The Merging of Sports and Technology – Nike and Additive Manufacturing

Nike and Additive Manufacturing

“History is one long processional of crazy ideas1” remarks Phil Knight in his autobiography on the creation of Nike. Since its founding in 1964, Nike, an American sportswear company, has transformed the industry, with 2018 revenues of $36.4bn, up 6% from 20172. Committed to embracing technology and innovation, the company has incorporated 3D printing into its manufacturing processes with the aim of producing products that continue to support athletic performance3. With the potential to reduce mass production times4, additive manufacturing is essential to Nike’s continued success.

As the capabilities of 3D printing advance, it is essential for Nike to utilize rapid prototyping and digitally optimized design. Within the supply-chain, rapid prototyping can be used to accelerate development processes while reducing costs5. As Nike partners with athletes to understand their evolving needs, management can produce shoes and test them at a more rapid rate. This quick feedback loop will reduce the time it takes for Nike to bring a shoe to market. Since rapid prototyping allows Nike to continuously adjust small aspects of the design and receive feedback on each adjustment, shoes will go through more comprehensive testing than before, in turn increasing customer satisfaction. Additionally, digitally optimal design will change product development by allowing Nike redesign products in an easy and cheap manner, leading to faster production times, improved quality, and increased consistency amongst products. Taken together, these initiatives will allow management to accelerate and improve processes while reducing costs and remaining competitive.

With its first jump into additive manufacturing, Nike worked with track and field Olympian Allyson Felix to engineer Flyknit6, a 3D printed shoe that increased dynamism. To maintain its focus on 3D printing the short term, Nike will commercialize this shoe and its newer model Flyprint7. More importantly, Nike will continue to make process improvements and reimagine designs as it gets feedback from top athletes. Through 3D printing, Nike can escalate its precision and speed by prototyping six times faster than previous 2D methods. The reduction of time to produce this shoe comes at a limited cost to Nike as the process improvements, such as using specific lines of material, do not deter from global construction and processes currently in place7. As the product development cycle accelerates and turnaround times are reduced, Nike will be able to get its shoes to market at a faster rate. In the medium term, management at Nike will focus on project manufacturing revolution or “ManRev,” which aims to seek the benefits of additive manufacturing by increasing speed to market and enhancing customization capabilities8. The goals of this project are twofold: to heighten margins by lowering materials and manufacturing costs and to enhance the speed of innovation. Management estimates that product testing, which currently takes weeks or months, could soon take days or hours9. As Nike continues to improve efficiency and scale its processes, 3D printing will impact how Nike makes profit. The growing trend of additive manufacturing will result in Nike shifting its sources of profit from production to design8. With this shift, Nike will intensify its emphasis on design thinking and hire individuals that specialize in this space.

In addition to utilizing additional manufacturing for shoe production, Nike should apply these techniques to its apparel lines and work towards decreasing throughput time and decreasing cycle times for its clothing brands – specifically its sportswear brand. Sales for sports fitness and clothing in the US are projected to reach $231.1bn by 202410, and the ability to manufacture products at a rapid speed could increase Nike’s market share. The company should also look to partner with a technology manufacturing start-up who can instill some of its knowledge into Nike’s processes. 3D design platform CLO11 use 3D printing and AI insights to alter fashion designs on the fly and in turn elevate customer satisfaction. By partnering with companies who specialize in additive manufacturing for fashion, Nike can expand its capabilities at a faster rate.  Lastly, Nike can use its athletes as marketers and spokespeople for 3D printing. This new wave of manufacturing will easily appeal to early adopters, but to sufficiently market to the early and late majority, Nike can use brand sponsors such as Serena Williams, LeBron James and Christiano Ronaldo to educate consumers on the performance benefits of 3D printed products.

As Nike’s management combines design, technology and innovation to catapult the brand into the future, embracing additive manufacturing is essential. While management has tactfully employed short and medium-term plans to reimagine design, improve processes, and reduce manufacturing times, it is unknown how the company will react to the actions of competitors and if mass customization is possible. How will Nike distinguish itself amongst competitors such as Adidas, who are also using additive manufacturing? Will Nike be able to use 3D printing for mass manufacturing and mass customization, and if so when?

(Word Count: 800)

Sources:

1Phil Knight, Shoe Dog (New York, NY: Scribner, 2016), p. 5.

2Nike, 2018 Annual Report, p. 71, https://s1.q4cdn.com/806093406/files/doc_financials/2018/ar/docs/nike-2018-form-10K.pdf, accessed November 4 2018.

