...9-690-003 REV: AUGUST 7, 2001 JANICE H. HAMMOND Merloni Elettrodomestici SpA: The Transit Point Experiment Dr. Vittorio Merloni was president of Merloni Elettrodomestici, a major Italian manufacturer of domestic appliances. On the evening of February 23, 1986, he stood in the doorway of his Milano warehouse and surveyed the scene before him. In front of him stretched a sea of people dressed in evening attire—over 1,000 in all, not including the catering staff and the comedians, dancers, and musicians who had been hired to entertain. Dr. Merloni’s guests were busy chatting, eyeing hors d’oeuvres, juggling drinks, sidling up to the sumptuous buffet table; few would have guessed that at that moment they were socializing in the warehouse that normally served one of the company’s highest demand regions. The warehouse had been artfully transformed by Marcello Grigorov—architect and set designer for the “Piccolo Teatro di Milano”—into a dinner theater and showroom for Merloni’s built-in appliance products. In keeping with the company’s advertising theme—emphasizing the built-in products’ beauty, durability, and adaptability to any setting—the walls of the exposition area were covered with posters depicting the appliances set in panoramic natural landscapes (see Exhibit 1), product displays were built into simulated-marble walls and counter tops, and the building was adorned with faux-marble columns and arches. Guests were greeted by Merloni billboards along the major routes leading to...
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...Merloni Group Introduction: Merloni Group (1930) is a diversified, multinational appliance manufacturer headquartered at Fabriano in Italy. Its technical and production oriented strategy with outstanding growth and diversification record helped it to become fourth largest manufacturer in Italy in 1970’s. Due to death of its founder Aristide Merloni in 1970 and success of product diversification in 1950’s and 1960’s, they changed their organizational structure from functional to product division. But due to economy slow down in Europe and resulted oil crisis, appliance market has experienced slow demand growth which led to focus on international markets by domestic players. To fill the capacity and lower their costs, Merloni expanded into other markets with subsidiaries in 6 European Nations. Ariston France is one of the sales subsidiary selling low and medium priced appliances of parent line in France. In spite of increased sales from high prioritised market France, AF experienced huge losses which lead to conflict between Headquarters and subsidiary due to difference in opinion of Organizational structure and Strategic mission linking parent and subsidiary company. International Strategy of Merloni: The international strategy of Merloni's appliance division was to sell all of its product line in each national market through its subsidiaries. Due to slow growth rate and oil crisis in Europe, it began expanding its operations in other markets from 1970. Due to high competitive...
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...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 system and of a transit-point-based distribution system? Answer 1: Following are the calculations for both the regional warehouses Roma and Catanzaro. Assumptions made for the calculations: 1. 20 working days in a month. 2. 218 Km, 797 Km – distance between Fabriano and Roma; Fabriano and Catanzaro. 3. 0.425 million & 0.25 million – each tractor truck cost trailer & small from Fabriano to Roma. 4. 1 million & 0.55 million – each tractor truck cost trailer & small from Fabriano to Catanzaro. The cost reduction for Roma Warehouse is 11.874%. Here in Catanzaro regional warehouse, the cost actually increased. This cost can be clearly attributed to a large increase in Total Long Haul Transportation Cost from...
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...Merloni Elettrodomestici SpA is an Italian company based in Fabriano and is one of Europe’s biggest makers of home appliances. In February 2005, Merloni Elettrodomestici was renamed Indesit Company, Indesit being the best known of the Group’s brands outside Italy. The Company was also operating under its “historic” brand, Ariston, and the regional brands Hotpoint, Scholtes and Stinol. During the perio 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 favour of tranit points which held zero inventory. The following is an analysis of the Transit Point Experiment conducted by Merloni: Cost saving in terms of infrastructure cost of regional warehouses and their maintenance. The company would require lesser amounts of overall inventory to be maintained. As regional warehouses would be closed there would be lesser labor requirements. Transit Point methodology works similar to JIT where-in the required amount of goods are shipped at the required time. Since it works more on the Pull from the customer and due to elimination of regional warehouses, the effect of bullwhip should be lower. 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. This would come as an additional cost...
