From factory to footwear - inside the Nike supply chain

Nike is still leading the pack. 
 
According to Brand Finance’s Apparel 50 report, the company holds its spot as the world’s most valuable apparel brand - worth over $31 billion. 
 
With more than 79,000 employees and a global operation that spans factories, retail stores, and e-commerce channels, Nike continues to dominate in footwear. Apparel and sports equipment follow close behind. 
 
But staying on top takes more than brand recognition. Behind the Swoosh is a supply chain constantly adapting to meet new pressures. From changing labor dynamics to rising customer expectations and rapid shifts in technology. 
 
In this blog, we look at how Nike is re-engineering its supply chain to keep moving faster, operate more sustainably and scale globally without losing local agility.

Lean at the core: Nike’s supply chain operating model 

Since the early 2000s, Nike has leaned into a contract manufacturing model, focusing on agility and low overhead. Rather than owning production facilities, Nike partners with over 120 independent factories in 13 countries.  

As of 2023, more than 50% of Nike’s footwear continues to be produced in Vietnam, with China and Indonesia making up most of the remaining volume (Nike FY23 Impact Report). 

By outsourcing production, Nike reduces fixed costs and shifts operational risk - a critical enabler of the company's lean manufacturing approach. This strategy saves an estimated $0.15 per unit compared to traditional in-house models - a substantial margin considering the company ships over 900 million units annually. 

Each facility typically accounts for no more than 5% of total output, which not only diversifies risk but helps Nike maintain production flexibility. Local material sourcing and factory-specific material management systems further reduce intermediate costs and simplify procurement. 

From Memphis to Mobile: rebuilding distribution around DTC 

Nike operates over 60 distribution centers globally, with Memphis, Tennessee, serving as its key logistics hub in North America. But the biggest shift in recent years has come in Nike’s go-to-market model. 

While wholesale remains important, Nike’s focus has aggressively shifted toward direct-to-consumer (DTC) sales. In FY14, DTC accounted for just 20% of Nike’s total revenue. By FY23, DTC made up over 44% of total sales - nearly $21 billion in revenue; thanks to the growth of Nike.com, mobile apps and owned retail stores. 

This shift comes with trade-offs: DTC increases control over brand experience and customer data but also places new logistical demands on fulfillment speed, reverse logistics and inventory responsiveness. 

DTC also requires more dynamic inventory management, especially as fashion trends shift faster and return volumes rise. Nike has responded by expanding its use of AI and demand sensing tools to improve forecasting and minimize overproduction. 

Orchestrating the sale of unsold or unwanted units to secondary markets is an entirely different logistical challenge, and as Nike continues to pivot toward DTC sales (and in doing so, almost certainly increases its reliance on secondary markets), it will have to augment its current approach to footwear distribution.

The sustainability mandate

Nike’s supply chain transformation is not just about speed - it’s about sustainability.

In 2025, Nike is working toward its “Move to Zero” targets: zero carbon, zero waste. The company now tracks environmental performance across its entire value chain - from factory emissions to shipping methods.

Key supply chain sustainability highlights include:

• 72% of Nike-owned and operated facilities run on renewable energy.
• Nike’s primary logistics providers are now required to track Scope 3 emissions and commit to carbon reductions.
• The Nike Refurbished program is expanding globally to give gently worn shoes a second life, reducing landfill waste and enabling a reverse logistics model that supports circularity.

Nike also launched its AirMI sustainability initiative, which uses recycled manufacturing waste to produce new Air soles - showing that even innovation can be repurposed for environmental gain.

Is automation still the future? 

Yes - but not in the way early forecasts imagined. 

Back in 2018, Morgan Stanley predicted that 20% of Nike and Adidas shoe production would shift to automated factories by 2023. While progress has been made - including pilot factories in the U.S. and Mexico equipped with automated cutting and assembly; labor arbitrage still dominates the economics of footwear production. 

That said, Nike is investing in localized, semi-automated production hubs that serve high-demand regions and enable faster “design to delivery” cycles. These hubs combine robotic automation, AI-assisted production scheduling and digital twin simulations to reduce waste and respond to fast fashion cycles. 

According to the World Economic Forum’s 2024 Global Lighthouse Network, Nike’s factory in Guadalajara, Mexico, is now considered a model “Lighthouse Factory” for its integration of automation and sustainable practices. 

Beyond optimization: building a responsive, resilient supply chain

Nike’s supply chain strategy is no longer just about efficiency. It’s about orchestration - aligning data, talent, systems and partners to meet growing complexity and consumer demand for speed, sustainability and personalization.

As the company deepens its DTC ambitions and ramps up its environmental goals, future investments are likely to focus on:

• Predictive inventory and demand planning powered by AI and machine learning.
• Expanded use of digital twins to simulate logistics networks and minimize risk.
• Resilient regionalization - balancing global production with nearshoring agility.
• Circular logistics infrastructure to support returns, refurbishment and recycling.

Where innovation meets execution 

Nike has long been known for innovation in product and brand but, its quiet supply chain revolution may be its most powerful asset yet. As lean becomes intelligent and sustainability becomes non-negotiable, Nike’s supply chain strategy offers a blueprint for brands navigating the modern global economy. 

Curious how your supply chain stacks up? 

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