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GENERAL OVERVIEW
Merloni Company was created in 1930 by Aristide Merloni. After the Second World War Merloni started to expand their range of products, and in the 60s and 70s Merloni was already the biggest producer of high quality domestic appliances, operating in both, Italy and Europe.
At some point in the 70s, the company became Merloni Group formed by four subsidiaries. Merloni Progetti for industrial projects; Merloni Igienico Sanitari for bath and heating products; Merloni Casa for built-in kitchen and bath furniture; and Merloni Electtrodomestici for domestic appliances. The latter is the subsidiary with the biggest percentage of consolidated sales.
COSTS AND BENEFITS OF MERLONI’S CURRENT DISTRIBUTION SYSTEM
When analysing the actual distribution model, we find out several faults. Firstly, the inventory management is much decentralized and there are few formal replenishment methods. The regional warehouses managers just define the stock goals and call central warehouse daily with a list of restocking needs. This lack of control can lead to an excess of stock, creating a higher inventory cost, or to a situation of stock out. When the latter happens, regional warehouse manager must order the required product from central warehouse and in order to compensate costumers he offers a discount of 4.000lires per piece.
We also realized that transportation costs are particularly high because every finished good, no matter where it came from, must be taken to the central warehouse and just afterwards it is sent to a regional warehouse. However, in some cases the products are just “travelling” across Italy creating useless transportations costs. For example, a dishwasher produced in ...