New manufacturing plants or better utilization of transportation by rails, plane, or ship could effectively accommodate newer markets. Barilla does not maintain a centralized database for its order processing, thus the Bullwhip effect comes into play thereby causing the retailers and distributors to maintain higher inventory thus adding to variability.
Maggiali might be more successful in persuading customer to at least try the JITD program by making their customer understand the benefits of the program.
They will no longer be able to influence sales figures seeing as how these numbers will already be standardized, losing all rewards and incentives. The distributors, nor the retailers, have any forecasting system in place to give them a glimpse at demand.
Furthermore, the excess costs will also be decreased by the demand management, i. The situation of Cortese DC is not an isolated case. Operations has a better understanding of the challenges that a distributor will have and can offer more value to the strengthening of those relationships.
JITD system of inventory management to avoid the future consequence of possible bullwhip effect. If Barilla wants this program to succeed they will have to invest in more equipment, in order have a better production line. As processing occurred at each level of distribution, the demand information became distorted as it traveled upstream Lee, Padmanabhan, Whang, Four general causes of the bullwhip effect and ways to counteract it have been identified in the literature: In summary, the root causes of the bullwhip-effect Barilla is suffering are the preference of using safety stock as the major cushion to combat the demand variability at each level of the supply chain, the lack of demand information sharing between the distributors and Barilla as well as the traditional sales and marketing promotion strategies to increase demand volume at the cost of manufacturing planning and inventory control.
After an ABC analysis of its products, the company should settle on the level of inventory to be maintained for each product. Involving sales team in the initiative without excessive job cuts with impressive compensation package, would help to avoid internal resistance, the external resistance should be tackled by showing the distributors monetary advantages of the system, other than that, the trust issues can also be resolved by making transparent policies with the distributors, sending the top management to talk with them and compromising on business decisions would make progress.
Barilla's marketing policy encourage customer to order huge amount. See the attached file. Tight heat and humidity specifications in factory tunnel kilns require very specific sequences of pasta production, which means Barilla has limited flexibility in ramping up or ramping down the production of pastas experiencing unexpected demand levels.
Monitor and control For Implementation Plan Step 2, the inventory levels and customer order fill rates in the depots will be closely monitored on a daily basis and reviewed once every week to fine-tune the program itself.
Credible sources and successful examples must be provided. The JITD program will, however, reduce the inventory holding and stockout costs for the distributors as well as it will increase efficiency across the supply chain.
It will help avoid stock out situations at distributer and retailer level, which are caused by panic ordering and non fulfillment of such orders, which in turn will improve the service level. Sales people need to be retrained to communicate more effectively with distributors and effectively express how JITD benefits both parties.
What are the internal and external barriers to implementation of JITD. Due to the nature of the tunnel kiln in the pasta-making process, it is impossible for Barilla to change the order of the pasta production to quickly fill an order of sold out pasta.
Furthermore, transportation expenses soared as some weeks only partial truckloads got delivered. Eliminates the demand variation caused by batch ordering. It discusses issues such as poor forecast capabilities, batch order, lead-time, price variations and level of inventory.
JITD will enable Barilla to increase the visibility of inventory and demand across the whole pasta supply chain. The proper execution would lead to some benefits:.
Executive Summary Barilla SpA, an Italian pasta manufacturer, is experiencing amplified levels of inefficiencies and rising costs due to variability in demand from its distributors. Barilla Spa - 1 Essay. Executive Summary Barilla SpA was founded in and today is the world's largest pasta manufacturer.
They produce 35% of all the. Transcript of Barilla SpA Case. Founded in by Pietro Barilla 21% annual growth rate during the 's Bullwhip effect. Distribution structure Demand Fluctuation Bullwhip Effect Sources of Demand Fluctuation Too long of a lead time Lead time=10 days Promotions.
Barilla SpA (A) Case Study Analysis 2 Diagnose the underlying causes of the difficulties that the JITD program was created to solve. What are the benefits and drawback of this program?
Download as DOC, PDF, TXT or read online from Scribd. Flag for inappropriate content. Save. Barilla SPA currently must decide the logistic planning of its future production and distribution systems.
The company is suffering from issues dealing with fluctuating demand from distributors, and the lack of end user sales and demand Information.Barilla spa bullwhip effect