Brief

Nike, Apollo Global Management establish new company to build vertical supply chain

Dive Brief:

  • Nike announced Thursday a partnership with Apollo Global Management, in which the latter will create a "new company" that would acquire and manage the apparel company's supply chain. Nike claims it will not have capital stake in the new company.
  • The new company has already acquired PA-based apparel manufacturer New Holland and the VA-based embellishment, warehousing and logistics operator ArtFX.
  • Apollo expects to acquire more textile and apparel suppliers throughout the Americas in order to create a sustainable, transparent and vertically-integrated supply chain. 

Dive Insight:

Nike's dependence on contract manufacturers for over 80% of its revenue has long set the apparel retailer as a case study for horizontal-supply chains. In 2014, a report stated the company's network consisted of more than 700 factories in 42 countries, while their products traveled across 57 distribution centers and more than 18,500 accounts.

Yet while third party logistics providers are becoming increasingly popular for companies looking to keep up with a tight fulfillment clock, several supply chain disruptions over the years appear to have convinced Nike to transform its approach altogether.

In fact, Nike is investing heavily in improving its supply chain capabilities. In the past year, Nike opened a new distribution center in Memphis, TN, a sustainable logistics facility in Belgium, and partnered with Flextronics International to help bring automation and customization to its processes.

The most recent partnership, however, promises to revolutionize Nike's supply chain processes. Abandoning the contractor model will allow Nike's supply-chain-management partner to increase accountability throughout the chain and potentially improve the Nike's fulfillment abilities.

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Filed Under: Logistics Procurement
Top image credit: Nike Facebook