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...Assignment Supply Chain Management Merloni Elettrodomestici SpA : The Transit Point Experiment Submitted By : Satish Kumar P Ramkumar Sameer Sarkate Manish Maurya Y9125037 Y9125026 Y9125036 Y9125021 Based on the data provided for Roma and Cantazaro, following is the numerical analysis of regional warehousing model and transit point experiment model. Short haul transportation cost will remain unchanged as the trucks will still be delivering to retailers. Case 1: Roma Average Inventory Demand filled by regional warehouse Order cycle Current Model (values in Lire on per piece basis) Operating cost per order cycle Inventory cost per order cycle Transportation cost (10 trucks in 8 days delivering 1200 items) Total cost per piece per order cycle 1200 154.8 7.751937984 (1200/154.8) 961.3333333 (3605*(8/30)) 276 (1035*(8/30) 3166.666667 (0.38m*10/1200) 4404 8 Days TPE Model (values in Lire on per piece basis) Operating cost (8days) Inventory cost Transportation cost (1 small and one big truck daily for 8days) 192.2666667 (20% of 3605)*(8/30) 0 No inventory 3866.666667 (8*(0.38+0.2)m/1200 4058.933333 345.0666667 Saving (Lire per piece per 8 days) Case 2: Catanzaro Average daily demand filled by regional warehouse Demand filled by regional warehouse Order cycle Current Model (values in Lire on per piece basis) Operating cost per order cycle Inventory cost per order cycle Transportation cost (5 large and 4 small trucks in 8 days delivering 1200 items) Total cost...
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...Problem/Situation Merloni Elettrodomestici SpA (Merloni) is a major Italian manufacturer of builtin 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 productionplanning lead times and decreased inventory levels. Particularly, with the implementation of an ABC 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 achieve a reduction from four to three months in the production planning time horizon while the required leadtime to firm orders was reduced from two months to one. In their efforts to further reduce inventory and enhance production efficiency, management is evaluating a proposal to replace regional warehouses with "transitpoints" (Refer to Figure 2 Appendix 1). 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 issue that is being assessed is the feasibility of the transit point solution and its effectiveness in improving efficiency, reducing operating and transport costs, reducing inventory requirement and improving customer service...
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...Merloni Elettrodomestici SpA – Transit Point Experiment Case Study Introduction |Merloni Elettrodomestici SPA (Merloni) is a major Italian manufacturer of high quality domestic appliances –of the | |‘free-standing’ and ‘built-in’ varieties, both in Italy and throughout Europe. Founded in the year 1975 as Merloni | |Elettrodomestici SpA by Vittorio Merloni, as a spin-off from Industrie Merloni. It was renamed Indesit Company S.p.A in | |2005 after a company it acquired in 1987. Merloni distribution system consisted of a three tier distribution system based | |upon the following network | |1 Central warehouse (near Fabrion in Central Italy | |17 warehouses warehouse | |5 plant warehouses (one based at each manufacturing plant) – used to store raw materials and WIP in addition to the | |finished goods corresponding to the one product line which the associated plant manufactures. | |With the given system of network model of warehouses, finished goods were moved from plant warehouses to the central | |warehouse. From the central warehouse, products were sent to customers through two channels. The first channel involved the| |customers ordering...
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...their own from which to satisfy their customers' needs, was typically greater than on larger retailers. Built-in appliance products were generally sold directly to architects and developers to be incorporated into new dwellings. No built-in appliance stock was distributed through Merloni's regional warehouse facilities. Customers in this channel, generally more sophisticated and ordering in higher volumes than retail customers, ordered directly from the central warehouse in Fabriano. The built-in market represented 45% of Merloni Elettrodomestici's business. The company aimed to give its built-in customers a high level of service. Merloni Elettrodomestici's appliance sales were subject to wide seasonal fluctuation. Exhibit 6 shows monthly sales levels for the company's product lines. In 1984, Merloni Elettrodomestici's market share in Italy was nearly 15%. Pr o duction and D ist ribu t ion ln accordance with Merloni Group policy, each of Merloni Elettrodomestici's five plants was dedicated to the manufacture of a single product line. Two of the plants and the central warehousewere located in central ltaly, in close proximity to one another and to corPorate headquarters in Fabriano....
