Inventory Management Assignment: Warehousing Facilities For Nike in Vietnam
Prepare a report on inventory management assignment concerning a business case of Nike and address the following tasks:
Task 1: Warehousing options for Nike
Task 2: Choice of location for setting up a warehouse facility for Nike
Inventory Management AssignmentTask 1: Warehousing Options
The supply chain and logistics operations are pretty vital to consider in order to coordinate the business operations. Nike has also contributed to improving their intermodal transport system in order to focus on their warehouse management and reduce the environmental and economic stress on the company. It is also essential to consider the factors that will be most influential for the company in terms of globalising the products of the company (Richards and Grinsted, 2020). As a result of that, it becomes pretty essential in the process to consider the warehousing choices and inventory management system. In this section, the relevance of inventory management and its technologies and usages are discussed in terms of Nike's business management, and the choice of warehouse operations and transport system has also been elaborated in this process. Furthermore, a discussion has been created based on the forward and reverse logistics management followed by Nike in their global business operations.
As stated by Poo and Yip (2019), the warehouses and distribution stores of Nike will be essentially designed in a process that suits the SCM process of the company and the overall demand that the domestic market of Vietnam presently has. In this process, the assessment of the geographic locations of the warehouses will be pretty essential. The size of the manufacturing plants of Nike will be quite large, and hence it will be necessary for Nike to select any location that is not congested in nature (Islam, Pulungan, and Rochim, 2019). Apart from that, the communication channels that those areas have been able to develop to date will also be essential in this regard.
Figure 1: Supply Chain Flow Chart of Nike in Vietnam
(Source: Created by the Author)
The above-presented diagram highlights the exact process that Nike follows in terms of managing its supply chain network in various global markets. As per the discussion of Wi?niewski (2018), it will be essential for the organisation to follow an equivalent model in the new sectors of Vietnam as well, where the warehouses and manufacturing facilities of the company will be developed. In this process, the management of the overall demand and supply process of the products of Nike will be managed in a proficient manner. The general operation of procuring the products of Nike will be handled through the computer system and IoT framework that Nike will utilise in terms of operating the warehouse and distribution centres (Botha, Grobler, and Yadavalli, 2017). The overall process will be followed according to the order that has been highlighted in the SCM management diagram.
Inventory Management System
The process of managing the inventories in the Nike SCM framework is done in a proficient manner. As a result of the methodologies like Six Sigma and Agile, Nike is able to handle all its supply chain operations in a prolific manner (Richards and Grinsted, 2020). However, certain factors will be essential in terms of developing the warehousing and the manufacturing centres in a new location. In the following segment, the analysis of these factors has been presented.
Size of the Warehouses
The size of the warehouse that Nike will develop will be pretty essential for the brand. The minimum size of the warehouses to be established in this regard must be above 50,000 sq. feet. It will be necessary for handling the increasing demand for the products of Nike in the domestic market of Vietnam (Rzepecki, 2019). Apart from that, the size of the warehouse will also be essential for the management of the technological superiority of the company in its workspaces. However, the organisation should have the option of expanding the warehouses in the upcoming period as per market demands.
Type of products Stored
Various types of products are stored within the locations where the organisation will develop its warehouses and supply chain networks. Apart from the sportswear and clothing products, Nike would keep a short range of accessories and even personal care products in these facilities. According to the analysis of Richards (2017), the organisation will also need to store the raw materials and chemicals that will be utilised in the process of developing its products as well.
Usage of Technology
As per the statement of Chan et al. (2017), the utilisation of intelligent warehouse management systems will be pretty essential for the process of managing the operations of Nike in Vietnam. Apart from that, Nike will also need to implement IoT technologies to order the products stored in the warehouses and distribution centres of the organisation.
Forward and Reverse Logistics Management
As stated by Poo and Yip (2019), the maintenance of the forward and reverse logistics agreement will be pretty essential for Nike when the warehouses and distribution centres of the company will start working in full flow. The management of Nike must implement a robust digital tracking system that will be able to fetch the detailed location of every product that has left the warehouse of the company (Faber, De Koster and Smidts, 2018). In terms of the reverse logistics process, the warehouse should accept the products returned by the consumers of the stores in a proper manner.
