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In 1973, Nike faced major supply problems. The demand for running shoes was high, but the supply was uneven. This posed a significant risk, especially for a growing company like Nike, as getting the numbers wrong could lead to bankruptcy. To overcome this challenge, Nike came up with an innovative solution - the Futures program. They asked their biggest retailers to make firm commitments on large and non-refundable orders, six months in advance, in return for a 7% discount. This strategy allowed Nike to have longer lead times, fewer shipments, and more certainty.
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The iconic Nike sporting goods company started over 50 years ago as a ‘crazy idea’ in the mind of a young runner in Oregon. Shoe Dog is Phil Knight’s...
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Another big challenge came in 1973: now, we were hitting major supply problems. Everyone wanted running shoes, but the supply was uneven. How could we significantly boost our supply without taking on huge inventory risks? The big guys, Adidas and Puma, they had the same problem; but for an upstart like us, getting the numbers wrong could tip us into bankruptcy. We struggled through the summer to come up with a solution. Then, in the fall, I had an idea: we'd solve our supply problems by changing the whole relationship with our stores. We told our biggest retailers that we were launching an innovative new program called Futures—if they signed firm commitments on large and non-refundable orders, six months in advance, we'd give them a hefty 7% discount. In one step, we'd have longer lead times, fewer shipments, and more certainty. The retailers resisted, but I kept telling them that they'd better get on board because this was the way of the future. Between my bold predictions and several...
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