...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? In your answers, consider the Barilla and distributors points of view (400-500 words). Late in the 80’s of the 20th century, Barilla SpA, faced increased difficulties caused by the variability of its distributors demand, these difficulties translated into augmented inefficiencies and rising costs of production and distribution of finished products. Barilla’s management noted that this high variability was in spite of the relatively stable consumers demands. A clear manifestation of the bullwhip effect. From Reading the posted Case we can identify many factors that contribute to the amplification of the bullwhip effect, exposed in what follows. Barilla had a typical multi layered distribution system with finished products having to be moved from the factory to Central distribution centers then to distributors to reach the shelves of supermarkets where actual demand is exerted, supply chain members at every tier had to make their own forecasting, which accentuated variability from one tier to the next up the supply chain structure. Variability was accentuated further by the fact that distributors (GDs & DOs) are independent third parties who use their own forecasting system based on “second hand” info already distorted by retailers’ forecasts, and the multiplicative effect travels further up the chain. The multi layered system...
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...School Informe Individual: Barilla SpA Barilla SpA fundada en 1875 por Pietro Barilla es un referente mundial en la industria de producción de pastas tanto secas como frescos, como también en bollerías y salsas. En principio la empresa se ha posicionado como un ejemplo de alto crecimiento a través de los años. Para 1990 ya Barilla se había convertido en el fabricante de pastas mas grande del mundo con una cuota de mercado del 35% en Italia y el 22% para toda Europa. Todo este crecimiento es el resultado de los esfuerzos de Ricardo Barilla, hijo del fundador, quien desde la re adquisición de la empresa ha implementado ciertas estrategias en cuanto a distribución, markeitng, y toda la cadena de suministro. Incluso con sus operaciones en todo el mundo, la compañía sigue siendo privada y una empresa familiar bajo la propiedad de los tres hermanos Guido Barilla, Luca y Paolo . Entrando un poco en la industria donde Barilla se encuentra, cabe resaltar que el foco principal lo debemos tener en Italia. Este es uno de los mercados mas importantes de Barilla ya que es allí donde Barilla maneja toda su estructura de producción y distribución de sus mas de 100 productos. Esta industria consume mas de 18kg per cápita de pasta al año, lo que indica que en Italia la pasta es un plato importante del día a día, y que representa uno de los mercados mas grandes frente a consumidores directos. Con un mercado muy competitivo y con cientos de competidores Barilla ha sabido mantenerse a flote...
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...CASE REPORT BARILLA SpA (A) PREPARED FOR PREPARED BY DATE | | | | | |Section |TITLE |PAGE | | | | | | | | | | | | | |1 BUSINESS /COMPANY BACKGROUND |3 | | ...
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...2008 JANICE H. HAMMOND Barilla SpA (A) Giorgio Maggiali was becoming increasingly frustrated. As director of logistics for the world’s largest pasta producer, Barilla SpA1, he was acutely aware of the growing burden that demand fluctuations imposed on the company’s manufacturing and distribution system. Since his appointment in 1988 as director of logistics, he had been trying to make headway on an innovative idea proposed by Brando Vitali, who had served as Barilla’s director of logistics before Maggiali. The idea, which Vitali called Just-in-Time Distribution (JITD), was modeled after the popular “Just-InTime” manufacturing concept. In essence, Vitali proposed that, rather than follow the traditional practice of delivering product to Barilla’s distributors on the basis of whatever orders those distributors placed with the company, Barilla’s own logistics organization would instead specify the “appropriate” delivery quantities—those that would more effectively meet end-consumer’s needs yet would also more evenly distribute the workload on Barilla’s manufacturing and logistics systems. For two years Maggiali, a strong supporter of Vitali’s proposal, had tried to implement the idea, but now, in the spring of 1990, little progress had been made. It seemed that Barilla’s customers were simply unwilling to give up their authority to place orders as they pleased; some were even reluctant to provide the detailed sales data upon which Barilla could make delivery decisions...
