Barilla Case Study: Production Is Based On Demand Prediction

1646 WordsNov 7, 20097 Pages
EXECUTIVE SUMMARY My decision is to implement the Just-in-Time Distribution (JITD) to improve the supply chain effectiveness especially the order fulfillment of Barilla SpA. Production has to be based on demand prediction and not only on orders. Sales and Marketing has to provide this information since they are always in contact with the distributors and customers. Information demand should be collected and used in order to manage inventory properly. This will eliminate stock outs and shorten production and delivery lead time. If my distributors will discard this JITD approach, I will have to recruit support from my internal organizations like the Sales & Marketing, Finance, Production, Logistics, Purchasing, Quality…show more content…
The management wants to have a Just-in-Time Distribution. For me, this is a good plan since they will be able to get a better forecast demand coming from the distributors. The goal is to let the supply chain players participate in this new approach in supplying products to the customers. CAUSES OF THE PROBLEMS The reason why Barilla is experiencing stock-outs is because the periodic review of inventories is done at the store level and distribution center level. This would be after the fact. The reaction time to delivery the goods is already late. Another cause for stock-outs is that each distribution center maintains their own inventory level without much or any input from Barilla sales representatives. In addition, the distributors were used to having full control of the orders and indulged in ordering different quantities in different periods. It would be easier for the company to deal with the big distributors and let those small scale distributors order from them. Sales representatives should spend more time with these large distributors in getting their inventory status. There is poor communication between the manufacturer, suppliers and retailers. There is a lack of sharing inventory cost and demand information for inventory-planning purposes. I think there is miscalculated impression that revenue depends on sales alone. Barilla’s sales strategy relied heavily on the use of promotion incentive. They had 10-12

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