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...Current State * Merloni Elletrodomestici – domestic appliances- 75 % of sales of Merloni Group * Decentralized operations, plants for single product lines * Exports comprised 60% of total revenue of 626 billion lire in 1984 * Urban retail customers with high volumes used to keep some inventory. Small and rural retailers did not have much inventory and relied on company’s warehouses for fulfillment. * Delivery could be delayed to problems like those of over demand, production issues and climate conditions. * Direct supply for built in products to architects from the central warehouse, that provided 45% of revenues * Seasonal variation for products and 15% market share in Italy * Two plants and central warehouse in Central Italy, HQ in Fabriano, 17 regional warehouses (RW), 65% served through RW * Customers demanding FTL were served directly with 4,000 lire discount * FTL recd per week at regional warehouses ranged from 1 to 10 depending upon seasons and area served * Implementation of A (2 weeks) – B (4 weeks) – C (no inventory) system and performance bonuses resulted in 75% reduction in inventory levels and production planning reduced from 4 to 3 months. Benefits of Implementation: * Drastic reduction in warehouse and storage costs * Significant reduction in supply time to major retailers * Higher customer satisfaction levels * Reduced labor costs Risks Associated with Cross Docking: * Excess orders...
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...iAssignment Supply Chain Management Merloni Elettrodomestici SpA : The Transit Point Experiment Submitted By : Satish Kumar P Ramkumar Sameer Sarkate Manish Maurya Y9125037 Y9125026 Y9125036 Y9125021 Based on the data provided for Roma and Cantazaro, following is the numerical analysis of regional warehousing model and transit point experiment model. Short haul transportation cost will remain unchanged as the trucks will still be delivering to retailers. Case 1: Roma Average Inventory Demand filled by regional warehouse Order cycle Current Model (values in Lire on per piece basis) Operating cost per order cycle Inventory cost per order cycle Transportation cost (10 trucks in 8 days delivering 1200 items) Total cost per piece per order cycle 1200 154.8 7.751937984 (1200/154.8) 961.3333333 (3605*(8/30)) 276 (1035*(8/30) 3166.666667 (0.38m*10/1200) 4404 8 Days TPE Model (values in Lire on per piece basis) Operating cost (8days) Inventory cost Transportation cost (1 small and one big truck daily for 8days) 192.2666667 (20% of 3605)*(8/30) 0 No inventory 3866.666667 (8*(0.38+0.2)m/1200 4058.933333 345.0666667 Saving (Lire per piece per 8 days) Case 2: Catanzaro Average daily demand filled by regional warehouse Demand filled by regional warehouse Order cycle Current Model (values in Lire on per piece basis) Operating cost per order cycle Inventory cost per order cycle Transportation cost (5 large and 4 small trucks in 8 days delivering 1200 items) Total cost...
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...ITALIAN CRISIS (the main reasons) The euphoria was evident. "We've done it!" Italian Prime Minister Enrico Letta tweeted the last year after the European Commission had provided his country with new financial leeway. Letta had managed to convince Brussels that Italy would remain below the European Union's budget deficit limit of 3 percent of gross domestic product, if only by a hair, at a forecast 2.9 percent. The premier insisted that his country finally had the latitude to stimulate growth and promote new jobs, and that his administration had achieved "perhaps the most important result" of all time. That was at the beginning of July. Since then, politicians and lobbyists have been energetically arguing over how to take advantage of the new opportunity. Former Prime Minister Silvio Berlusconi wants to abolish the property tax on first homes, which would cost €4 billion. And if the government were to refrain from a planned increase in the value-added tax, as has also been called for, it would forfeit an additional €2 billion ($2.6 billion) in revenues. Letta and the left, for their part, would like to invest €1.5 billion to create new jobs for young unemployed Italians. The debate, and Letta's optimism, has temporarily obscured the difficult situation in which Italy finds itself. All the ideas under discussion for stimulating the country's economy will cost money -- and will require Rome to take on additional debt. Indeed, Standart & Poor's recently showed its lack of...
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...Euro Disney: The First 100 days Lessons Learnt: There is the need to target a specific culture in countries where there are many. Trade agreements with countries are necessary, if possible, to facilitate smooth operations. The different culture of the country should be put in high consideration when expanding a company. Marketing Strategies: Involvement of the local people in the process of operating the park. Involvement of the government in terms of providing assistance through subsidies. Research and identify the target market to better tailor efforts to them. Provision of alcoholic beverages as an enticement to the French population. Global Management Challenges Risk Cultural Obstacles Different languages made it hard to reach out to larger customer base. Cultural difference as a result of the diversity made it harder to stay within politically correct bounds. Food and Music variety made it challenging to decide on what the best option for the country was. Global Issues Differences in the economy of both countries had an influence on pricing and cost. Relationship between the countries over the years had a positive impact. ZUCAMOR S.A: GLOBAL COMPETITION IN ARGENTINA Lessons Learnt: Both countries hold themselves in high regard in that they value their countries very much. Marketing Strategies: Provision of protection for local products and companies Also...