3“At Nike the Future is Faster and it’s 3D,” press release, May 17, 2016 on Nike website, https://news.nike.com/news/nike-hp-3d-printing, accessed November 4, 2018.

4 D. Spaeth, “3D Printing is Changing the Face of Multiple Industries,” ECN: Electronic Component News, 61, no. 9 (October 2017): 21-23, http://web.a.ebscohost.com.ezpprod1.hul.harvard.edu/ehost/pdfviewer/pdfviewer?vid=1&sid=9926301c-be37-490a-9483-025e51f60c64%40sessionmgr4006m accessed November 4, 2018

5Deloitte & Company, July 2015, “3D Opportunity for Product Design” https://www2.deloitte.com/insights/us/en/focus/3d-opportunity/3d-printing-product-design-and-development.html , accessed November 7, 2018.

6“Nike Zoom Superfly Flyknit” press release, March 16, 2016 on Nike website, https://news.nike.com/news/allyson-felix-track-spike, accessed November 4, 2018.

7“What is Nike Flyprint?,” press release, April 17, 2018 on Nike website, https://news.nike.com/news/nike-flyprint-3d-printed-textile, accessed November 4, 2018.

8Bradley Seth McNew., “Nike Inc.’s “ManRev” Project — How Nike Plans to Shape the Future of Manufacturing,” The Motley Fool, (October 2016). https://www.fool.com/investing/2016/10/27/nike-incs-man-rev-project-how-nike-plans-to-overha.aspx, accessed November 4, 2018.

9McKinsey & Company, January 2014, “3-D printing takes shape” https://www.mckinsey.com/business-functions/operations/our-insights/3-d-printing-takes-shape, accessed November 7, 2018.

10“The Growth of Sales in Sportswear,” press release, August 10, 2017 on Business Insider, https://markets.businessinsider.com/news/stocks/the-growth-of-sales-in-sportswear-1002249734, accessed on November 4, 2018.

11“The Future of Fashion: From Design to Merchandising, How Tech is Reshaping the Industry,” CBSInsights, (February 2018). https://www.cbinsights.com/research/fashion-tech-future-trends/, accessed November 4, 2018

 

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8 thoughts on “The Merging of Sports and Technology – Nike and Additive Manufacturing

  1. This is a thought-provoking piece. I particularly like the well-thought out action plan anchored in rapid prototyping and celebrity sponsorship. You mention “The reduction of time to produce this shoe comes at a limited cost to Nike as the process improvements, such as using specific lines of material, do not deter from global construction and processes currently in place.” I agree that there is likely a net-positive impact from Nike’s utilization of 3D printing, but I disagree with the assertion that it will be minimally disruptive to other industries. 3D printing threatens to disrupt vulnerable populations that currently work in Nike’s shoe factories. Over 1M+ contractors currently help make Nike shoes and I wonder what happens to those jobs as 3D printing becomes the preferred method of production (https://www.bizjournals.com/portland/blog/threads_and_laces/2014/05/how-much-do-nike-contract-factory-workers-get-paid.html). On the one hand, this could be net-positive given the horrific workplace conditions like sub-standard pay that have been reported over the years (https://www.bizjournals.com/portland/blog/threads_and_laces/2014/05/how-much-do-nike-contract-factory-workers-get-paid.html). On the other hand, this could be net negative given many of these contractors are located in the developing world and there are limited alternative opportunities. This does not change many of the conclusions you asserted in your article, but does beg the question of how disruptive this innovation will be to the world economy and who will bear the brunt of the negative externalities.

  2. If additive manufacturing requires less labor than comparable methods, how would the rise in this technology affect global supply chains in apparel manufacturing? If we expand this idea outside apparel but to many other manufacturing industries, one could imagine a world where jobs leave traditionally low cost countries. How does this possibility affect governmental funding of these technologies?

  3. This was a pleasure to read – great job Robert! Like you, I too wonder what implications using 3D printing for mass manufacturing and mass customization would have for Nike’s brand. Quartz reported that Nike COO Erik Sprunk noted “the ability for consumers to 3D print a pair of sneakers is close at hand,” [1]. Though Nike may save by reducing lead times and the labor needed to produce shoes, I wonder if the company may be in danger of going too far with 3D printing. If consumers are able to print their own products, will Nike’s brand equity be damaged as a result? How will they maintain a design standard and look if customization goes too far? Further, how will they prevent consumers from recreating the exclusive lines (like Jordans) they sell at a premium and release in small quantities? This likely wouldn’t be an issue for many years, but as Nike moves in the direction of allowing 3D printing and customization for the masses, it is something they will need to consider.

