Identify an appropriate inventory management strategy which Nike could implement in order to be more efficient in servicing its Russia, Turkey and South African markets?
Nike has a central customer service center (distribution center) located at Laakdal in Belgium. The center is 200,000 square meters in size and serves 45,000 customers in EMEA (Europe, Middle East and Northern Africa) with footwear, apparel and equipment. The center receives products from supplier factories around the world for distribution to retail clients both before the start of all four seasons each year, as well as during the 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 center is a clear example of a company deciding to centralize receiving, storage and shipment to customers at one location in Europe. The benefits including 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 standardized for all flows of goods and all customers. Not every shipment is handled in a standard way through a single distribution pipeline:
• 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.
• New growth areas that are served from the center are Russia, Turkey and South Africa. For Russia, the first satellite center with small inventories was recently opened to enable faster local replenishment of selected products.
• Selected shipments to selected retailers are dealt with by a materials handling operation at the center. This mainly involves labelling and re-packing operations.
• Some retailers share weekly point of sale data with Nike, enabling it to replenish inventories based upon actual sales.
Identify an appropriate inventory management strategy which Nike could implement in order to be more efficient in servicing its Russia, Turkey and South African markets?
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