Merloni Case

1) Evaluate the structure of the global wine industry? How and why is that structure changing? What threats do these changes present for Robert Mondavi?

The location of apt areas of production is what determines the overall cost per unit or qualityof the product. For distribution and logistics the factors such as payment of tariffs and

Transit time is an important element as well. Any reduction in transit time therefore reduces the overall cost of the delivered goods. Transit times can be improved by

Motor carriers have traditionally had the highest variable costs given their reliance on fuel and the continual maintenance of vehicles. The cost structure of motor

With the same inventory levels, whether in a store or in a warehouse, the warehouse can drive the cost of this up, beyond that of in a store. Service charges are a cause of this inflated cost. The advantage the warehouse option has here, is there is plenty of space available to keep extra inventory versus what a store can hold, to guarantee a cushion of product in order to fill any customer demands. Also, centralizing stock allows easier monitoring of the stock levels for different products and due to service levels implemented in a warehouse, inventory checks can be easier in the warehouse.

Part A: Describe how you would design a new logistics network consisting of only a single warehouse.

By modifying the transportation route, the trucks were able to get the product inventory to intended destinations somewhat faster which was another factor in the stores stabilizing product inventory on location.

The cost in transportation rates will increase for MARS Inc. with this change. The Portland supplier’s location to MARS Inc. based on the current situation charges “per hundredweight is $10 for carload lots of 50,000 pounds. The less than carload rate is $15 per hundredweight.” While anything coming from the Columbus supplier was offered just-in-time delivery service at no charge to MARS Inc. Also, this will affect the EOQ’s because dealing with the Columbus supplier they were located close enough that they offered JIT delivery which allowed the reduction minimizing “work-in-process inventories (waste) by reducing lot sizes in order to increase production efficiency and product quality.” Now, with the change, it will force MARS Inc. to spend money on warehousing and carrying cost due to the one week replenishment cycle the Portland supplier has.

Outbound logistics refers to physical distribution activities such as collecting, storing, and distributing products to buyers and involves (finished goods) warehousing, materials handling, network planning and management, order processing, and

1. Relative to the U.S. distribution network, calculate the cost associated with running the existing system. Assume that 40 percent of the volume arrives in Seattle and 60 percent in Los Angeles and the port processing fee for federal processing at both locations is $5.00 per CBM. Assume that everything is transferred to the Kansas City distribution center by rail, where it is unloaded and quality checked. Assume that all volume is then transferred by truck to the nine existing warehouses in the United States.

Making wine is nothing else but a touch of passion, love and few drops of magic. From the first view, wine industry seems very artistic and secret at the same time. There is no doubt that hearing that Robert Mondavi Corporation is going to layoff 4% of its workforce ring the bell to the investors, at the same type the stock price dropping down dramatically makes an impression that the company is going through difficult period as the senior management is upon completing the reconfiguring future strategy. The big decision is whether to get back to original vision, and focus on the domestic market, which bring a 90% of revenues or continue diversification and keep on pursuing the vision of

The organization in this study, a multi-billion dollar warehousing and distribution company, has been housed in an old building and will be moved to a new state-of-the-art facility. This move involves the planning, organizing, staging and moving of products from one location to the other. Included in planning needs are signage, warehouse racking placement, warehouseman selector choosing routes, freezer, cooler and dry product placement. Incorporated into this move will be the necessity to deal with contractors who are completing the building as well as contacting all vendors and suppliers to inform them of the change of location and service changes during the two-day transition period. The actual moving of all products will require 16 hours, 30 employees on two shifts at two different locations.

* Since no inventory is maintained at near-by locations, the goods will have to be fetched from central warehouse thereby increasing lead time.

Define what the impact on inventory and warehouse cost would be? Fixed costs are generally a concern with warehousing. Many companies are streamlining their manufacturing and distribution network by consolidating and centralizing their logistics operations. (Ou, 2002) Warehouse consolidation is a key component of the logistics strategy. When the products are high in value and when transportation costs are insignificant compared to inventory and ordering cost, consolidation can be pursued with great enthusiasm. Also, outsourcing warehouse functions has proven to be a good idea when the product in question has a seasonal, cyclical, or uncertain sales nature. One recent example of manufacturing consolidation is Colgate-Palmolive establishing a new facility in Greenwood County. “Greenwood County had a building that was a perfect fit for our needs, offers us a talented workforce and excellent market access” said Mike Corbo, Vice President-Global Supply Chain, for Colgate-Palmolive. (Skipper, 2013) That “perfect fit” comes thanks to

Transport plays a critical role in the supply chain and according to Bhattacharya et al. (2014) it is becoming one of the key components of the whole supply chain valuation for many organizations. Transportation is the movement of good from one location to another. Supply chain is a network of individuals, organizations, activities, resources and technology that is involved in formation and sale of a product, which is from the delivery of source materials from the supplier to the manufacturer, through to the end user. Hopkins (2007) states that supply chain professionals look at whole business procedures, which is from raw materials to manufacturing, wholesaling and retailing. And by