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Nike Inc. and supply chain software supplier i2 Technologies are pointing fingers at each other after a flawed i2 implementation upset Nike's inventory and ultimately forced the footwear maker last week to slash earnings estimates.
Nike officials said an i2 demand and supply planning application didn't perform as expected, resulting in shortages of some footwear models and excess stock of others. Executives at i2, however, maintain that the problem was caused not by the software itself, but by Nike's customized implementation.
Regardless of who's to blame, the resulting inventory shortages will reduce Nike's fiscal third-quarter sales by as much as $100 million. Earnings estimates for the quarter, which ended last week, have been cut to 34 to 38 cents per share from 50 to 55 cents.
Nike has been working on its i2 software implementation since June as part of a $400 million IT overhaul designed to streamline communications with buyers and suppliers and lower operating costs. But glitches with the i2 demand and supply planning module led Nike to overestimate demand for some shoes while underestimating demand for others, creating serious inventory problems, officials said.
"This is what we get for our $400 million?" Nike chairman Philip Knight told financial analysts when the company issued its earnings warning last week.
The i2 software failed to meet expectations "both in performance and functionality," a Nike spokeswoman said. Nike and i2 have "created some technical and operational workarounds" and the implementation is now stable, she said, but the financial impact of the glitch will be felt for six to nine months, until Nike...