Merloni Elettrodomestici SpA: The Transit Point Experiment

By Janice H. Hammond Rev: August 7,2001

Presented By: Group 2

Tina Vaz (Roll No: 118) Nitija Kupekar (Roll No: 91) Mehul Sahu (Roll No: 112)

Question: 2

How did the Merloni groups reliance on small, decentralized operations influence its logistics network ?

Answer
P 1 W 1

C RW1 SO U S T

P 2

W 2

RW 2

SO

P 3

W 3

CW O M

P 4

W 4

RW 16 RW 17

SO

E
R

P 5

W 5

SO

Distribution system: 3 echelons

1. Plant warehouse 2. Central warehouse 3. Regional warehouse Each plant has a warehouse area adjacent to its production facilities for storing raw material, components & finished goods

 Finished goods are shipped regularly in truckloads quantities from each plant to the central warehouse in Fabriano. From central warehouse, they are sent to one of companys 17 regional warehouses. From regional warehouses they are sent to Retail establishments

High Volume Central Warehouse 2-6 days of shipment

Built-in appliance products

Freestanding products

Regional warehouse 24 hrs delivery Appliance retail establishments

Lower volume Low space

High Volume More space

Rural Vendors

Urban Retail

Shipment Delay Causes

Production problem at plant New product introduction Unexpected high demand Transport equipment failure Bad Weather Conditions (Snowfall: Italy case)

 Also as the distance between the central warehouse and the regional warehouse increases the inventory levels at the regional warehouse increases to save on the transit times. (Refer: Exhibit 7 and 8)