Case Study : Barilla Spa ( A )

Supply chain management is a complex process. There are several issues that can lead to the bullwhip effect and those issues can be exacerbated by delays in transmitting information, and a lack of coordination up and down the supply chain. Some causes of the bullwhip effect include:

Changes within the supply chain can disrupt the normal flow of goods and services because each change hasn’t been fully scrutinized. A firm can plan and speculate that a change with have a certain effect on the supply chain, but until those processes have been measured it is impossible to know the true cause and effect of any disruption.

This is something that must be addressed in supply chain management because if one area of the company is operating below capacity the other sectors will not be able to make up this lack of production. Another main component of supply chain management is how to handle damaged goods. It is a waste of money to send out defective products because it costs the organization large amounts of money to recall the damaged materials back to the factory and replace them, slowing production efficiency. There must be quality controls and regulations that enable Ford to minimize inventory defects and returns. The Ford Motor Company must have damage control operations to continue manufacturing the same amount of automobiles so that they do not lose any necessary inventory. There must also be procedures in place that deal with delivery systems and the delays and unsuitable materials that could easily occur. This paper will fully break down the previous issues associated with the Ford Motor Company 's supply chain management and operations. SUPPLY CHAIN MANAGEMENT OF FORD Synopsis of Supply Chain Management as it Applies to Ford The definition of supply chain management (SCM) involves taking a systems approach to the entire supply chain with the overall goal of reducing the level of risk and uncertainty throughout the supply chain. This will ultimately permit lower

Define the Problem: Describe the type of case and what problem(s) or issue(s) should be the focus for

Additionally, forward buying activities from distributors due to frequent trade promotions and volume dis-counts enforce the effect of demand fluctuations. During promotions, distributors buy huge amounts of pasta at a lower price. This forward buying leads to lower demand in future periods and contributes to high peaks in or-der quantity and low levels of orders in the following periods. Connected to this problem is the incentive system of the sales force, which relies heavily on trade promotions in order to achieve quarterly targets. Another factor related to these aspects is batch ordering and

During the game, I realized that wide gaps in orders of every role in the supply chain such as factory, distributor and retailer create inventory management challenges. For example, distributor records 0units between week1-week 4 compared to retailer within the same period. The retailer records 3units, 5units, 2units and 2units between weeks 1- week 4. The same applies to factory with 0units from weeks 2-4. Addressing inventory management problems requires developing an average unit level to avoid disappointing customers when demand

Nordstrom has famously been known for its lean retail prices and its tight inventory. Nordstrom uses demand forecasting to minimize leftover inventory. Nordstrom’s total corporate management is based on two main goals. One is to associate purchasing with demand to keep inventory as lean as possible. Second is to present customers and sales associates with a wide-ranging view of Nordstrom’s entire inventory, including all stores and warehouses. Nordstrom relates purchasing with demand to keep inventory lean and show customers and employees Nordstrom’s inventory. Nordstrom keeps its items in stock for an extremely short period of time so that if a customer wants it, they only have

Company is facing a challenge of potentially higher inventory costs. Rising prices may further result in changes in customer behavior and preferences.

The customers, wholesalers and retailers may order in large quantities with the expectation that they will receive a greater allocation of products that are in short supply. The impact on the supply chain is significant as the forecasted demand is greatly, and unrealistically, increased with these inflated orders. Eventually orders disappear and cancellations pour in, making it impossible for the manufacturer to determine the real demand for its products

They stated that Barilla was an Italian company that produced pasta in both Italy and the United States depending on the product being sold. In their frequently asked questions page I realized that address of where the pasta came from was also the location of their corporate office.

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

Effective supply chain management can provide an important competitive advantage for a business marketer, resulting in improved communication and involvement among members of the chain, increased motivation, and decreased costs. Tracking the movement of and demand for components used to manufacture a product across a variety of potential and actual suppliers, provides insight and the ability to respond instantly to shortages, surpluses, and changes in market conditions. It seeks to optimize production, decrease manufacturing time, minimize inventory, streamline order fulfillment, and reduce cost.

The AAA region was hit by a period of economic uncertainty caused by the slowdown of Chinese growth, instability of Middle East and economic recession in Russia. The Barilla brand market share in value terms increased in all of the key markets in this area: confirmed position as leading competitor at national level in Russia, market leader in Turkey, and further expansion in Middle East and Israel markets with an aggressive dedicated strategy. The substantial investment in the Solnecnogorsk (Russia) for pasta manufacturing will significantly improve flexibility and profitability in this area (Barilla,

The class text states that Supply chain management is frequently divided into supply chain planning applications, supply chain execution applications, logistics management, and warehouse management. Often when companies fail at implementing an efficient supply chain because of the planning section, or inaccurate demand forecasts. The text states electronic data interchange is one of the earliest uses of information technology for supply chain management, Electronic data interchange is the use of the Internet for everyday business transactions. “In this era of information a firm’s supply chain should operate at speed of thought and this is possible only by enhanced e-speed communications and information sharing with their critical partners.” (4)

Businesses over the years have learned from their mistakes, and make the necessary adjustments within their organizations to eliminate the issues and prevent them from occurring again. By conducting market testing, manufactures can collect input from the end user, then analyze the information to determine the best location to place their products for purchase. The various demands received by manufactures can be mind boggling and without proper handling it can lead to devastation. Daily, manufactures deal with internal demands from their employees; from adjusting work schedules to allow for vacations, to better healthcare insurance, or higher wages. Moreover, companies receive demands from their distributors, requesting an increase in product production to meet the demand from the retailers. Along with increase in production, there is demands for transportation, which all of these demands affect the manufacture’s bottom line and without proper planning and budgeting, these demands may lead the manufacture out of business. Product distribution is critical and when the product is not available it affects more than just the manufacture. Understanding the direct and indirect approach for distributing a product along with choosing either an extensive, intensive, or exclusive distribution channel will allow the product to reach the distributor, retailer, and consumer all while making everyone in the supply channel happy.