Merloni Essay

522 words - 2 pages

The new transit point experiment will need high co-ordination among the retailers, transit point, central warehouse and the plant as the information flow is very important for the regular working of the system. The major change due to the transit point implementation is that the inventory at the regional warehouse which acted as cushion will not be further available and thus the inventory planning needs to be changed to absorb the demand fluctuation. The impact of the transit point experimentation on the different tiers of the Merloni supply chain are mentioned below:

1. Manufacturing plant: The important change needed in the manufacturing plant is to make it more flexible so that the daily demand by the retailers can be incorporated in to the production planning. Now the production at the plant should be more based on the need or demand by the retailers. The overall inventory level in the system will be reduced as the process is reaching toward centralized pooling concept. The flexibility is owing to the reduced total safety stock levels and thus the production process should be more flexible.

2. Central Distribution Centre: The central warehouse centre will have to keep less safety stock as the demand from most of the regional distribution centres (especially located in the larger region) will be pooled and thus the standard deviation will be less than the sum of standard deviation of individual distribution centres. In case of total lead time, the time taken by the product from the plant to the retailers will be...

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