Solutions to Last Mile Concerns

Lighting the World

18-3 What manufacturing strategy should Nokero pursue? Should it continue to supply all of its light bulb orders from a single factory location in China? What impact could uncontrollable issues such as COVID-19 have on Nokero’s sourcing strategy?

Nokero is a company that makes solar-powered light bulbs. The company started out by selling its bulbs in Africa, where there is a great need for affordable and sustainable lighting solutions. Nokero has been successful in Africa, and it is now expanding its sales to other markets. One issue the company faces is how to manufacture its bulbs. Should it continue to supply all of its light bulb orders from a single factory location in China? There are advantages and disadvantages to this strategy. On one hand, manufacturing in China is relatively cheap, and Nokero can take advantage of economies of scale. On the other hand, shipping costs may increase as Nokero expands into new markets, and there is always the risk that production could be interrupted if there are political or economic problems in China. Another option would be to set up additional manufacturing facilities in other countries, closer to Nokero\'s target markets. This would reduce shipping costs and risks, but it would also be more expensive. Nokero must weigh these considerations carefully as it decides how to manufacture its products (Serapio, n.d.).

Of course, there are several potential problems that can arise from single source supply chain management. First, the reliance on a single supplier creates a situation of dependency, which can lead to higher prices and terms that are unfavorable to the buyer. Second, if the supplier is located in a different country, there is the potential for language barriers and cultural differences to create communication difficulties and delays. Third, if the supplier experiences problems with their own production or delivery, it can cause significant disruptions to the supply chain. Finally, if the supplier goes out of business or otherwise stops supplying the product, it can be difficult and expensive to find a new source. Given these potential problems, it is important for Nokero to carefully consider whether single source supply chain management is right for them.

When something like COVID strikes, however, it can seriously disrupt operations that are dependent on a single source out of China. China had a zero-COVID policy that meant many businesses were shuttered as the state tried to eradicate all COVID traces. This can be a big problem for a company like Nokero. In the future, Nokero may need to diversify its sourcing strategy in order to reduce its dependence on China. One option would be to source inputs from other countries with low labor costs, such as Bangladesh or Vietnam. Another option would be to develop long-term relationships with suppliers in different countries so that it can quickly switch between suppliers in the event of a disruption. By diversifying its sourcing strategy, Nokero can reduce its vulnerability to uncontrollable issues such as pandemics.

18-4 In terms of distribution networks, should Nokero maintain fulfillment warehouses in Africa, Asia, and Latin America? How should Nokero address the last mile issue of accessing people in the most remote locations?

The benefits of maintaining fulfillment warehouses in Africa, Asia, and Latin America include the ability to control inventory levels and respond quickly to customer demand. Additionally, it would allow Nokero to provide more tailored customer service, as well as take advantage of local market knowledge. However, there are also several potential challenges associated with this approach. First, it would require a significant investment in infrastructure. Second, it could lead to higher levels of inventory obsolescence if demand shifts. Third, it could create logistical challenges in terms of managing multiple warehouses across different time zones. Ultimately, the decision of whether or not to maintain fulfillment warehouses in Africa, Asia, and Latin America depends on a number of factors. Nokero will need to carefully consider the costs and benefits before making a decision.