Centralised distribution at Nike centralised and specialised, but not standardised Nike has a…

Centralised distribution at Nike
centralised and specialised, but not standardised 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

Centralised distribution at Nike
centralised and specialised, but not standardised 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:

_ 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 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.

_ Selected shipments to selected
retailers are dealt with by a materials handling operation at the centre. 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.

Questions

1 What are the reasons for a company, such
as Nike, with a centralised distribution centre to ship some products directly
to customers, not through the distribution centre?

2 What are the reasons to start satellite
centres when a company such as Nike has a centralised distribution centre?

3 What are the pros and cons of locating
materials handling operations, such as labelling and packing, in a distribution
centre, as opposed to in a factory?

4 What are the pros and cons for a company
such as Nike to take on these materials handling services as opposed to leaving
them to retail customers?