SCM B371

2020 Summer Examinations (PT-DL)

LOGISTICS (2020 Summer Term)

17 August 2020 Time Allowed: 2 hours 18:30 - 20:30

Important notes:
1. You should complete the examination by 20:30.
2. You are given an additional 15 minutes for uploading the answer script. Your answer script should be
submitted via Turnitin on the Online Learning Environment (OLE) by 20:45. Please allow enough time
for the submission process.

Instructions:
1. Answer this examination paper in English. Read the rubric(s) in the examination paper carefully.
2. This is a CLOSED-BOOK examination. You should write in your own words. You are NOT allowed
to access any course materials or external resources, online or in other form, during the examination.
3. You should complete the online examination on your own. You are NOT allowed to discuss, share, or
check your answers with other examinees or any third party.
4. You MUST type out your answers in Microsoft Word and submit the Word document of your answer
script via Turnitin on the OLE for plagiarism checking. Handwritten answer scripts will NOT be
accepted. Answers recorded elsewhere will NOT be marked. Begin each question on a new page and
type the question number at the top of each page you have worked on.
5. Rough work will NOT be marked. Do NOT upload or submit any rough work along with your answer
script.
6. You should name your file as follows:
Course Code + ‘_s’ + the first 8 digits of your student number.
For example, if your student number is 12345678, your file name should be:
SCM B371_s12345678
7. At the end of the examination, upload and submit your answer script via Turnitin on the OLE for
plagiarism checking. You are only allowed to upload ONE file when submitting your answer script.
You should make sure that all parts of your answer script are included in the same Word file. Please
make sure the correct file is attached for your submission. No re-submission is allowed.
8. Once you have submitted your answer script, a ‘successful submission’ message will appear with
details of your submission. Please double-check to make sure that your submission was successful.

© The Open University of Hong Kong

This examination paper is divided into TWO (2) Sections. Students are required to
answer ALL Sections and answer the number of questions indicated in each Section.

SECTION A (40 marks) Answer all questions in this section

Question 1 (40 marks)

Read the article of “Centralised distribution at Nike”.

Centralised distribution at Nike

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 support
the customer demand.
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.

Adopted from: Harrison, van Hoek, Skipworth (2014) Logistics Management and Strategy, Competing through
the Supply Chain, 5th Edition. Pearson (Intl),

SCM B371 2020 Summer Page 2 of 5

IN YOUR OWN WORDS, answer the following questions.
Word limit for question 1: Not more than 600 words in total (40 marks).

(a) Illustrate the logistics strategy Nike adopts here to achieve competitive
advantages. Describe how this strategy benefits Nike’s logistics
performance. (10 marks)

(b) Analyse the reasons to start satellite centres when Nike has a centralised
distribution centre. (10 marks)

(c) Discuss the pros and cons of locating materials handling operations, such
as labelling and packing, in a distribution centre, as opposed to in a
factory. (10 marks)

(d) Explain how the weekly point of sale data the retailers share with Nike
benefits Nike’s logistics performance. Propose how the retailer could
share sale data with Nike in real time instead of weekly sharing. (10 marks)

[END OF SECTION A]

SCM B371 2020 Summer Page 3 of 5

SECTION B (60 marks) Answer 2 out of 3 questions in this Section. Each question
is worth 30 marks. Word limit for each question is 450 words.

Question 2 IN YOUR OWN WORDS, answer the following questions. (30 marks)

(a) A Hong Kong-based electronics toy company with her own manufacturing (15 marks)
plant located in Shenzhen mainly exports products to Europe. Discuss the
main logistics costs of this company and propose how to reduce the
logistics costs and improve customer service levels for her customers.

(b) Explain why companies hold inventory in the supply chain and describe the (15 marks)
related risks. Suggest two ways to reduce the total inventories in the supply
chain. Use examples to justify your answers.

Question 3 IN YOUR OWN WORDS, answer the following questions. (30 marks)

(a) Discuss how drop shipments (i.e. direct shipments from suppliers to (15 marks)
customers) improve logistics efficiency. Illustrate the main concerns when
arranging drop shipments?

(b) The agenda in a management meeting is to discuss whether the company (15 marks)
should adopt outsourcing strategy for her own manufacturing operations to
third parties. Identify the main reasons to support the outsourcing proposal
and explain the risks involved. Use examples to justify your answers.

Question 4 IN YOUR OWN WORDS, answer the following questions. (30 marks)

(a) Illustrate the role of distribution center in modern supply chains. Analyse (15 marks)
the factors need to be considered in selecting the location and determining
the size of distribution center. Use examples to explain your answers.

(b) Packaging is becoming a more visible issue with current environmental (15 marks)
concerns about recycling and the reuse of packaging. Identify four types of
packaging designs that simultaneously satisfy both environmental concerns
and cost concerns. Use examples to support your answers.

SCM B371 2020 Summer Page 4 of 5

 [END OF SECTION B]

[END OF EXAMINATION PAPER]

SCM B371 2020 Summer Page 5 of 5