'Digital demand sensing' is Nike's next frontier
- Nike's "Express Lane" strategy is on the way to cutting lead times in half and "driving double-digit growth in many of our key cities," CEO Mark Parker said on a recent earnings call.
- The program combines rapid prototyping with 3D and digital printing, and "continues to be the engine that’s creating the most agility in our supply chain right now," said Parker, who rolled out Express Lane in 2016.
- The CEO said the company's next task will be to tackle demand forecasting with technology, so Nike can capitalize on its shorter lead times
The company works with 529 factories in 41 countries, according to its website, so reducing lead times by a matter of weeks was no small feat. But the ability to bring new products to market fast is only as good as Nike's understanding of what its customer wants, and where.
As a result, Nike is coordinating a wave of new efforts to wring every bit of data out of its global sales. Parker said the company is "investing significantly" in "digital demand sensing, consumer data and analytics, connected inventory, digital product design and creation, a digital content engine and a new enterprise resource platform that will help unlock speed and flexibility in our supply chain."
In the same earnings call, CFO Andy Campion said better demand forecasting is helping boost margins too, as the split of full-price versus off-price sales is moving in a favorable direction.
More advanced demand forecasting may also affect Nike's retail locations. The company opened the first Nike Live concept store in Los Angeles in July with a concept based on constantly evolving inventory tailored to specific local demand, predicted using digital sales data.
"We're testing a number of new features including product assortments that update frequently based on what's trending with the local consumer; a service that allows consumers to reserve an item on our apps and then pick it up curbside or in the store from a personal smart locker," Parker explained.
The company is also incorporating RFID into its data stack to keep inventory as low as possible, while attempting to respond to consumer demand on a dime.
- Seeking Alpha NIKE, Inc. (NKE) CEO Mark Parker on Q1 2019 Results
- Supply Chain Dive Inside Nike's plan to cut lead times from 60 days to 10
- Fashion Network Nike’s 'Express Lane' to cut product time-to-market down to a few weeks
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