The Friday Report: March 29th, 2019

Nike Attributes 7% Revenue Increase to New Technology

For the past few years, Nike has been laser-focused on supply chain speed.  According to Nike’s third quarter earnings call, the 7% revenue increase for 2018 occurred without a substantial increase in inventory.  For years Nike worked on speeding up its supply chain through the use of digital tools and began to reap the benefits.

In 2018, Nike launched a program known as Express Lane to produce shorter lead time on goods.  The Express Lane initiative enabled Nike to leverage consumer feedback to update key styles using different colors, print and materials. 

In the third quarter of 2018, Express Lane products comprised 10% of Nike’s revenue in that time period. The Express Lane initiative involved positioning materials in factories so that additional manufacturing could be initiated as soon as possible.  Nike continued to launch new digital tools for sensing demand, inventory tracking and supply chain visibility.

The Express Way initiative was developed to get ahead of anticipated consumer purchasing when LeBron James moved to a new team.  The result?  It cut jersey lead times by nearly half. 

This is great news for the sportswear company as it heads into summer, a time with plenty of high-profile free agency moves. Nike also invested in digital tools including RFID to improve inventory tracking.

Continued Growth of E-commerce Powers U.S. Warehouse Construction Trend

Just as consumer shopping trends have changed, so has the way warehouses have been built.  The frequency of warehouse construction has increased along with the size of the warehouse facilities.  Today, the 1 million square foot-sized warehouse has become an industry standard.

Brick and mortar retailers usually offer online shopping and have increased warehouse stock.  Industry experts revealed that most of the growth in the e-commerce warehouse sector is related to online-only retailers.  Multi-level warehouses are becoming more frequent and the addition of more technology within the warehouse is more common than that of previous decades.  This includes robotics and automated storage and retrieval systems (ASRS).

Modern High-Tech Warehouses Explore Alternative Energy Options

With the addition of more technology in warehouses today, typically comes a need for more power.  The U.S. has been evaluating new ways to make the national power grid more stable to accommodate the use of alternative power and the ways that facilities use it.

Issues including cybersecurity threats to the power grid, natural disasters and isolated power outages have provided the impetus for warehouses to find alternatives.  Other major reasons are the cost of power and ability to continue to function if a massive power outage occurs.

Warehouses have reported increased use of rooftop solar panels and solar canopies over parking areas as well as battery storage systems.