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...Executive Summary Barilla SpA, an Italian pasta manufacturer is experiencing problems in manufacturing and distribution systems caused by fluctuations in demand. To eliminate these difficulties Giorgio Maggiali, the Chief of Barilla’s Logistics Department, has been trying to implement the Just-In-Time-Distribution, further referred as JITD, system proposed by his predecessor Brando Vitali. JITD can be called a remake of popular “Just-In-Time” manufacturing concept. Although Maggiali has been trying to convince his consumers that the JITD would definitely work, he has not made much progress. The program was met with significant resistance by the distributors and Barilla’s own Sales and Marketing organizations. Now Maggiali is looking for possible solutions of the problem. In the following analysis we will provide recommendations, which will help Barilla to successfully implement the JITD system and thus decrease its costs, increase efficiencies and its profits. Introduction Barilla SpA was founded in 1975 by Pietro Barilla. From a small shop in Palma, Italy, it became a large, vertically integrated corporation with mills, plants and factories located throughout the Italy. Barilla’s success highly depended on its’ quality of product and innovative marketing programs, which created strong brand name. The company was sold to Grace Inc. in 1971, because the building of a huge plant in Perdignano drove the owners “deeply into debt”. Grace brought additional capital investment...
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...Introduction………………………………………………………………………..4 Problem Description……………………………………………………………….5 External and Internal Resistances to JITD program……………………………….9 Solution…………………………………………………………………………....11 Recommendations to the solution …. …….………………………………………12 Other recommendations…………………………………………………………...15 Customer response to the solution…………………………………………………16 Conclusion………………………………………………………………………....21 Executive Summary Barilla SpA, an Italian pasta manufacturer is experiencing problems in manufacturing and distribution systems caused by fluctuations in demand. To eliminate these difficulties Giorgio Maggiali, the Chief of Barilla’s Logistics Department, has been trying to implement the Just-In-Time-Distribution, further referred as JITD, system proposed by his predecessor Brando Vitali. JITD can be called a remake of popular “Just-In-Time” manufacturing concept. Although Maggiali has been trying to convince his consumers that the JITD would definitely work, he has not made much progress. The program was met with significant resistance by the distributors and Barilla’s own Sales and Marketing organizations. Now Maggiali is looking for possible solutions of the problem. In the following analysis we will provide recommendations, which will help Barilla to successfully implement the JITD system and thus decrease its costs, increase efficiencies and its profits. Introduction Barilla SpA was founded in 1975 by Pietro Barilla. From a small shop in Palma, Italy, it became a large, vertically integrated corporation with...
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...Barilla Spa Case Study Analysis Solution Diagnose the underlying causes of the difficulties that the JITD program was created to solve. What are the benefits and drawback of this program? Brando Vitali, Barilla’s director of logistics, proposed the idea of Just-In-Time Distribution (JITD) in the 1980’s as an alternative to Barilla’s traditional practice of delivering products to their distributors (Hammond, 1). Instead of distributing Barilla’s products based on the orders the distributors placed with the company, Barilla’s own logistics organization would determine the product quantities to distribute that would most effectively meet end-consumers needs. This in turn, would more evenly distribute the workload on Barilla’s manufacturing and logistics systems (Hammond, 1). Vitali hoped his innovative idea would solve the tremendous fluctuation that occurred from week to week in the number of Barilla dry products being ordered by the distributors. The extreme demand variability seriously strained Barilla’s manufacturing and logistics operations. Barilla’s highly automated manufacturing system was not designed to accommodate large fluctuations in demand nor, was it designed to accommodate sudden changes in demand or product. The manufacturing sequences of pasta production made it very difficult to produce particular types of pasta that had been sold out due to unexpectedly high demand. The temperature and humidity in the kiln had to be precisely specified for each...
