Case Analysis:
Merloni Elettrodomestici Spa
By
Sharath Chandra Rao Silvery PGP12094
Kumar Saurabh PGP12022
Vigneshwar PGP12104
Tejit Mithal PGP12046
A very brief insight into the Company: * Merloni Elettrodomestici SpA is an Italian company based in Fabriano and is one of Europe’s biggest makers of domestic appliances. * During the period from 1984 to 1986, Merloni undertook a number of initiatives to improve efficiency in inventory control and logistics. * One such initiative was the transit point experiment where in the Milano region, regional distribution centre was eliminated in favor of transit points which held zero inventory.
Question 1: What are the costs and benefits of Merloni's current distribution
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Advantages for Cross docking: * Cost saving in terms of infrastructure cost of regional warehouses and their maintenance. * Lesser amounts of overall inventory to be maintained * Lesser labor requirements due to closure of regional warehouses * Effect of bullwhip is lowered due to elimination of regional warehouses.
Disadvantages for Cross docking: * Because the regional warehouses will be eliminated, the capacity storage of the central warehouses should be expanded to meet the requirements of the extra Cycle inventory. * Intensive planning of daily shipment should be done (calculation of exact amount of goods to be shipped and arrangement of the goods) * Due to intensive planning, more skilled administration staff would be required. * If the customer does not order before 3pm, the delivery of the product would happen only after the second day. This can hamper customer satisfaction. * Since no inventory is maintained at near-by locations, the goods will have to be fetched from central warehouse thereby increasing lead time. * Demand variability is not easily supported by employing Transit Point methodology. If there is an urgent demand for goods in excess of truckload capacity then it can lead to huge additional cost. * If any of the vehicles break-down it could lead to huge delays and pile up of demand. Merloni needs to keep some extra vehicles as a backup, which needs to
The customer service representative’s first priority is always the customer. Whatever the customer wants, ideally, the customer gets. However, when the customer service representative conducts the search with respect to locating the desired product and shipping the product at the desired shipping address within the desired delivery time sometimes becomes a burden. There are often times where the closest warehouse does not have the requested product in stock and other warehouse locations need to be conducted. In that event, the customer service
Freight cost will reduce by Truck load and by using maximize the cube and also less than truck load shipment will reduce.
When a customer orders material one of the first questions they should be asked is “when do you need it”. Once that’s understood then we can strive to use customer service follow ups to ensure the date is hit (obviously, there needs to be negotiation on the date up front if the customer is unrealistic). Everyone needs to be held accountable to this expectation and it’s not an option to enter the date incorrectly.
Two-If Westminster were to use three weekly trailer deliveries from one warehouse instead of one weekly trailer delivery from three separate warehouses, transportation cost would definitely increase, but if these three deliveries could include mixed products from all three locations in one trailer, it will bring the increased cost more into balance. Economies of scale can be achieved by having only one trailer moving daily which reduces costs (Bowersox, Closs, & Cooper, 2010).
Make sure to arrange the packing materials and transportation after considering the type of items
Centralization with one warehouse: Centralize the North American warehousing with one warehouse in Waltham by closing down the regional warehouses. In this way, the inventory requirements could be pooled to meet the demand.
ft. facility. There is no need for that additional facility since it increases direct and overhead costs. It should be eliminated. The DC is cluttered with merchandise everywhere, under conveyors and scattered across aisles. Tony considered three strategies: improving the physical structure and process flow in the distribution center, the modernization of distribution systems and business processes, and to reallocate human resources. He had to obtain goods from the companies international suppliers and quickly distribute them to their stores within Canada to gain competitive edge.
In addition, I would design a strategic transportation plan that coordinates inbound and outbound shipments to reduce transportation costs and improve service levels. The warehouse will be designed
Several days of inventory will need to be stored within the facility or within close proximity to the retail
The distribution centre in our simulation was located at 949 Laidlaw Avenue, roughly 20 minutes away from the Spicy Cube factory. Both locations are in a relatively built up area, meaning there is adequate infrastructure. This is beneficial as multiple routes between the two minimizes delays that may be encountered due to events such as traffic accidents, or road works. Events such as previously mentioned can occur without warning, so by choosing the location of warehouses in a strategic manner, the risk of failures within the supply chain can be minimized.
Understanding not only how often customers are ordering, where they are located, size of the shipments, the company should require input from the sales team to understand any potential growth in the customer base. Breaking up the customer location into zones will allow the data to be run through a transportation modeling simulation that will provide a cost analysis based on the location of the warehouse and the location of the customers. Using shipment detail, that shows number of shipments, destination details, transit time requirements, number of pallets or parcels, weights, and freight class, will allow the simulation to provide a clear cost and service for the transportation requirements on outbound shipments. This simulation can be run from each location that is under consideration for the warehouse to be located. The simulations will provide a good understanding of inbound and outbound costs, the ability to manage transit times to meet expectations of the customer, both internal and external, and finally point to the optimum location for the warehouse to be located.
Following considerable investment in new warehouse and carrier management systems the number and quality of delivery options had increased. Now delivery options include: same day, next day or standard delivery options that normally takes around 2-3 days. Also customers can set delivery date by themselves and if wanted can be notified via email or text alerts of delivery status. In addition 85% if orders are tractable
2. Discrepancy in Inventory – Rick reviewed at the manufacturing and warehouse operations. He found that floor workers did not record the defective components in the system correctly. He organized training classes for all workers and also increased the physical inventory count frequency from once in every 15 days to weekly. This will help to reduce the inventory discrepancy and increase order accuracy.
This shipment delay makes it difficult to meet customer demands and causes high cost due to backorders.
The dealers did not maintain any warehouse and hence, expected all the storing from the manufacturers. The manufacturers had to fulfill the orders by delivering the finished goods that was in the inventory and manufacture on expedited basis.