Footwear maker Nike is betting that it can boost its performance by consolidating U.S. distribution operations in a new state-of-the-art facility in or around Memphis, Tenn. After running a comprehensive analysis, Nike has concluded that consolidating operations will lead to higher service levels, faster deliveries (shipping times will be cut by three days) and cost savings on the order of $200 million over 20 years. Nike will close its existing DCs in Wilsonville, Ore., and Memphis and consolidate its distribution operations at the new center, which will open in 2008.
The company says the move is necessary if it is to remain competitive. "[T]his is the correct decision for Nike's continued long-term supply chain success, its retail customers and shareholders," says Nick Athanasakos, vice president of Nike's U.S. supply chain. "We regret the varied impacts upon the dedicated employees and supportive Wilsonville community. However, to leave a projected savings of $200 million over 20 years on the table and not reinvest in Memphis or retailer service, would jeopardize our future growth plans for the entire business."
Nike currently has 232 full-time employees at the Wilsonville facility and 250 at its existing site in south Memphis. The company says it anticipates transferring nearly all of the Memphis employees to the new facility and is optimistic that the employees at Wilsonville will find employment at its manufacturing plant there.