SPORTOGroup is a USA based international company, which operates retail outlets across the globe selling sports clothing and sports footwear.
As CEO of the company’s Spanish division of SPORTO Group, you arebased in Algeciras, Spainwhere you have a Regional Distribution Centre which is used as a base to distribute the company’s products across the country. Products are currently imported from two established suppliers:
- Sports Clothing-San Francisco, USA[goods shipped from the Port of Oakland]
- Sports Footwear-Sao Paulo, Brazil[goods shipped from the Port of Santos]
The products are despatched in 20ft sea containers from each supplier [approximately 250 containers from each supplier annually]. A small percentage of goods are transported by air when there is a requirement for goods to be dispatched urgently.
The Distribution Centre in Algeciras, Spain typically holds the following inventory levels:
- Sports Clothing 6 weeks cover
- Sports Footwear 3 weeks cover
The company’s sales across the globe have grown significantly and the two factories supplying Spain have been running at full capacity for some time. Consequently, you have been asked to look for alternative suppliers.
Discuss what factors you would expect your Sourcing Manager to consider when benchmarking alternative potential suppliersagainst each other.
Assume after carrying out the benchmarking exercise it is decided to source the products from factories in the following locations:
- Sports Clothing -Colombo, Sri Lanka
- Sports Footwear-Kuala Lumpur, Malaysia
As these new suppliers do not have experience of supplying Spain, you have requested your Logistics Manager to visit each factory and ensure that relevant logistical issues are reviewed and agreed before starting to import products from these sites. Discuss the key issues you would expect the Logistics Managerto assess.
3 Transit Times and Inventory Levels
[a] Produce a table showing the transit time by sea from your current suppliers’ ports of export[Port of Oakland used for goods from San Francisco, USA to Algeciras and Port of Santos used for goods from Sao Paulo, Brazil to Algeciras] and the transit times from the ports you would select to ship the goods from Sri Lanka and Malaysia, respectively, to Algeciras. [Use www.searates.com for transit times].
[b] Based on these transit times discuss whether you would consider reviewing the level of inventory you hold in Algeciras of sports clothing and sports footwear and, if so, what suggestions you would make.
A further 18 marks for overall clarity, conclusion and any recommendations you would put forward to ensure the new operation was implemented successfully.