2-2 Milestone One Draft of Intro and Organization Sections I and II

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QSO-415 Trends in Operations Management 2-2 Milestone One: Draft of Introduction and Organization March 11, 2023 Leif Dyer

Consumer preferences and expectations are not the sole drivers of behavior in business. The growing needs and expectations of the global community along with an increase in governmental regulations call for an increase in corporate responsibility. More and more, organizations are recognizing that adapting corporate sustainability as a business approach is increasingly essential to their viability and longevity. As expectations grow, so does the need for transparency in the initiatives that organizations put in place to demonstrate their commitment to environmental and social sustainability. Sustainable Operations Management responds to those demands by pursuing the triple bottom line through the establishment of meaningful goals that shape the behaviors of the organization, its supply chain, as well as its consumers and stakeholders. In Accenture’s research on responsible leadership, companies with high ratings for environmental, social, and governance (ESG) issues enjoyed average operating margins 3.7 times higher than lower performers. Total returns to shareholders outpaced poorer ESG performers by 2.6 times (Haanaes & Olynec, 2022). In addition to positive impacts on the environment, sustainable operations can create competitive advantages. Nike is a global organization that has made and continues to make sustainability a priority in the way it does business. Not only has it transformed its business practices over the years, but it has also made them more transparent, thereby making a public statement that sustainability is a priority. It has used this strategy not only to distinguish itself from its competitors; it has influenced the global culture of sustainability as well. Where some businesses look at sustainability in terms of meeting government standards or even as a compromise to profits, Nike’s commitment to sustainability has evolved simply into the way we do business. From sourcing strategies to innovation in manufacturing, transportation, and distribution, Nike

strives to do business in a way that treats the environment responsibly and that inspires the world to do the same. In addition to environmental responsibility, Nike is socially conscious in its treatment of global communities. It has developed and implemented scores of programs that focus on equity, diversity, and inclusion for marginalized groups in its employment practices and in programs that endeavor to uplift and improve communities through sport. It has used innovation in technology to develop products and manufacturing techniques that support the community’s growing concerns for social and environmental sustainability and has done so in a way that secures its financial success. As a proud team member and shareholder, I have chosen to examine Nike from a sustainability lens. Each year Nike produces an Impact Report which consists of 29 enterprise targets along with corporate commitments and long-term goals and public commitments to meet stakeholder expectations and align with Nike’s business priorities. ( FY21 NIKE, Inc. Impact Report , 2022). The baseline target date to achieve the 29 performance objectives is FY2025 and each year-end result represents achievement toward the FY2025 goal. The Impact Report includes metrics that address achievement categorized by People, Play, and Planet which address environmental and social sustainability priorities. The priorities are broad in range and are designed to bring accountability to the organization, its partners, and members of the supply chain. Data is gathered from internal sources, surveys, and reports from various segments of the business accumulated over the Fiscal Year. It appears that Nike has chosen these metrics because they are aligned with the expectations of public communities, government, and stakeholders concerning environmental and social concerns shared in the global community. The metrics are varied and broad to demonstrate Nike’s commitment to making meaningful progress in ways that

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appeal to an equally broad and diverse audience. Below is a segment from the Planet category from the Impact Report. ( FY21 NIKE, Inc. Impact Report , 2022) Nike regards sustainability as an “opportunity for innovation” (Sharma, 2013). Employing the use of emerging technologies and best practices continues to positively impact environmental and social sustainability efforts. Sustainable Operations Management is not achieved in a vacuum. While responsible use of material resources is integral to Sustainable Operations Management, so is the technology that equips Nike to use it as a resource. Through technological advances, Nike utilizes significant recycled materials (including plastics, recycled polyester, and production scraps) in its products. 75% of all Nike products contain some recycled material ( How Nike Uses Technology for Sustainability , 2018). Nike’s financial success

is a key resource that enables technological exploration, manufacturing innovations, and other critical partnerships. Its net income for FY2021 was $6.04B ( FY21 NIKE, Inc. Impact Report , 2022). In addition to raw material resources, Nike works with a diverse group of partners in its global network. To foster continuity and alignment with Nike’s code of ethics and to ensure that alignment is sustained, Nike understands that collaboration is a critical resource in setting, enforcing, and maintaining high industry standards, business practices, and working conditions. Nike’s collaboration effort with suppliers involves working with partners such as the Sustainable Apparel Coalition, the Fair Labor Association, the Better Work Programme, and the Social Labor Convergence Program. These organizations help develop essential management capabilities within supplier facilities, measuring performance and investing in working conditions across the industry. ( Supply Chain Industry Collaboration , 2018). Nike is also an advocate for legislative reforms to protect workers’ rights and improve working conditions. Nike supports supplier sustainability through its partnership with the International Finance Corporation which offers better financing terms to factories that are compliant with Nike’s Code of Conduct. At least 23 factories take advantage of the program due to their continued sustainable performance. ( Supply Chain Industry Collaboration , 2018). These and many other partnerships support environmental sustainability by monitoring and providing tools that keep suppliers aligned with Nike’s transparent business model emphasizing environmental sustainability. Various coalitions and partnerships have helped Nike to create a synchronized regulatory framework that supports and protects suppliers, customers, and the planet. Because sustainable operations is a defining characteristic of Nike’s culture and marketing strategy, the goals will continue to be pushed to their limits with the aid of technology and supply chain partnerships.

Nike’s sustainability initiatives and practices are transparent and so deeply associated with its identity that its very reputation and marketability are at risk given current global conditions. Particularly, reliance on electricity, water, fuels (transportation and manufacturing), and limited raw materials can make it vulnerable to criticism from the global community and to government regulations surrounding carbon emissions. Rising fuel and material costs along with wages have implications that can impact production costs and the bottom line. Demonstrating and maintaining equitable working conditions among marginalized groups also threatens its reputation if aggressive social sustainability goals are not achieved. Nike addresses these risks through technology innovation to reduce waste, by making creative and more sustainable material choices, involving the entire supply chain to reduce its impact on carbon emissions, and partnering with global governments to ensure alignment with regulatory measures.

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References FY21 NIKE, Inc. Impact Report . (2022, March 3). Nike.com. https://about.nike.com/en/newsroom/reports/fy21-nike-inc-impact-report-2 Haanaes, K., & Olynec, N. (2022, May 9). Why all businesses should embrace sustainability . IMD Business School. https://www.imd.org/research-knowledge/articles/why-all- businesses-should-embrace-sustainability/ How Nike Uses Technology for Sustainability . (2018, May 24). Aphrodite. https://www.aphrodite1994.com/blog/index.php/fresh-air-how-nike-uses-technology-to- push-for-sustainability/ Sharma, A. (2013, May 17). Swoosh and Sustainability: Nike’s Emergence as a Global Sustainable Brand . Sustainable Brands; Sustainable Brands. https://sustainablebrands.com/read/supply-chain/swoosh-and-sustainability-nike-s- emergence-as-a-global-sustainable-brand

Supply Chain Industry Collaboration . (2018, April 4). Nike.com. https://about.nike.com/en/newsroom/resources/supply-chain-industry-collaboration

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