    [1] Marc Bain, “Nike’s COO thinks we could soon 3D print Nike sneakers at home,” Quartz (October 2016). https://qz.com/518073/nikes-coo-thinks-we-could-soon-3d-print-nike-sneakers-at-home/, accessed November 2018.

  4. You make a compelling case for how Nike benefits from additive manufacturing. I do worry that there’s not much of a competitive moat with that, though. I see it as a way for the company to reduce costs (in selective applications), though Adidas et al certainly can do the same. I don’t think the consumer cares enough about whether or not their shoes are 3d-printed, therefore this innovation is only really meaningfully impactful from a cost standpoint, which will eventually be a benefit had by all competitors in the category.

  5. This is a great read on a topic I find very interesting and relevant! Very good overview of the current trends, benefits, and risks. In addition to Nike’s challenge of distinguishing themselves from competitors, I wonder if they should also be concerned about potential counterfeit products. As additive manufacturing technology becomes more efficient, it may become cheaper for average people and smaller companies to purchase. This would increase the risk of counterfeiting especially in developing countries where intellectual property rights will be very difficult to enforce.

  6. Great article. I really like the idea of AM for companies like Nike who mass produce products around the globe. In addition to the supply chain, manufacturing, and design efficiencies made possible with AM, could AM also be used to deliver a more customized experience for customers? It is well documented that Nike works with super-star athletes to create substantial performance enhancing changes to its shoes. These shoes are then custom made for that athlete that gets the direct benefit of perfect size and quality. In the future, Nike can differentiate itself by bringing customization to the masses. Imagine a world where you walk into a Nike store, they measure your feet, and then 3D print your running shoes in the back according to the exact specifications you need. This would be attractive to the average consumer and to the many non-professional sports players across the country who could now get basketball shoes, soccer cleats etc. made exactly to measure.

    I also think Nike has to be careful that 3D printed shoes or clothes do not have inferior quality. While AM may dramatically reduce costs for the company and lead to more innovation, if the product is inferior people will eventually notice and it will hurt the brand and its sales.

  7. Really interesting read! I remembered reading a while ago when Formlabs (one of the largest venture-backed 3D printing startups) announced their partnership with New Balance to do something similar (https://formlabs.com/company/press/formlabs-and-new-balance-come-together-3d-print-high-performance/).

    My main question after reading your article, and the same question I have every time I read about a consumer brand using 3D printing, is will it ever make economic sense for them to shift mass production to 3D printing? It’s hard to imagine a near future where 3D printing outperforms traditional mass production methods in terms of cost (e.g. injection molding). 3D printing has a relative advantage when customization if highly valuable (e.g. medical implant) or volumes are relatively low and quality is paramount (e.g. aerospace), but I just don’t see how the tech fits into the shoe industry at scale… in any case, will be something interesting to continue monitoring. Great article!

  8. This is a great piece! I love how Nike has been employing additive manufacturing techniques for both product innovation and process improvements, and are successful at both. In particular, as a brand that is known for constant prototyping of products before they release the final version to ensure perfection, Nike can definitely leverage the reduced costs and improved throughput time associated with additive manufacturing. At scale, though, the positive effects of additive manufacturing may not persist, and as a company that often produces at large volumes, this might actually prove detrimental to Nike.

    As Nike and Adidas are competing head-to-head in the ‘additive manufacturing for footwear’ space, I believe it is possible for smaller startups with more differentiated value propositions may come up because of the ‘unsealing’ effects afforded by additive manufacturing. It is very important for Nike to recognize this threat, and be alert to any niche market segments they may be losing out in. For instance, it is now possible for a footwear startup to sell uniquely personalized luxury footwear through additive manufacturing, given the smaller fixed costs, which may infringe upon some of Nike’s market.

    Also, as your touched upon in your write-up, 3D printing can be used to build extremely customized footwear for athletes to optimize performance, but it is important to ensure that there are no quality concerns with these products.

    I believe that Nike should consider introducing new product lines that leverage additive manufacturing to bring about better customization, and possibly price them higher. 3D printing technology is still not mature enough to risk being deployed for mass manufacturing or customization, and a market leader like Nike should be cautious about experimenting with a large fraction of their customers.

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