Diagnose
Another issue relates to UA’s distribution strategy of only operating 2 leased distribution facilities located closely to each other in Glen Burnie, Maryland, United States. Before deeply analyzing this problem, the fact needs to be noticed is that UA outsources nearly 100% of their manufacturing from Asia, Latin America and other areas. All finished products that are manufactured overseas are shipped to the distribution centers in Glen Burnie first, then they will be distributed to retailers, wholesalers and company stores of UA in U.S., Canada and Europe via third party logistics. So what happens if a UA company store in Europe has backorders of a certain product, for example, GoldGear shirts? They have to wait for a relatively long …show more content…
First, because UA only have their products stored in 2 closely located places in Glen Burnie, the accessibility is limited if products are needed, for instance, in California. Second, by locating distribution centers centrally, UA has potential high cost of rush delivery (“Pros and Cons of a Centralized Warehouse”). If there is a mistake made in calculating how many products are needed or how long the inventory should last, UA would have to compensate for that mistake by paying additional fees for rush deliveries. If these mistakes happen frequently, then the money saved from choosing to use a centralized system will balance out. Third, even though UA can reduce their inbound logistics costs, their outbound logistics costs will continue to remain high. Another disadvantage, as mentioned before, is that having centralized located distribution centers makes UA to be less responsive to the market. The long supply line and transportation lead time may damage UA’s brand image and also increase the product obsolescence costs (Dess, Lumpkin, Eisner, and McNamara 226). In addition, if a natural catastrophe happens in Glen Burnie, UA will suffer from not only losing their inventories, but also losing their customer simply because they do not have a backup facility to support the normal …show more content…
One is that when products are needed, the entire fulfillment process will be much easier because products are stored in multiple places. Retailers or company stores can easily access to UA’s inventory. Also, since products will be spread out over a larger area while locating distribution centers at multiple places, the cost of delivering an order will decline significantly (Melendez). In addition, the time for delivering an order can be cut down pretty drastically (Melendez). So if a customer in China wants an AllSeasonGear shirt but the store currently does not have the product, he/she does not need to wait the products being shipped from the U.S., instead the product will be shipped from the distribution hub located in China with much short delivery time. All of these contribute to higher level of market responsiveness and lead to greater customer satisfaction, which can ultimately improve UA’s performance and generate more
Another issue relates to UA’s distribution strategy of only operating 2 leased distribution facilities located closely to each other in Glen Burnie, Maryland, United States. Before deeply analyzing this problem, the fact needs to be noticed is that UA outsources nearly 100% of their manufacturing from Asia, Latin America and other areas. All finished products that are manufactured overseas are shipped to the distribution centers in Glen Burnie first, then they will be distributed to retailers, wholesalers and company stores of UA in U.S., Canada and Europe via third party logistics. So what happens if a UA company store in Europe has backorders of a certain product, for example, GoldGear shirts? They have to wait for a relatively long …show more content…
First, because UA only have their products stored in 2 closely located places in Glen Burnie, the accessibility is limited if products are needed, for instance, in California. Second, by locating distribution centers centrally, UA has potential high cost of rush delivery (“Pros and Cons of a Centralized Warehouse”). If there is a mistake made in calculating how many products are needed or how long the inventory should last, UA would have to compensate for that mistake by paying additional fees for rush deliveries. If these mistakes happen frequently, then the money saved from choosing to use a centralized system will balance out. Third, even though UA can reduce their inbound logistics costs, their outbound logistics costs will continue to remain high. Another disadvantage, as mentioned before, is that having centralized located distribution centers makes UA to be less responsive to the market. The long supply line and transportation lead time may damage UA’s brand image and also increase the product obsolescence costs (Dess, Lumpkin, Eisner, and McNamara 226). In addition, if a natural catastrophe happens in Glen Burnie, UA will suffer from not only losing their inventories, but also losing their customer simply because they do not have a backup facility to support the normal …show more content…
One is that when products are needed, the entire fulfillment process will be much easier because products are stored in multiple places. Retailers or company stores can easily access to UA’s inventory. Also, since products will be spread out over a larger area while locating distribution centers at multiple places, the cost of delivering an order will decline significantly (Melendez). In addition, the time for delivering an order can be cut down pretty drastically (Melendez). So if a customer in China wants an AllSeasonGear shirt but the store currently does not have the product, he/she does not need to wait the products being shipped from the U.S., instead the product will be shipped from the distribution hub located in China with much short delivery time. All of these contribute to higher level of market responsiveness and lead to greater customer satisfaction, which can ultimately improve UA’s performance and generate more