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...Executive Summary In 1875, Pietro Barilla opened a small shop and laboratory where they produced, and sold pasta and breads. In 1990, Barilla was the largest pasta manufacturer in the world, making 35% of all pasta sold in Italy and 22% of all pasta sold in Europe. Since Pietro’s grandsons took over, Pietro and Gianni, Barilla evolved into a vertically integrated company with flour mills, pasta plants and baking products. This case study outlines Giorgio Maggiali’s (Director and Logistics) concern of the growing burden that demand fluctuations imposed on the company’s manufacturing and distribution system. Currently, Barilla’s dry product orders range greatly from week to week, causing an increase on stock outs. Given the information provided in this case, my executive decision is to implement the idea of Just-In Time Distribution (JITD) strategy, which is modeled after the widely popular “Just-In-Time” manufacturing concept. This strategy will allow Barilla to forecast and maintain inventory levels by shipping product to the distributors based on the customer’s internal planning processes and forecast. Unfortunately, the customers are showing unfavorable responses to this new strategy. Barilla needs to convince the distributors that this strategy will reduce the average delivery time. The JITD model should be considered a selling tool offering customers additional service without any extra cost. The JITD proposal will be a help to all parties; from manufacturer, to end customer...
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...Barilla SpA, the world's biggest pasta manufacturer, has continuously experienced problems with increased costs and inefficiencies in their operation. The fluctuations in demand have caused Barilla SpA's manufacturing costs, inventory costs, and distribution costs to go up. Issues that influenced the demand fluctuations are the discounts Barilla SpA offers on both price and transportation, the compensations for sales representatives that is based on the volume of goods they sell to the distributors, and long lead times between time of order and time of delivery - just to name a few. The idea of JITD is to allow sales and inventory data to be shared along the supply chain. By doing so, Barilla SpA can use that data from its distributors to better understand the demand of its products and perform better forecasting. The results would be lower transportation costs due to better shipment planning, increase manufacturing efficiency, reduce inventory costs, and less stock outs for its distributors. This will benefit both Barilla SpA and its distributors, but resistance from the distributors and Barilla SpA's internal opposition makes it difficult to implement such strategy. Barilla SpA's sales representatives were afraid of losing their jobs because they felt with the JITD in place; they will no longer be needed. Also, it would essentially eliminate the current compensation system, meaning they would make less money. As for the distributors, the idea of providing sales data...
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...THE BARILLA Spa CASE [pic][pic] QUESTION 1: Observe Exhibit 12. What are the underlying causes and drivers that make order patterns to look this way? Provide a discussion on these causes/drives to show how they are causing the resulting demand pattern. Examples of items to consider include transportation discounts, promotional activity, product proliferation. The BARILLA case is an illustrative example where we can understand the effects of a phenomenon which is very common among industries that is called the Bullwhip effect. As an immediate outcome this phenomenon creates large swings in demand on the supply chain resulting from relatively small, but unplanned, variations in consumer demand that escalate with each link in the chain .Events that can trigger begin at any point in the supply chain: consumer, retailer, distributor, manufacturers, raw materials suppliers and so on. As orders progress up the chain, each level perceives a greater demand that it seeks to rectify from its own Lets discuss in more detail some of the causes that can trigger this event and we can identify in the case: • Promotions: Barilla’s sales strategy relied heavily on the use of promotions, in the form of price, transportation and volume discounts. They divided the year into 10 to 12 canvass or promotional periods, during which different products were offered at discounts. These price discounts ranged from 1.4% to 10%. Barilla’s volume discounts consisted...
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...Barilla SpA (A) Case Module 1 ------------------------------------------------- Table of Contents ------------------------------------------------- Executive Summary 3 Issue Identification and Root Case Analysis 4 Alternatives and Options 7 Recommendations and Implementation 8 Monitor and Control 9 Exhibits 10 ------------------------------------------------- Executive Summary ------------------------------------------------- The tremendous fluctuation that occurred from week to week in the number of Barilla dry products being ordered by the distributors and the extreme demand variability seriously strained Barilla’s manufacturing and logistics operations. Barilla’s highly automated manufacturing system was not designed to accommodate large fluctuations in demand nor, was it designed to accommodate sudden changes in demand or product. Brando Vitali, Barilla’s director of logistics, proposed the idea of Just-In-Time Distribution (JITD) in the 1980’s as an alternative to Barilla’s traditional...
