Barilla Case Study

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CASE STUDY – 1 BARILLA SPA IMPLEMENTATION OF JITD Submitted as a requirement for completion of Module 5 – Supply Chain Inventory Management of the SCMP Program. By: Iqbal Gill (Registration Number – 201501160004) Date: 14 February 2015 Table of contents Executive Summary 3 Statement Of Issues 4 Impact of Issues 5 JITD Implementation 6 Barriers 7 Recommendations 11 Conclusion 14 Executive Summary: The Italian Pasta Manufacturer, Barilla SpA, is experiencing a tremendous impact of the BULL WHIP effect (Appendix 1) causing inefficiencies and increases in cost due to variability in demand from its distributors. Giorgio Magialli, the Director of Logistics, wants to implement a Just-In-Time…show more content…
The costs are related to direct revenue loss due to competition and inventory holding cost respectively. Due to fluctuations, the manufacturing and logistics operations are put under pressure. At the distributors’ end, the impact of such fluctuation may cause them to establish additional capacity to hold Barilla’s excess production (which is expensive) or to buy any type of promotion. Stockouts can also happen and they are also costly because they mean a loss of sales and we can see from the case that the level of stockouts is still at or over 5%. Since margins are reducing, cost reduction on the operations side would be beneficial to the company as a whole. Brando Vitale’s JITD proposal being implemented by Giorgio Maggiali is a mechanism for reducing these costs. JITD’s proposition to supply distributors with quantities chosen by Barilla, instead of according to distributor orders, is designed to meet end-customer needs more effectively and also distribute the workload of the factory and logistic departments more evenly. If the workload is distributed more evenly, the manufacturing and logistics operations will not be under so much pressure. It means production will operate more smoothly, only producing what is requested. Inventory and stockouts should also be reduced at Barilla and at the retailer and distributor sides. As per JITD, information gathered from distributors will help Barilla to estimate its production and inventory levels. Through forward

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