Barilla SpA Case Study
Define the Problem: Describe the type of case and what problem(s) or issue(s) should be the focus for your analysis.
Type: Supply Chain
- Extreme demand fluctuations – week-to-week variation in distributors order pattern, strained
Barilla’s manufacturing and logistics operations: high inventory, stock out, low fill rate to customers. - Pressures to manufacturing in terms of production lead-time and availability of the product
- High inventory cost and manufacturing cost due to operational inefficiencies
- Strong resistance for JITD (Just In Time Distribution) Program implementation, either from
Barilla’s distributor or its own sales and marketing department or organization.
- Distributors …show more content…
There’s a mismatch supply chain strategy that used by Barilla. Barilla should consider moving left or down which means change their supply chain strategy or change their products strategy. Pasta should be not an innovative products but functional products because it offers great variety and low profit margins. In this case, Barilla should change their Innovative to Functional products and restructure their efficient
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supply chain strategy.
With using Just-In-Time-Distribution (JITD), Barilla can managed the inventory concept, Barilla can give the authority to determine the shipments, decides what products to ship and when to ship it and lastly distributors would have to submit their Stock Keeping Unit (SKU) so that Barilla can control it.
Q: What exactly is causing the distributors order pattern to look like as seen in Exhibit 12? What are the underlying drivers of the fluctuations in the exhibit?
Overburdened manufacturing and logistics operation
Poor product delivery
Decreasing of retailers/distributors
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Looking at the fluctuation in Exhibit 12, one could expect that poor coordination in the supply chain would increase costs. Provide a discussion for the cost of poor coordination in Barilla’s supply chain. Items to consider here include production changeovers or setups, inventory levels, facility utilization, transportation costs, quantity discounts and promotions, canvas periods etc.
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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.
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With vision aligned, Nabisco concluded a critical decision on investing in Supply Chain. As supply chain management defines, all resources which includes finance, materials and information that flows from the supplier’s supplier ending all the way to the customer’s customer. In order to fulfill its mission, Nabisco’s supply chain will have to succeed. Supply Chain Strategic Management became the core competent that Nabisco need to achieve.
Distributors would not stock their inventory with Barilla products that exceed the real demand. Thus, the JITD program would help Barilla’s partners reduce distribution costs and allow them to be more efficient. The project also might help improve Barilla’s relationship with its partners, as Barilla won’t exert pressure on distributors to hold more finished products than necessary. The implementation of the program will eventually improve the planning procedures for Barilla and enable the company to provide exceptional service to its customers at low costs.
Approximately 65% of Barilla’s dry products were supplied through outside distributors to supermarket chains and independent supermarkets who would eventually get the product into the hands of the ultimate user. Distributors would receive their product from one of the two Barilla’s central distribution centers (CDCs) where movement of product would be assessed based on its category which would be either “dry” or “fresh”. Barilla maintained different distribution systems for its dry and fresh products due to their differences in perishability and retail service requirements. Brando Vitali’s JITD proposal focused solely on dry products sold through Barilla’s distributors who I am going to examine. There is an industry culture around the supply and demand of Barilla products. Internal and external politics are at the root cause of the resistance to change around the distribution channels. There are issues that Barilla needs to address internally before the idea of JITD can come to life externally. Barilla’s sales and marketing personnel have expressed a range of concerns because this new philosophy could
It is assumed that the logistics strategies outlined in this report would apply to any divisions in Tsingtao Brewery. As such, it is also assumed that other divisions run very similar supply chain management systems to that of South China Sales Company. The final assumption is that investment by the Tsingtao Group in the supply chain is a very manageable investment for them.
Barilla sales representatives serving DOs spent an estimated 90% of their time working at the store level. In the store, sales reps helped merchandise Barilla product and set up in-store promotions; took note of competitive information including competitors ' prices, stock outs, and new product introductions; and discussed Barilla products and ordering strategies with store management. In addition, each sales rep spent half a day in a regularly scheduled weekly meeting with the distributor 's buyer, helping
The authors noted that Just in time (JIT) and supply chain management (SCM) both look for quality improvements in the supply chain. JIT concentrates on the production process and requires integration of productions schedules between the supplies and the deliveries to efficiently move only the volume of production needed to meet the deliverables. SCM looks at development and production across the supply chain for opportunities to improve quality and add value to the customer. While SCM would appear to need a coordinated effort between transportation, logistics, and purchasing aspects of the manufacturing process, it has only focused on the oversight of transporting goods
The design has some benefits including reducing the setup time, improving the goods flow from warehouse to shelves, efficient use of multiple skilled employees, synchronizing production schedule and work hour consistency with demand, regular interval supply through the production day and at last minimizing the storage space. Problems are also associated within the JIT system by leaving the suppliers and consumers open to supply shocks and demand changes and within raw material streaming by linking JIT through the entire supply system.
To support this statement, I would like to present Starbucks ' supply chain reorganization started in late 2008. The initials first step was to simplify a complex structure in four essential supply chain functions. Every supply chain job fell in plan, source, make, and deliver. If someone involved in production planning or replenishment or new product, was part of the planning department. Sourcing functions split between coffee and "non-coffee" procurement. At that time Starbucks spent in the average US $600 million on coffee a year and total US