1. Diagnose the underlying causes of the difficulties that the JITD program was created to solve. What are the benefits and drawbacks of this program?
One of the underlying causes of the difficulties that the JITD program was created to solve was the effects of inconsistent demand that came from Barilla’s distributors. The extreme demand variation strained Barillas manufacturing and logistics, and made very hard for Barilla to meet that demand. For example, as noted on the case “the specific sequence of pasta production necessitated by the tight heat and humidity specifications in the tunnel kiln made it difficult to quickly produce a particular pasta that had been sold out due …show more content…
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.
While the JITD program has many beneficial it also has its drawbacks. One of them is the perception that the power will be transferred to Barilla, as one of the distributors was quoted “we would be giving Barilla the power to push product into our warehouses just so Barilla can reduce its costs.” Another drawback is that some of the distributors are not comfortable or willing to share their warehouse data, which is a vital piece in order for JITD program to work. Furthermore, it might be hard for some retailers to report daily sales simply because they might not have the point-of-sale technology at their stores.
2. What conflicts or internal barriers to Barilla has JITD created? What causes these conflicts? How would you deal with them?
JITD created lot of internal barriers to Barilla; while some of the concerns are easy to overcome others would need more convincing. For example, the sales department, sales representatives receive more on their compensation through commission from their sales. JITD would cut or reduce to zero most of sales people responsibilities, which in turn will squeeze their commission, as one sale man said “Our sales levels would flatten if we put this program in place”. As noted in the case most of the sales come from the
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In order to increase visibility downstream, Barilla has developed a program that pulls relevant shipping information from their downstream partners. This allows Barilla to optimize production and transportation decisions given the information. Barilla¡¯s Just-In-Time-Distribution program (JITD) effectively looks at the daily shipping decisions made by distributors and warehouses, combines that information with each distributor¡¯s stock position by SKU and plans future production and replenishment decisions for each distributor.
A more targeted approach to implementing the JITD system will increase the likelihood of success. Due to the high number of SKU’s we move through our supply chain, the project is considerably more complex than necessary. We should use a Pareto analysis to select a smaller number of SKU’s that account for 80% of our throughput. This will maximize the impact of our efforts, while keeping them achievable.
As argued by Lubben (1988), JIT allows businesses to have better management since this ensures that there is no loss as there is sufficient number of clients requiring the equipment. This reduces her to deal with huge deliveries when the clients’ numbers are not increasing. (Lubben, 1988, p.4) also suggested the idea of JIT that “... major elements of manufacturing – capital, equipment and labour are made available only in the amount required and at the time required to do the job.” So it is a good practice by utilising JIT approach as it reduces wastes and ensure the correct amount of equipment is available (Lubben,
If I were a customer of Barilla, I would just be concerned with getting all the products I need in a fast time and in good quality. If they could do that, then I would be happy. If I were an investor in the Barilla company, my perspectives would probably not change regarding JITD. I feel that the program will help the company enormously. It will create more revenues for the company, reduce working capital, and it will provide better service to the
JITD distribution ideas was developed to meet and exceed the demand supply of Brailla brand fresh and dry products by streamlining a forecast based supply management system. Barilla’s total product range comprises of 75% dry and 25 % for fresh products having 21 days and 12-18 months of shelf lives respectively.
Bimbo has been successful over the past several years due to three main strategic elements: analyzing the external environment, utilizing their best resources, and vertically integrating parts of their supply chain. They have analyzed their external environment through overcoming barriers to entry, utilized their best resources by engaging their human capital and reinvesting in their factories to produce at a higher quality, and vertically integrated the flour mill into their factories to ensure quality control and the protection of proprietary information.
Barilla revolutionalized the Italian pasta industry's marketing practices by creating a strong brand name and image for its pasta and by 1968 hit double-digits in sales growth. Due to their size and amount of products, Barilla was organized into seven divisions: three pasta divisions, a bakery products division, the fresh bread division, the catering division, and the international division. By 1990, Barilla became the largest pasta manufacture in the world (which it sill is today).(4)
With JITD, the number of urgent order will be decrease. Barilla can put more focus on managing the standard order with the normal manufacturing setup. Extra work on rearranging the production line will not be required frequently. The whole operation can be more efficient and standardize.
The problem faced by Barilla is that they are experiencing the bullwhip effect as a result of the supply chain lacking coordination causing unpredictable demand. Barilla is experiencing fluctuations and variability in demand as a result of each supply chain member focusing primarily on their own local objectives resulting in increased manufacturing, inventory, distribution, transportation and labor costs. There are a number of obstacles Barilla is facing that is leading the demand for their products to fluctuate
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.
The Just In Time Philosophy (JIT) is simply to eliminate waste, by cutting excess capacity or inventory and removing any activities that do not create value (Krajewski, Ritzman, Malhotra, 2013). As mentioned in the introduction, there are certain items that need to be gotten under control in order to run a neat, lean system. The goals of a lean system are to eliminate eight types of waste (overproduction, inappropriate processing,
Barilla has experienced difficulties in collecting needed information. These outside distributors, especially the supermarket chains such as Marconi, have sophisticated experience in managing their inventories. They simply do not believe Barilla can do a better job than themselves on controlling the inventory level.
As it was already mentioned, in 1988, the Barilla’s Logistics Director, Brando Vitalli addressed the company’s problems in manufacturing and distributions systems and proposed an idea that would fix all the problems caused by fluctuating demand and radically changed the process of ordering and delivering. This idea was later supported by Giorgio Maggiali, the Chief of Barilla’s Logistics Department, who was trying to implement the Just-in-Time-Distribution (JITD), taken from ‘Just-in-Time’ manufacturing concept. The purpose of JITD system was reaching operating efficiency. The main idea of JITD was that instead of letting the distributors determine the quantity and delivery schedules, Barilla’s own logistics would be responsible for doing this. Barilla would look at all the distributor’s shipment data and send only that quantity what was needed at the store. JITD would look at the
Barilla could offset some of the lost incentives to distributors by paying for the data or offering discounted pasta for the right to decision-making. With proper data, Barilla could work to eliminate costs involved with inventory, manufacturing, transportation, and using the CDC. JITD would allow Barilla to work directly with distributors and thus eliminate the need for the CDC.