Wcms 565091
Wcms 565091
Wcms 565091
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Smart lessons on designing Enterprise level interventions
Promoting productivity and working conditions in SMEs
Nike Lean Supplier Capability Program
Following the development and implementation of the program among footwear suppliers, Nike
delivered it to its apparel suppliers. In terms of targeting, the program focused on suppliers with a
longer business relationship with Nike, many of which came from emerging and developing
countries, including Thailand, India, China, Sri Lanka, Vietnam, Malaysia, among others.
Key steps in the implementation of the program among apparel producers are represented below.
•Eight-weeks training
was delivered to NIKE verifies
Suppliers commit to
managers in training implementation key
implementation of lean
manufacturing practices in centre in Sri Lanka elements of the lean
their plants and confirm system and management
participation to the training understanding of lean
techniques
Nike reported a range of benefits resulting from the program in terms of business performance. For
example for the financial year 2010-2011, it indicated it achieved:
50% reduction in defect rates
40% faster lead times
20% improvement in productivity
30% reduction in time taken to introduce a new model
While the program itself focused on lean management systems and practices, it also led to improvements in
working conditions.
Independent researchers analysed data from labour compliance assessment in 304 Nike suppliers in
emerging countries (68 of which adopted lean manufacturing practices), to detect whether or not
there was a link between the adoption of lean manufacturing and improvements in working
conditions as found in the results of compliance monitoring reports for these firms. They looked at
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Smart lessons on designing Enterprise level interventions
Promoting productivity and working conditions in SMEs
Nike Lean Supplier Capability Program
data from developing countries over time both on firms that implemented lean manufacturing and
on that who did not, and they controlled for other possible influencing factors.
The analysis indicates that for firms the adoption of lean manufacturing was associated with a 15%
point reduction in non-compliance with labour standards, particularly with regards to
compensation and working time. The nature of the changes in compliance (i.e. focused on
compensation and working hours) suggests that the link between the adoption of lean
management practices and working conditions is likely to be explained by the fact that lean
manufacturing involves changes in labour and Human Resource practices. In particular lean
manufacturing requires increased investment in worker training and higher level of discretionary
efforts by workers, since employees in lean systems are expected to perform tasks that go beyond
those required in standard mass production systems: for example workers engage in joint-problem
solving and play a role in quality inspection at their work stations. The higher level of involvement
expected from workers and the investment in employee training in turn means that managers have
an incentive in improving working conditions to motivate and retain skilled workers.
A further possible way to explain links between lean manufacturing and improvement in working
conditions is linked to management systems: lean manufacturing involves increased management
capacities and more effective processes, which can facilitate compliance with certain aspects of
labour standards, such as Occupational Health and Safety. The analysis of the data in the study did
not detect evidence of such mechanism in the firms reviewed, however other studies do suggest
this is an important dimension of the relation between lean manufacturing and working conditions.
Nike’s focus on promoting lean manufacturing in its supply chain has been continuing since the
inception of the program. Nike is continuing the capability building of its suppliers and has revised
and expanded its Lean program to incorporate elements of Human Resource Management. In
addition, Lean management has been incorporated in Nike’s Code Leadership Standard. This is a
standard against which Nike suppliers are periodically assessed and rated, with implications for
business relations. The adoption of lean manufacturing practices is one of the requirements to
qualify for the higher ratings in the scale.
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Smart lessons on designing Enterprise level interventions
Promoting productivity and working conditions in SMEs
Nike Lean Supplier Capability Program