Inbound Logistics

Our Approach

Our overall aim for logistics is to improve the carbon intensity of our operations - in other words, achieving growth in revenue and units while decreasing emissions. Our aim is for each of Nike's regions to thoroughly understand and take responsibility for the climate impact of its logistics. We also ask regions to provide data so that we have central oversight and the ability to note trends and shape the way we operate. It's an ambitious task, given that this requires local ownership, coordinated efforts, collaboration with transport partners in our supply chain and new systems for tracking all variables in shipping decisions.

Our analysis shows that inbound logistics accounts for 23 percent of Nike's climate impact. It is the largest single area of impact in our supply chain outside of manufacturing. Inbound logistics - getting product from factories to distribution centers, typically across continents - is largely managed by transportation partners. We continue to measure our logistics CO2 emissions with a first-generation carbon calculator tool co-developed with the University of Delaware.

While net revenue for Nike brand grew 70 percent, CO2 emissions increased only 14 percent from FY03 to FY09, largely as a result of better container utilization and a significant reduction in the use of air freight. This resulted in a 4-percent improvement in emissions intensity (number of units shipped per tonne of CO2). These results are largely the result of business-driven shipping decisions focused on optimizing cost, not a direct effort to reduce carbon emissions.

We need to be able to understand the carbon impact of decisions we make as part of forecasting. And to realize our goal of an absolute reduction, we need to do more.

Nike Inbound Logistics CO2 Emissions

In addition to realizing CO2 reductions by using better forms of travel, we can reduce or eliminate emissions by shipping smarter. That includes optimizing the use of containers. In FY09 our U.S. group realized more than $8.2 million in savings through better container utilization, eliminating unnecessary trips and air freight reduction.

Assessing Our Impact

Prudent planning will require a new generation of scenario planning tools. We are scoping and testing tools that will enable us to analyze factors including the number of miles, type of transport (e.g. air, rail, sea) and number of containers, all of which we track now. We are pursuing solutions that measure these alongside assessing impacts of process changes such as consolidation and location of distribution centers.

Our data collection and work to date is helping us understand the greatest areas of impact and define regional ownership, understand the variables affecting emissions and incorporate NIKE, Inc. affiliates.

We are piloting new systems in our Western Europe and Central and Eastern Europe business units, which face multi-continental shipping challenges. Our teams are sharing their experiences to help develop our global roll-out. One of our key logistics partners, Maersk Logistics, developed a tool, provided Nike early access to it and is working side-by-side with our team to improve our collective ability to measure and report emissions. This tool will help us better connect the results from project execution to the overall reduction in logistics emissions in each business unit. Additionally, it gives us the capability to measure and report emissions from outbound logistics (from our distribution centers to the retail store). We will gain experience, skill and scenario planning competencies as we roll out this program to additional business units.

Collaboration

Because we work closely with shipping partners and others to get product from A to B to C, we do not control all the impacts in our logistics operations. To make real change, we need to collaborate with key partners who share our commitment to carbon reductions. We have affirmed this commitment with each of our key logistics providers.

Our work with these key suppliers brings us closer to a transparent industry standard for measuring and reporting the emissions from logistics. We are collaborating to assess the joint impacts to on-time delivery, cost and emissions and to share accountability in reporting. Additionally we are exchanging strategies and program plans at the senior level to improve the potential for emissions abatement.

In addition to partnering with those in our own supply chain, we are working with others in the industry and business to share learnings. Bodies including Business for Social Responsibility's Clean Cargo and EPA's Smart Way bring us together with companies as diverse as Wal-Mart, The Coca-Cola Company, Nordstrom, Ikea, and Starbucks, all of which realize the value of improving shipping even without owning the fleet. We are committed to sharing developments.

On the Horizon

We expect further advances in measurement and reporting tools. We are actively working with key partners on next-generation tools that will improve our ability to measure and report emissions from outbound logistics. We are working collaboratively with key logistics partners on long-range road maps which will outline specific projects aimed at reducing emissions. In addition, we will continue to use productive industry working groups to solidify a common set of measures and accountabilities for carbon reductions, and reporting and we will work to integrate emissions metrics into our scorecards and reward business, in part, on reduction results.