Manufacturing defects account for nearly 20% of Nike’s global footwear manufacturing waste.  From a sustainability perspective, this is a significant and controllable driver of environmental impact.  Besides generating waste, defects also increase factory energy consumption, reduce factory productivity, and increase costs.  As part of our strategy to help protect the future of sport, the top priority in Nike’s global manufacturing waste reduction strategy is to reduce defect-related waste, especially in phylon and rubber midsole and outsole components. 

Minimizing defects and sustaining that level of process control requires a systematic, data-driven approach based on Lean management principles. The key pillar to our defect minimization strategy focuses on establishing and maintaining a consistent set of best practices at the factories that generate almost all defect-related waste. However, to understand what best practices are necessary requires real-time tracking of key data such as defects by type, shoe model, operator shift, individual operator, shoe size, and specific mold used to make the component for an entire shoe factory.  If we can measure it, then we can control it.

Given the sheer volume of data generated in a factory producing tens of thousands of pairs of shoes per day, quick and easy methods of data collection and analysis are necessary to ensure real-time resolution of the manufacturing defects.  Stella, a Nike footwear manufacturing partner with factories in China, developed an innovative technology that leverages WiFi-enabled digital tablets and a data analytics application to collect and study all this data very quickly and efficiently.

As data enters the app through the tablet, the software automatically alerts the production team leader when defects exceed the target threshold so timely action can be taken to investigate and resolve the root cause of the defect before excessive waste accumulates.  Besides tablets, team leaders can also access detailed, real-time defect data on their smartphones. In addition, weekly analytical reports are generated and discussed by cross-functional teams to systematically focus continuous improvement efforts on the most common types of defects the factory can control. As a result, Stella cut its phylon midsole component defect rate in half within the first three months the system was operational.  

Role-modeling leadership in their industry and understanding the positive impacts that this significant waste reduction can have on the environment, Stella generously agreed to share their system at no cost with other Nike contract manufacturers in support of Nike’s global waste reduction strategy. To supplement the Stella technology, Nike has written a defect-reduction best practices playbook, hosts quarterly meetings for factories to share best practices, and has field consultants based near factories to help factories understand and apply best practices.  

Over the last year, Nike has worked with 17 factories that drive 90% of its injection phylon (IP) midsole defect waste globally to implement the Stella tracking system or similar systems based on the same principles. These factories have reduced associated defects an average of 23%.  This has prevented 450,000 KGs of waste, saved $1.6M, and prevented 2.1M KGs of CO2e.  

Given the success of this program in reducing IP midsole defects, Nike plans to expand it to address other types of footwear component manufacturing defects (e.g., rubber outsole defects). This will accelerate Nike’s work to reduce environmental impact and help protect the future of sport.