Merloni Elettrodomestici Spa

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Problem/Situation Merloni Elettrodomestici SpA (Merloni) is a major Italian manufacturer of built-in and freestanding Home appliances. Merloni's distribution network consists of five manufacturing plants, a centralized warehouse, and seventeen regional warehouses. During the past few years, Merloni has been successful in implementing programs that have significantly reduced production-planning lead times and decreased inventory levels. Particularly, with the implementation of an A-B-C inventory classification program and institution of a centralized inventory planning system (Refer to Figure 1 - Appendix 1), they were able to reduce inventory levels and shorten production planning cycles at the regional offices by 75%. Merloni was able to…show more content…
Transportation: Low variability in demand and relative closeness of distribution centers are critical in order for cross docking to be successful. The demand for Merloni's products however, are quire variable. For example, if the average demand for the free-standing products jumps by 200% from January to February. Not only this causes serious impediments to planning and coordinating shipments, but also could result in serious service disruptions. Also, since units must be shipped to regions on a daily bases, regardless of the quantity ordered, significant inefficiencies result if the trailer is not filled to maximum capacity. Another significant concern with the transit point overture is the length of time that transportation would add to product delivery lead times. Customer Service: Currently, over 65% of products are delivered within 24 hours, directly from the regional warehouses. And, only 35% of products are shipped from the central warehouse with a two to six day delivery times. Eliminating inventories at regional warehouses would increase the delivery time for all products to two to six days. Additional delays owing to delivery problems or product damages could increase the delivery times. The significant increase in lead time will adversely affect customer satisfaction. Although the two months trial that took place between the central warehouse and Milan was successful with most of

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