How to Write a Summary of an Article? Barilla Spa Case Study Barilla SpA Barillais an Italian largest pasta manufacturer in the world manufacturer that sells pasta to retailers largely through third-party distributors. Barilla has been facing huge variability in demand which is straining the manufacturing and distribution network of the company. This fluctuation in demand, are forcing the CDCs to maintain a higher level of inventory.
Possible lost sales and potential customer loss requires reviewing Barilla distribution system.
Recommended Just-in-Time Distribution program implementation will address high demand fluctuation, stock-outs, information flows and will help to reestablish customers trust as well as decrease inventory cost and improve cash-flow.
Introduction Director of Logistics Mr. Maggiali has been trying to implement Just-in-Time Distribution JITD as a new strategy of supply chain management for Barilla SpA in order to solve both demand fluctuation and customer stock-outs.
However, the idea did not enjoy the support neither from customers, nor from Barilla sales representatives.
Customers are not interested in sharing their sales data and sales representatives are afraid that their responsibilities will be diminished. JITD feasibility is evaluated by addressing the following issues: How to gain support with sales department?
Who is a target customer to implement JITD? What are the ways to convince customers to implement JITD? Environment and Root Cause Analysis Despite being the industry leader in pasta manufacturing in Italy and one of the biggest exporters of pasta, Barilla faces two major challenges great demand fluctuation and stock-outs.
The main causes of demand fluctuation are identified as follows: Poor demand forecasting system: Orders are placed occasionally distributors mainly on a weekly basis. Minimum and maximum of order quantities are not defined. Product proliferation and relatively short product shelf-live only deteriorate the situation making operations planning extremely difficult which results in CDCs holding a monthly production inventory, but still not able to meet customer demand.
Existing system of discounts and promotions: Promotion canvasses make distributors buy product that is sold with a discount rather than products most likely to be sold to the end customer. It results in high manufacturing demand for the same product category leaving no room for operations flexibility.
Moreover, it leads to a big amount of urgent orders of small quantities of products that are not discounted at the moment. Sales representatives push GOs to buy discounted product during a canvass to get a bonus.
High demand fluctuations result in inevitable stock-outs. Product and packaging proliferation makes specialized plants not capable of meeting frequently changing demand without proper forecasting. It results in 8 to 14 days order lead time despite short distance between plants, CDCs and customers.
Stock-outs mean lost sales and, eventually, lost customers. Long lead times and recurring stock-outs undermined customer trust to Barilla.
In addition to customer distrust, there is an internal resistance form sales representatives fearing diminishing of their responsibilities and decrease of their incentive bonuses. Sales representatives are key contacts between a company and its customers and they should be motivated to promote Barilla strategy.
Alternatives A number of alternatives were considered to resolve the two major supply chain challenges: Follow traditional distribution model and choose one of the following options in order to improve forecasting system: Designate sales representatives to work closer with both internal and external customers in order to get more precise forecast; Increase flexibility of manufacturing process and the number of Barilla-run depots; Reduce product and packaging proliferation; Implement JITD.
Increase of manufacturing flexibility is a long-term alternative that requires capital investments and should be analyzed separately.
Reducing product and packaging proliferation may hurt Barilla currently strong brand image of a unique and luxury product. Implementation of JITD program will address demand fluctuation, stock-outs, and information flow.Barilla can have a pilot run on the DO (Distribuzione Organizzata) where sales representatives functions are dominant, sales representatives are one of the key factors on the success of JITD implementation.
Barilla SpA Part A (continued) To address this problem, the director of logistics suggests: – Implementation of Just-in-Time Distribution (JITD) with Barilla’s distributors. What is the JITD System?
– Decision-making authority for determining shipments from Barilla to a distributor would transfer from the distributor to Barilla. JITD might also help the relationship between Barilla and its distributors, since Barilla won’t need to use pressure on distributors to hold more finished products than necessary.
Barilla Spa Case Study specifically for you. for only $/page. Order Now. The proposed new system, Just-In-Time Distribution (JITD), is the solution suggested to resolve the demand fluctuation issues and lower costs.
IMPLEMENTATION. How to effectively implement JITD at Barilla. It needs to prove that the implementation of JITD will lessen the current problems that have resulted in high costs of carrying inventory and lost sales, which are shared by all members (Barilla, distributor, and retailer) of the supply chain.
2. What conflicts/barriers internal to Barilla does the JITD program create? Before Barilla can implement JITD it must first garner acceptance from the. Barilla Spa (A) Case Questions 1. Diagnose the underlying causes of the difficulties that the JITD program was created to solve.
What are the benefits and.