Merloni Elettrodomestici SpA – Transit Point Experiment
|Merloni Elettrodomestici SPA (Merloni) is a major Italian manufacturer of high quality domestic appliances –of the |
|‘free-standing’ and ‘built-in’ varieties, both in Italy and throughout Europe. Founded in the year 1975 as Merloni |
|Elettrodomestici SpA by Vittorio Merloni, as a spin-off from Industrie Merloni. It was renamed Indesit Company S.p.A in |
|2005 after a company it acquired in 1987. Merloni distribution system consisted of a three tier distribution system based |
|upon the following network ...view middle of the document...
|In an effort to reduce the production planning lead times and inventory levels, Merloni implemented a successful A-B-C |
|inventory classification having a centralized planning system. With this system in place, they were not only able to |
|reduce the inventory levels but also were successful in shortening the production planning cycles at the regional offices |
|by 75%. This approach helped Merloni achieve a reduction in the production planning time horizon from four to three months|
|leading to reduction in the lead-time to firm orders from two months to one. |
|In their endeavour to further boast the reduction in the inventory level and heighten the production efficiency, management|
|came with the proposal of replacing the regional warehouses with "transit-points". With these transit points, products |
|arriving on trailers from the central warehouse and plants could then be shipped directly to smaller local delivery trucks.|
|However in doing so, the primary issue was to assess the feasibility of the transit point solution and its effectiveness in|
|improving efficiency, reducing operating and transport costs, reducing inventory requirement and improving customer |
|service. The secondary issue was to make room for an exhibition center in the Milano area without impacting the product |
|delivery mechanism |
A Brief Background:
The case is all about a decision made by Mr.Merloni on a transit point choice as against the choice of holding inventory in 17 additional locations there by focusing on the saving of expenses in this process besides how is choice enabled the company to progress from the stock holding passways enabling the company to reduce the total operating costs to as little as 20% of what they were before transit point suspending the warehouse lease payments and by discharging their warehouse employees.
The case was a real incident that occurred in 1986. Thanks to an exposition for its customers that was conducted in Mialno Regional warehouse. During the two-month period preceding the event, when...