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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 Distribution (JITD) system to gain more control. The new system is untraditional and is being rejected by both distributors and Barilla's internal departments. I have reviewed the reasons for opposition and have made recommendations to gain support for the new JITD system. I feel that with proper implementation and some tweaks; Barilla can garner leverage in the near future and can outgrow the pangs of the newly launched system. Although the case focuses on domestic (Italy) distribution-related operational issues, the Barilla management team should define their operation strategy for the near future that covers both domestic and international markets in alignment of Barilla’s market vision. The operation strategy should identify the order of importance...
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...Implementation----------------------------------------------------------------------------------------Page 3 VI. Monitor and control----------------------------------------------------------------------------------Page 5 VII. Conclusion----------------------------------------------------------------------------------------------Page 5 VIII. Exhibits--------------------------------------------------------------------------------------------------Page 6 I. Executive summary Barilla SpA, an Italian based company, is the world’s largest Pasta manufacturer. It has a 35% market share in Italy and a 22% market share in Europe. In addition to the family of pastas (macaroni, spaghetti, fusilli, etc.) it also manufactures other products such as biscuits, cookies sauces, breadsticks, etc. Barilla has a very complex distribution network consisting of Grand Distributors (owned by large Supermarket chains), Organized Distributors (independent third party distributors) in addition to its own depots. Due to such a complex and multi-echelon network, Barilla has been experiencing large amounts of variability in demand which are resulting in operational inefficiency and increased manufacturing, inventory and distribution...
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...Executive Summary Barilla and its distributors have decided to implement the Just-in-Time Distribution (JITD) approach. This will require a vendor relationship between Barilla and its distributors and investment in sharing information from its customers and the inventory on hand in the distributors’ warehouse. Because of Barilla’s poor performance caused by shortages it is imperative that JITD is implemented in a proper manner that emphasizes the short term and long term gains that Barilla and its supply chain will have. Although most of the implementation can occur in a short period of time, in order for the supply chain to truly be successful, there must be long term investment for the vendor relationship and relationship with its internal members to truly be effective and successful. Issue Identification The following are a list of issues that must be addressed: * Distribution System * Extreme demand fluctuations * Distributor resistance * Internal resistance Issue Identification including Root Cause Analysis Distribution system Barilla has employed two main approaches to meet the end users’ needs. Barilla carries extra inventory in its factories in anticipation of any large pulls from its customer because it can’t produce product fast enough within the constraints of its production facilities. However, holding extra inventory is extremely expensive because there is no predictability in demand. Second, in order to minimize its inventory carrying...
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...Barilla S.p.A. Cases A and B 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? The JITD program was created to view distributors’ shipment data and sends only the required amount to stores. Barilla would be able to ship products on a need basis instead of piling up huge stocks in their facilities and that of their customers. The complex nature of manufacturing sequences of pasta made it extremely difficult to produce certain types of pasta that was stocked out due to unforeseen demand. Different kinds of pasta were made in various plants with special equipment based on the type of pasta produced. This ultimately limited Barilla’s production flexibility to switch the location of plants as needed to meet the demand for the product. Barilla was attempting to hedge against the bullwhip effect that occurs due to fluctuating demand as well as to solve stock out issues that were hindering Barilla’s logistics operations. It was often difficult to manufacture certain goods with limited lead time as well as expensive to hold sufficient inventory of finished goods when demand fluctuated so much. The fluctuation in demand was causing manufacturing, inventory and distribution costs to be a lot higher than they needed to be. At the current rate, Barilla’s logistics team knew the status quo would not be enough to keep up with the uncertainty in demand. Something has to change, and in...
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