Intermodal Transport System
As per the analysis of Pane, Awangga and Azhari (2018), the modal choice of Nike will be pretty essential for the purpose of setting up the warehouse and the SCM elements of the organisation in a new location. For this purpose, the intermodal transport design will be used. As opined by Andiyappillai (2019), the intermodal transport system is mainly based on the utilisation of various transport mediums for delivering or importing the products associated with the business.
Figure 2: Intermodal Transport Design of Nike in Vietnam
(Source:Tejesh and Neeraja, 2018)
The above-presented figure shows all the elements that are connected with the business process of Nike in Vietnam. In this regard, the analysis of the nodes that will be utilised for transporting the products of Nike will be essential (Tejesh and Neeraja, 2018). Initially, the origin of the transportation process will be conducted through roadway transportation. Then the products of Nike will be transported through rail carriers and maritime transportation as well. According to the statement of Ashika (2019), the selection of the transport mechanism for Nike will also depend on the value of the freight and the location where the products must be delivered. In this process, airway transportation will be preferred over the roads and maritime transport if the value of the products is on the higher side. The price range of the overall freight will also be considered in terms of delivering them to different locations (Teerasoponpong and So Padang, 2022). It is pretty evident that the selection of the roadways and the railways will be cheaper than maritime or air transportation for Nike. As per the discussion of Dey (2021), the choice of multimodal or transmodal systems has not been selected in this regard as a result of the higher cost requirements of these processes. Nike would need to ensure that it keeps the overall cost of transportation as limited as possible as well. It will be helpful for maintaining the cost leadership position of the company in the Vietnamese market.
The advancement of the technology will be beneficial in terms of developing new innovation in the process of business technologies and operations for Nike. As a result of that, the company will be able to improve its warehousing operations in a short lead time and ensure a reduction in the cost. The enterprise will further make possible achievements in improving the inventory management and transport system so as to ensure the logistics operations and delivery activities are undertaken within a specific duration of time. This will enable the firm to generate positive reviews and the customer experience in the process, along with leading to an increase in market satisfaction level. Furthermore, the organisation can benefit their values and brand image through establishing a solid communication channel in the SCM process, and that will also generate better lead teams, reduce the environmental impacts and will also increase the potential of logistics management of Nike in the Vietnam market.?
Inventory Management AssignmentTopic 2: Choice of Location
The selection of the locations for setting up the warehouse facilities becomes quite essential in order to generate a robust supply chain network (Fleischer, Graf and Lange, 2020). In Vietnam, the warehouse facilities of Nike would be established around Ho Chi Minh City, commonly known as Saigon. It is a vast city with all the modern amenities and transport facilities that will be required to set up a professional SCM network. Nike will be able to control its nationwide supply chain process as a result of having warehouses in Saigon (George, Ulhaq and Nayak, 2020). The analysis of the selected locations for developing the warehouse facilities will be presented in the following section.
According to the discussion of D’Andrea (2021), the location of the distribution centres, stores and manufacturing facilities of Nike in Vietnam will depend on various essential factors like the government regulatory policies, availability of raw materials and technology, cost of labour, land cost and so on. The main distribution centre of Nike in Vietnam is located in Saigon Notre-Dame Basilica. It is pretty rightfully situated on the outskirts of the city as the size of the facility will be quite large. The selection of the locations of the warehouse and manufacturing factories would need the primary reconnaissance of the areas around the city (Alawneh and Zhang, 2018). As per the statement of Dinh (2020), the company would want cheaper land in vacant locations, which will be able to reduce the cost of developing the facilities. However, the sites must have proper connections with Ho Chi Minh City as well. It will be essential for delivering the goods to various parts of the region. The potential options that Nike can consider in terms of setting up the SCM facilities are Tan Uyen, Bien Hoa, Tan An, An Lac and Ben Cat. As per the evaluation of Civelek (2017), the similarity between all these locations is that they have massive vacant places which can be transformed into SCM facilities in a lower price range. These locations will also be proficient in terms of trucking activities as Ho Chi Minh City is well-connected with national and state highways.
