This article titled “Nike: how supply chain measures up” was written by Nicolette Fox for the Guardian Professional Network, for theguardian.com on Friday 17th May 2013 08.56 UTC
Nike has created a new index to judge the sustainability performance of its factories around the world in a consistent way.
The Manufacturing Index, launched in 2102, ranks labour and environmental performance alongside more traditional supply chain measures of quality, cost and on-time delivery.
Nike’s index has to work across a manufacturing base, which includes more than 800 contracted factories, more than 1m contracted factory workers and 500,000 different products, each with its own environmental and social footprint.
The Manufacturing Index includes separate sustainability metrics, which assess the performance of contract factories over a wide range of issues including water, energy, carbon and waste, as well as health and safety and labour management.
The company believes that competitive pressure will help it achieve improvement across its global supply chain, so the index defines what is "good", and matches incentives and sanctions to performance. Significant improvements in performance have already emerged since its launch.
The new index integrates performance scoring for quality, cost, delivery and sustainability into a single rating. Factories that demonstrate innovation and benchmark performance within the broader manufacturing landscape, will achieve the highest rating.
With each contract factory given a single overall score, the index is helping Nike to have a consistent and comprehensive conversation about its performance across the world.
Nike’s vision of a lean, green, equitable and empowered sustainable supply chain required a fundamental shift in business relationships, but is now embedded within the new Manufacturing Index.
The development of the index over a 12-month period, involved more than 30 Nike employees and 19 contracted factories. A supply chain director led the cross-functional team, with oversight from a leadership steering committee.
Nicolette Fox is part of the wordworks network
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