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...ДЕМО-ВЕРСИЯ российский рыноК бытовой холодильной техники МАРКЕТИНГОВОЕ ИССЛЕДОВАНИЕ И АНАЛИЗ рынка Москва, декабрь 2009 СОДЕРЖАНИЕ СОДЕРЖАНИЕ I. ВВЕДЕНИЕ II. ХАРАКТЕРИСТИКА ИССЛЕДОВАНИЯ III. АНАЛИЗ РОССИЙСКОГО РЫНКА БЫТОВОЙ ХОЛОДИЛЬНОЙ ТЕХНИКИ 1. Общая характеристика Рынка 1.1. Описание предмета исследования 1.2. Показатели социально-экономического развития 1.3. Описание отрасли. Российский рынок бытовой техники и электроники 1.4. Описание влияющих рынков Рынок жилой недвижимости Рынок торговой недвижимости 1.5. Резюме по разделу 2. Сегментация и структура Рынка 2.1. Сегментация Рынка по основным видам продукции 2.2. Сезонность на Рынке 2.3. Резюме по разделу 3. Основные количественные характеристики Рынка 3.1. Объём Рынка 3.2. Темпы роста Рынка 3.3. Резюме по разделу 4. Конкурентный анализ Рынка 4.1. Конкуренция на Рынке 4.2. Описание профилей крупнейших игроков Рынка Indesit Company ЗАО «Атлант» Samsung Electronics ОАО «КЗХ «Бирюса» Группа «Норд» ФГУП «ПО «Завод им. Серго» (POZIS) LG Electronics Inc. Компания Vestel Bosch und Siemens Hausgeraete GmbH Завод «Океан» (Группа «В-Лазер) 4.3. Резюме по разделу 5. Сегмент розничной торговли на Рынке 5.1. Описание розничного сегмента 5.2. Описание профилей крупнейших сетевых розничных точек по продаже бытовой техники Российские торговые компании «Эльдорадо» «М.Видео» «Техносила» «Мир» Сеть магазинов «Линия тока» «Эксперт» «DOMO» «Технопарк» (Электрофлот) ...
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...Haier Case Introduction We will answer the group’s assigned question in two main parts; evaluating in the first instance the factors that led to the establishment of Haier’s competitive advantage in China over time followed by an analysis of the sustainability of the current position. Haier’s Competitive Advantage It is our view that the Haier company, under the leadership of founder and CEO Zhang Ruimin established a strong position in the Chinese market with respect to its competition. The company achieved this through a continuous evolution of a multi faceted strategy. Focusing firstly on on product quality and building a brand reputation, then adding in exemplary customer service followed by access to the remotest locations in China coupled with product localizations; the company was able to drive a continuous evolution of its value proposition. In parallel its focus on efficiency of production and operations drove cost advantages as it leveraged process improvements, economies of scale and scope. In the next section we outline the analysis of the sources of competitive advantage. Summary of Value Stick An essential element of the success of Haier in gaining and maintaining its competitive advantage was a deliberate and continuous approach to improving both cost and value drivers in its business. Each of the elements shown in the Value Stick comparison below were built on in key phases over time. Figure 1 - Value Stick Comparison Figure 1 - Value Stick...
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...Mission The mission of Haier is to innovate and become a leader in the industry. Under this umbrella, Haier has further designed a series of strategies to address the following two issues: 1. Lead by building a strong brand, centered on product quality and best of breed services. 2. Build a strong research and development capacity to boost Innovation to capture and meet the needs of customers, Another important dimension of Haier’s mission and strategies is to build Haier into a global brand by internationalizing its R&D, manufacturing, distribution, services, etc. Internationalization Strategies * Focused on difficult markets first-enter the difficult developed market first. This will allow Haier way to develop highest quality standards since the requirements in the developed market are very tough and not easy to meet. * Staff with locals who have worked multinational/top brand. Use local people and local thinking to satisfy the needs of the customers. * Utilized speed and differentiation approach. Haier paid close attention to consumer needs in overseas market and made modifications to meet them. Focuses on minor details (e.g. freezer with a separate compartment for ice scream). * Rapid product development which was facilitated by its eight design center * To manufacture quality products and sell it at a premium price * Offered what the developed market didn’t have. Going Global- The EU Market Objectives Given the fact that Europe...
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