Presently, the situation of Nike is quite robust within the Vietnamese market as the organisation itself is a global brand. According to Hue and Tuyet (2021), the manufacturing statistics of Nike are also quite robust in the South Asian zone as 27% of the global production of the company occurs from regions like Vietnam and China. However, the most critical issue that the company is facing in the process of maintaining a robust degree of profitability in the business is the high percentage of rivalry factors in the market (Nica, Chiri?? and Ionescu, 2021). Global companies like Adidas and Reebok are expanding their business process and SCM network in the South Asian region as well. Apart from that, various domestic brands are also trying to grab some market share by imitating the products of Nike and other available international brands.
Selection of Locations
As per the analysis of Ovchar and Golubka (2018), the selection of the locations that have been presented in the above section must be well-justified to demonstrate their long-term viability as essential parts of the SCM framework of Nike. It will be necessary to explain all the factors that were selected for the reason of finalising the potential locations of Nike's warehouses and distribution centres.
As opined by Ovchar (2018), the analysis of the factors that will occur from the side of the organisation, also termed as the supply-side factors, will be essential in terms of selecting the warehouse locations. The impact of the supply-side factors is most prominent on the overall success of the supply chain network of any organisation.
The cost of labour within the outskirts of Ho Chi Minh City is relatively low in comparison with the other parts of the country. As various people migrate to these regions from different parts of Vietnam, Nike will be able to get workers for the warehouse and distribution centres at a cheaper rate.
According to Tu and Giang (2018), the cost of land for the facilities located near the central area of Ho Chi Minh City is relatively high for obvious reasons as the city itself is highly congested. However, it is not the case for the locations which are located on the outskirts of the town. The sites like Tan An and An Lac have vast lands that are pretty low in the price range. As a result of that, Nike will be able to develop the SCM facilities with the utilisation of a minimum amount of resources.
The availability of conventional energy can be a challenging task for Nike as these locations have some minor power supply issues. However, the organisation can arrange for its own power supply facilities for operating the manufacturing and distribution centres (George, Ulhaq and Nayak, 2020). In this process, the utilisation of renewable energy resources can be pretty proficient for Nike. The organisation can utilise energy sources like solar cells and wind energy in this regard.
The cost of transporting the products of Nike to various stores in the region will also be relatively low as a result of the robust roadway network of Ho Chi Minh City and its outskirts. Furthermore, organisations can also utilise air transportation to transport the products to other parts of the country and even in foreign markets (Fleischer, Graf and Lange, 2020). The utilisation of the Saigon Airport will be majorly done in this regard.
Demand Side Factors
As opined by Hoa et al. (2020), the factors that will be essential for the purpose of satisfying the consumers and fulfilling the requirements of the buyer base are known as the demand-side factors.
Suitability of the Sites
According to Hue and Tuyet (2021), the geographic location of the sites that have been selected for the purpose of developing the warehouses is quite proficient as they are located around the core region of Ho Chi Minh City. As a result, the organisation will be able to connect these warehouses and distribution centres with various parts of the country.
Image of Location
As stated by Nguyen (2020), the locations that have been selected for this purpose are free from critical political and socio-economic issues. The communities that are present within these locations are also friendly to local businesses.
Convenience of Customers
As a result of setting up the distribution centres at the selected locations, the consumers of Nike in Vietnam will be adequately served. The customers will also be attracted towards the company if they get their ordered products within a shorter time span.
Viability of Nike in the Country
The overall growth and profitability of Nike can be developed in a robust manner as a result of developing the warehouses and distribution centres in the selected locations. The organisation can set up a sustainable and environment-friendly manufacturing centre to enhance the overall viability of the brand (Tu and Giang, 2018). In this process, it will be essential for Nike to manufacture the footwear and other crucial presents without the utilisation of any material that is harmful to nature. In this process, it will be able to meet the sustainability goals of the company. Apart from that, the organisation will also be able to meet the enhancing demand of the consumer base in the domestic market of Vietnam with the newly built manufacturing facilities (Nguyen, 2021). Lastly, the utilisation of technological advancements like IoT framework and data-based analytics can also be helpful for Nike in the process of improving its growth within the Vietnamese markets.
As a global leader in footwear and Sports merchandise, Nike can improve its business in a proficient manner as a result of establishing the supply chain network in Vietnam. The warehouses and the supply chain elements that would be found in this region can also be used for international manufacturing in the upcoming period. In this process, Nike will be able to design a robust measure of developing its business in the forthcoming period. ?
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