The proposed JITD system required the distributors to share their sales data with Barilla, who would then forecast and deliver appropriate amounts of products to the distributors at the right time in order to effectively meet demand.
The compensation system in place at Barilla for Sales reps, made them to push more products into the pipeline during promotional periods and not able to sell sufficient quantities during non promotional periods created wide variation in demand patterns.
The JITD program essentially uses the point-of-sale data from the retailers, though one step behind; as such, sales and marketing will be directly influencing the JITD program. Collecting inventory data, analyzing the patterns, and using it to build forecasts would be beneficial to all sides and decrease the inventory holding and stockout problems.
There will disrupted existing arrangements between the sales department and distributors. This implies that the Company had to hire more transport facilities as well as staff to facilitate transportation.
They could also go overseas to sell their products in international chains.
By putting a system in place that allows for Barilla to see distributor and retailers data of its product, Barilla would be able send vendors only inventory that is needed.
Barilla has no visibility on what is happening in reality with the flow of their products in the market. The push supply chain oriented must be changed towards a more pull oriented system.
Since the distributors were working with nearly suppliers, they did not have the trust comfort level by disclosing the sales data to Barilla, and their relations with other suppliers could be affected, if they were aware of sharing the proprietary data with Barilla.
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.
What are the ways to convince customers to implement JITD? Like with all major changes, there is opposition. Recommendations The program had strengths as well as weaknesses. We have new technology that already holds all the information needed.
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. Main reasons for fluctuating demand: Stock-outs mean lost sales and, eventually, lost customers.
This program will help them improve operations for themselves and their customers. It is not easy to increase shelf space in retail outlets and manufacturers are constantly introducing new products and wanting retailers to display each product on the fronts of their shelves.
The overarching problem is distributors base their actions off of retail demand on the one side and Barilla sales incentives on the other with no means to reconcile the two.
Finally the cash flows were also uneven. Extreme variable demands will lead to extra inventory for safety stock. The idea is good, but they can not only send what the end users need. I think there is miscalculated impression that revenue depends on sales alone.
Both manufacturers and retailers are suffering from thinning margins. Sales success is measured by shelf space and not by low inventory.
The sales team would still be able to hold trade promotions; however, they would have to be automated versus random.
They will send no more and no less of what is needed.What are the underlying causes of the difficulties that the JITD program was created to solve? JITD was created to solve the problems of a) effects of fluctuating demand (Bullwhip Effect) b) stockouts issue that strain Barilla’s Manufacturing and logistics operations.
Even though JITD was created to solve the problems they were having, many stakeholders did not agree with the program. Let us write you a custom essay sample. Case Barilla SpA (A) Discussion Question 1.
Answer these questions about the Barilla case study; a. Diagnose the underlying causes of the difficulties that the JITD program was created to solve. Essay title: Barilla Spa, Just in Time Distribution Barilla spA case analysis Barilla SpA, an Italian pasta manufacturer, is experiencing amplified levels of inefficiencies and rising costs due to variability in demand from its distributors.
More Essay Examples on Inventory Rubric. Most important, as end-consumer demand fluctuates – even slightly – the perceived variation in demand increases significantly moving down the supply chain toward Barilla’s manufacturing facilities.
Underlying causes that led to JITD The case study describes some of the underlying causes that lead to the creation of the JITD program at Barilla SpA.
The most important contributing factor was high fluctuations in demand.Download