After Reading The Article: Adding Value In Nike's Production

After Reading The Article Adding Value In Nikes Production Line And

After reading the article “Adding Value in Nike’s Production Line” and watching the video "Behind Nike Flyprint and Zoom Series - Next Level Innovation," research your favorite brand of shoes (Nike, Adidas, Reebok, Puma, New Balance, etc) and answer the following questions: Has the company experienced decreased or increased cost attributed to computerization? Were the variable costs increased or decreased? Were fixed costs increased or decreased?

Paper For Above instruction

The evolution of shoe manufacturing has been significantly influenced by technological advancements, particularly the integration of computerization and automation into production processes. Nike, as one of the leading global footwear brands, exemplifies the profound impact of these technological shifts. Based on the article “Adding Value in Nike’s Production Line” and the video "Behind Nike Flyprint and Zoom Series - Next Level Innovation," it is evident that Nike has experienced substantial changes in cost structures attributable to computerization, with notable effects on both variable and fixed costs.

Initially, the adoption of computerization in Nike's production lines aimed at enhancing efficiency, precision, and innovation. The implementation of advanced computerized systems and automation has led to a significant decrease in variable costs. Variable costs, which fluctuate with production volume, include raw materials, labor directly involved in manufacturing, and energy consumption related to production activities. Automation reduces the reliance on manual labor, thus decreasing labor costs per unit produced. This shift also optimizes the use of raw materials, minimizing waste and excess, further lowering variable costs. For example, the use of Flyprint technology in Nike's high-performance shoes represents a move towards 3D printing, which precisely manages material usage and reduces waste, directly impacting variable costs positively by decreasing them (Nike, 2020).

Conversely, fixed costs have tended to increase with the integration of computerization. Fixed costs, which remain constant regardless of production volume, include investments in new machinery, computer systems, software development, and training personnel to operate sophisticated automated systems. Nike's investment in state-of-the-art manufacturing technologies, such as automated cutting machines and 3D printing equipment, involves significant capital expenditure, accounting for increased fixed costs. Additionally, investing in research and development to innovate and maintain technological advancements adds to fixed costs. However, these higher fixed costs can be offset over time through economies of scale and reduced variable costs, leading to better margins and sustained innovation capacity.

Furthermore, the push towards automation and digitalization in Nike’s production processes reflects a strategic move to maintain competitive advantage amid rising global competition and high consumer expectations for innovation and sustainability. The use of computerization allows Nike to produce high-quality, customized shoes more efficiently, which aligns with consumer demand for personalization. Despite the increase in fixed costs, Nike benefits from streamlined operations, faster product development cycles, and reduced variability in product quality, all of which contribute to long-term cost savings and value creation.

In conclusion, Nike has experienced decreased variable costs as a result of computerization due to automation and optimized material use, while fixed costs have increased owing to capital investments in new technologies and infrastructure. These changes reflect a strategic balance aimed at leveraging technological advancements to enhance productivity, product quality, and innovation, ultimately supporting Nike's competitive positioning in the global footwear industry.

References

• Nike. (2020). Nike Flyprint: The Future of Custom Shoe Manufacturing. Nike News. https://news.nike.com
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