Merloni Elettrodomestici SpA: The Transit Point Experiment

Case Study: Merloni Elettrodomestici SpA: The Transit Point Experiment

The Organization

Merloni Elettrodomestici SpA (Merloni), is a major Italian manufacturer of freestanding and built-in appliances. Merlonis dissemination network consists of five manufacturing plants, a centralized warehouse, and seventeen regional warehouses.

During the past few years, Merloni has implemented programs that have success copiousy trim back payoff-planning lead measures and decreased inventory levels. In particular, with the serve up of a centralized inventory planning system and slaying of an A-B-C inventory classification program, they were able to reduce inventory levels at the regional offices by 75%. The production planning time horizon was reduced from four months to three while the need lead-time to firm orders was reduced from two months to one.

In line with a current wave of efforts to further reduce inventory and enhance production efficiency, management is evaluating a proposal to replace regional warehouses with transit-points. At these transit points, products arriving on trailers from the central warehouse and plants would then be transferred directly to smaller local delivery trucks. The primary exhaust being tasked then is the viability of the transit point solution and its lastingness in improving efficiency and reducing costs. The secondary cut is the provision of an exhibition center in the Milano area without earthshaking risks to product delivery.

Analysis

The proposal being evaluated utilizes the concept of cross- sorreling and is synonymous with JIT in manufacturing. In cross-docking, goods are received on one dock and are immediately shipped through another, without the need for storage. To carefully assess the benefits and disadvantages of this proposal, a number of critical factors must be turn to:

Inventory: As describe above, the current inventory levels held at the regional offices already reflect a 75% reduction in comparison to historical figures. This level of inventory is established found on customer demands and...

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