supply and demand in North America, and its "strong and steady momentum" in greater China thanks to investment in the market to fuel growth.

Indeed, in Nike's North America business, sales edged up 3% to $3.65bn, while Western Europe sales grew 7% to $1.38bn. Greater China sales, meanwhile, were up 12% to $1.05bn.

Nike Q2 profit grows on US and China demand