You are the CEO of the Middle East Division of Sun and Sports, a USA based international company, which operates retail outlets across the globe selling sports clothing and sports footwear.
As CEO of the company’s Middle East Division you are based in Dubai where you have a Regional Distribution Centre which is used as a means of supplying your customers across the GCC region. Goods are currently imported from two established suppliers:
• Sports Clothing – Los Angeles, USA
• Sports Footwear – Algeciras, Spain
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 Dubai 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 the Middle East have been running at full capacity for some time. As a consequence you have been asked to look for alternative suppliers.
Discuss what factors you would expect your Sourcing Manager to consider when benchmarking alternative potential suppliers against 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- Shanghai, China
As these new suppliers do not have experience of supplying the Middle East, 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 what key issues you would expect the Logistics Manager to assess.
3 Transit Times and Inventory Levels
(a) Produce a table showing the transit time by sea from your current suppliers’ ports of export, Los Angeles and Algeciras, to Dubai (Jebel Ali), compared to the ports you are likely to use for exporting from Sri Lanka and China.
(b) Based on these transit times discuss whether you would consider reviewing the level of inventory you hold in Dubai of sports clothing and sports footwear and, if so, what suggestions you would make.
Provide conclusion and recommendation.