NIKE ERP: A DISASTOR

In 2000, Nike attempted to upgrade its ERP systems using a software from i2 Technologies for demand-planning for $400 million. However, this went terribly wrong, causing the company to lose $100 million in sales and a 20% drop in its stock price. This was due to lack of testing; a rushed timeline and the system simply being flawed. The two companies blamed each other, Nike stating that the software was unable to perform in the way that it should, while i2 claimed that Nike abandoned their implementation technology.

-       What advantages does Nike get from its single-instance EPR system?

In a single-instance EPR system, a company runs its whole business on one single database worldwide. This differs from the traditional multi-instance database where companies run separate EPR systems for different continents and require syncing at the end of each month.  

There are quite a few advantages that Nike gets from its single-instance EPR system. Some of these include being able to view all data globally through one system, a huge benefit for a large MNE such as Nike, creating a unified customer experience around the world, helping people to feel the similarity of Nike stores around the world which often leads to brand loyalty and improved inventory management due to the enhanced forecasting abilities, tracking demand all over the globe.

-       What advice would you give to a firm embarking on a similar project?

• I would advise the firm to choose the right software for the project, something that will benefit the exact project that is being worked on. Failing to do this could result in extra steps being taken to achieve the goal at hand.

• Making sure that risk mitigation is a priority and that it is independent of the software. This is something that the firm must take charge of as these systems often have problems identifying risks.

• Investing in all of the necessary elements of the system is key to avoid failure as this could cause delays and ultimately lead to higher costs. Taking all of the time required for implementation and investing correctly is crucial to avoid operational disruptions.