Reorganisation of Alstom Services Italia’s Logistic Network – Full Service Minuetto Project

In a world where there is a shortage of materials and raw materials which could push companies to overstock increasing warehousing related costs furtherly increasing the raw materials prices, the optimization of inventory levels is fundamental to achieve competitive advantages, reducing costs compared to competitors while remaining efficient. Alstom is a world leader in the train sector, both in production and services related to their maintenance, along with other related infrastructures. With over 70,000 workers and 15b$ of revenues, (after the acquisition of Bombardier Transportation, is one of the biggest companies in the field and one of the most successful ones. Thanks to the balanced and capable supply chain workforce and its internally standard supply chain processes, the inventory levels are constantly monitored and corresponds to the physical quantities in the warehouses, avoiding penalties while making the organization able to satisfy the requirements of all the ongoing projects. The objective of this thesis is to analyze, simplify, and improve the logistic network of Alstom Services Italy by reducing the transportation costs, the number of material movement, and the Hard Inventory, meaning the material owned by Alstom not necessarily stocked in its facilities, which is currently over 10M€ for the Full Service Minuetto project alone. The analysis will be divided in two parts, the stock levels and the transportation, which will then converge in the final analysis and results discussion. The first chapter of the thesis analyzes the theory behind the work, focusing on reorder point calculations, the Hubs and Spokes network, the ABC analysis and other supply chain principles. The second chapter will present the Alstom company and its history, with a focus on Alstom Services activities in Italy, the Regionals Business Units, its projects and an introductive description of the warehouses network currently present in Italy. The third chapter opens the real work of the thesis, describing more in detail the logistic structure AS-IS in Italy, the Full Service Minuetto project and the processes of data cleaning and data transformation used to obtain the database on which the data analysis is conducted. The third chapter will also contain a preliminary evaluation of logistic hubs to reduce the inventory levels and some ideas on where to allocate every single material based on a few classification rules. The fourth chapter will focus on analyzing the transportation inside the network, between both single warehouses and geographic areas, to understand how many movements of materials there are right now and how much material is moved, with an estimation of the cost of transportation and a preliminary evaluation of periodic milk runs. The fifth chapter will talk about the final logistic network, the new costs of the logistic hubs and of the periodic milk runs and the money saved compared to the previous situation and the new estimated inventory levels compared to the previous ones. The conclusions of this work will be briefly discussed along with the limits of this work. This will show whether the new hypothesized network will present an improvement or not in terms of operating costs and inventory levels.