Merloni Scm Case Study
Question 2:
Should Merloni replace its network of regional warehouses with transit points? if so, what contigency plans and support systems are necessary to support the new logistics network? if not, what changes, if any, would you recommend Merloni make to its distribution system?
Answer 2:
The company should go for selective Cross docking.
Cross docking should be done for retail outlets which have had low inventory costs as well as low backlog cost in the past.
It should also be done for comparatively shorter distances from the central warehouses where co-ordination will be comparatively easier.
It will better to follow cross docking for closer locations since replenishment will be comparatively faster.
Moreover, as seen in the case it will help save around 80% of warehouse cost as seen in the case of Milano. Thus contributing to operational efficiency and giving a strategic advantage in the long run.
Advantages of Cross Docking * Reduces material handling. * Reduces need to store products in warehouse. * No need for large warehouse areas * Reduced labour costs (no packaging and storing). * Reduced time to reach customer. * Transportation has fuller loads for each trip therefore a saving in transportation costs while also being more environmentally friendly. * Products are moved more quickly through a cross dock. * Easier to screen product quality. * Elimination of processes such as ‘pick-location’ and ‘order picking’ * Cross docking terminals are less expensive to construct than your average warehouse. * High turnover of products with everything moving quickly through the cross docking terminal. Products usually spend less than 24 hours here. * Products destined for a similar end point can be transported as a full load, reducing overall distribution cost.
Support Systems required for new logistics network:
* Highly accurate retailers demand due to the fact that there is very less scope to store
Should Merloni replace its network of regional warehouses with transit points? if so, what contigency plans and support systems are necessary to support the new logistics network? if not, what changes, if any, would you recommend Merloni make to its distribution system?
Answer 2:
The company should go for selective Cross docking.
Cross docking should be done for retail outlets which have had low inventory costs as well as low backlog cost in the past.
It should also be done for comparatively shorter distances from the central warehouses where co-ordination will be comparatively easier.
It will better to follow cross docking for closer locations since replenishment will be comparatively faster.
Moreover, as seen in the case it will help save around 80% of warehouse cost as seen in the case of Milano. Thus contributing to operational efficiency and giving a strategic advantage in the long run.
Advantages of Cross Docking * Reduces material handling. * Reduces need to store products in warehouse. * No need for large warehouse areas * Reduced labour costs (no packaging and storing). * Reduced time to reach customer. * Transportation has fuller loads for each trip therefore a saving in transportation costs while also being more environmentally friendly. * Products are moved more quickly through a cross dock. * Easier to screen product quality. * Elimination of processes such as ‘pick-location’ and ‘order picking’ * Cross docking terminals are less expensive to construct than your average warehouse. * High turnover of products with everything moving quickly through the cross docking terminal. Products usually spend less than 24 hours here. * Products destined for a similar end point can be transported as a full load, reducing overall distribution cost.
Support Systems required for new logistics network:
* Highly accurate retailers demand due to the fact that there is very less scope to store