Examine and discuss the reasons for Nike to utilize warehousing in order to optimize their operations n global markets.

Centralised distribution at Nike
Nike has a central customer service centre (distribution centre) located at Laakdal in Belgium. The centre is 200,000 square
metres in size and serves 45,000 customers in EMEA with footwear, apparel and equipment. The centre receives products
from supplier factories around the world for distribution to retail clients both before the start of all four seasons each year,
and during a given season. Prior to the start of a season, when work is at a peak, the workforce stands at some 2,300
operational staff. Off peak, that drops to 1,350 staff. Deliveries are very time-critical, given the seasonal nature of the
business. Retailers demand in-store availability on day one of a new season. The centre is a clear example of a company
deciding to centralise receiving, storage and shipment to customers at one location in Europe. The benefits include
consolidation of inbound shipments, lower inventory levels and better delivery service (in comparison to fragmented
warehouses scattered around Europe). This does not mean, however, that the logistics operations are standardised for all
flows of goods and all customers.
Not every shipment is handled in a standard way through a single distribution pipeline:
1. About a quarter of the volume of shipments is shipped to customers directly. These are larger shipments, such
as full pallets for larger customers – for which there is no need to consolidate with other shipments. As a result, it is
cheaper and quicker to make these shipments directly.
2. New growth areas that are served from the centre are Russia, Turkey and South Africa. For Russia, the first
satellite centre with small inventories was recently opened to enable faster local replenishment of selected
products.
3. Selected shipments to selected retailers are dealt with by a materials handling operation at the centre. This
mainly involves labelling and re-packing operations.
4. Some retailers share weekly point of sale data with Nike, enabling it to replenish inventories based upon actual
sales.
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Examine and discuss the reasons for Nike to utilize warehousing in order to optimize their operations n global markets.