Case | HBS Case Collection | February 1990 (Revised August 2001)
Merloni Elettrodomestici SpA: The Transit Point Experiment
by Janice H. Hammond and Maura G Kelly
Merloni Elettrodomestici is a leading Italian manufacturer of domestic appliances. In 1986, an exposition for Merloni customers is scheduled at its Milano regional warehouse. During the two-month period preceding the event, when the warehouse must be free of inventory, the company conducts a "transit point" experiment. Each day, a truckload of products from the company's central warehouse is sent to Milano, where it is immediately transferred to small trucks for local delivery. At the conclusion of the experiment, the company is considering the replacement of its 17 regional warehouses with transit points. Students are asked to evaluate this proposal and recommend a configuration for Merloni's distribution network. Issues to be considered in the analysis of the case include the impact of different network configurations on customer service and on inventory, labor, operating, and transport costs.
Keywords: Logistics; Marketing Channels; Planning; Time Management; Distribution Channels; Competitive Advantage; Customer Relationship Management; Information Technology; Consumer Products Industry; Italy;
Company had dedicated single plant for one product. Company hadCompany had dedicated single plant for one product. Company hadreliable pool of semireliable pool of semi--skilled people near the plants. Company¶s response for demandskilled people near the plants. Company¶s response for demandfluctuation could be good.fluctuation could be good.
Company emphasized on decentralized operations.Company emphasized on decentralized operations.
Some retailers generally received 24Some retailers generally received 24--hours delivery of product that washours delivery of product that wasin stock at nearestin stock at nearestwarehouse. Otherwise two to six days were required to replenishwarehouse. Otherwise two to six days were required to replenishthe stocks from centralthe stocks from centralwarehouse to regional warehouse to retailerswarehouse to regional warehouse to retailers
Shipment delays occurred time to time for variety of uncontrollable andShipment delays occurred time to time for variety of uncontrollable andcontrollable reasons.controllable reasons.Under such conditions small retail customers with no or little stocksUnder such conditions small retail customers with no or little stockswere impacted mostwere impacted mostleading to unsatisfied consumers. It affected Merloni¶sleading to unsatisfied consumers. It affected Merloni¶sresponsiveness and efficiency both.responsiveness and efficiency both.
No builtNo built--in appliances were distributed thru regional warehouses.in appliances were distributed thru regional warehouses.
Each plant had its own warehouse area to store raw materials, finishedEach plant had its own warehouse area to store raw materials, finishedgoods etc. It was togoods etc. It was toincrease responsiveness at plant level.increase responsiveness at plant level.