...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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...Barilla SpA - Case Study Table of Contents I. Executive summary II. Issue Identification III. Environmental and Root Case Analysis IV. Alternatives and Options V. Recommendations VI. Implementation VII. Monitor and Control/ Conclusion I. Executive Summary My decision for this case is to implement the Just-In-Time Distribution (JITD) system. Barilla SpA, an Italian pasta manufacturer, is experiencing amplified levels of inefficiencies and rising costs due to variability in demand from its distributors. In order to bring things back into place and to improve margins, Giorgio Magialli, the Director of Logistics at Barilla wants to implement a Just-In-Time Distribution (JITD) system that was proposed by his predecessor Brando Vitali. This system is entirely different from the existing setup and is being opposed by both the distributors and Barilla’s Sales and Marketing Department. In this report we have studied the reasons for this opposition and have suggested strategies. We have given our rationale for the JITD system to work and have proposed recommendations to resolve all existing issues. We think that a centralized supply chain with Barilla having authority of the orders over the distributors will result in better margins for all the partners. We believe that by following these recommendations and implementations, Barilla will succeed in influencing its distributors and sales and marketing personnel to work together and apply the JITD program...
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...Barilla SpA (A) Case Report SCMP Module 5 By Jamie Brymer Robert Greene February 12th, 2016 Table of Contents Executive Summary 3-4 Issue Identification 5-7 Environmental and Root Cause Analysis 8-9 Alternatives or Options 10-12 Recommendations and Implementation 13 Monitor and Control 14 Exhibits Attached Executive Summary Barilla SpA, is an Italian pasta manufacturer and distributor and even with an attractive piece of the market (35% in Italy, 22% in Europe) and diversifying product lines, they are experiencing inefficiencies and rising costs due to irregular and ever changing demand from their distributors. Giorgio Magialli, the Director of Logisitics, has been tasked with resolving these issues by gaining control over their fluctuating demand. Barilla currently has in place, a very complex distribution network and has been experiencing increasing variable changes which is not only hitting operations for their inefficiency but increasing costs across the board for inventory, distribution and manufacturing. After much backlash the first time of trying to implement a Just-In-Time Distribution (JITD), the plan is to regroup and decide whether this time of program can be implemented successfully and if so, which customers they should target with this type of system. The first attempt at implementing the JITD strategy was done by Brando Vitali, the former Director of...
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...Session 5: Supply Chain Inventory Management Assignment 3: Case Response Barilla SpA (A) Submitted by: Lena Table of Contents Executive Summary 3 Issue Identification 4 Issue Identification including Root Cause Analysis 5 Recommendations 7 Implementation Plan 8 Monitor and Control 10 References 11 Executive Summary Barilla SpA is the world’s largest pasta producer is initiating the Just-in-Time Distribution (JITD), which is supposed to help the company to meet the demand fluctuations imposed on the company’s manufacturing and distribution system. The company had realised that leaving money on the table with understocking or increasing costs with overstocking is not an option. The current delivery system at Barilla follows the traditional way of ordering through distribution centres placing orders with the company. Instead, Barilla SpA wants to engage its own logistics organizations, which would specify the appropriate delivery quantities that would meet end-customer needs and distribute the workload on Barilla’s manufacturing and logistics system. The predicament exists in Barilla’s customers, sales representative and marketing organizations resistance to change and internal resistance toward implementing JITD. In this case study response I will be providing analysis and recommendation on how to increase the chances the Barilla’s management idea of JITD would be acceptable and provide the reasons...
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...Barilla SpA (A) Case Analysis Teona Omiadze, Nino Tskhvariashvili, Mari Zaridze School of Economics, Business and Administration of the University of Georgia Instructor: Natia Zedgenidze Tbilisi 2011 Table of Contents Executive Summary……………………………………………………………….3 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...
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...Barilla spA case analysis Barilla SpA, an Italian pasta manufacturer, is experiencing amplified levels of inefficiencies and rising costs due to variability in demand from its distributors. The main problem addressed in this case is how to effectively implement JITD system suggested by Giorgio Magialli, the Director of Logistics by resolving the issue of gaining control over the fluctuating demand. Barilla has a very complex distribution network including independent third party distributors and due to such a multi-echlon network, Barilla has been experiencing large amounts of variability in demand which are resulting in operational inefficiency and increased manufacturing, inventory and distribution costs. The proposed JITD system required the distributors to share their sales data with Barilla, who would then forecast and deliver appropriate amounts of products to the distributors at the right time in order to effectively meet demand. This was a radical change from the current and more traditional supply-chain setup where the distributors were not sharing any data and could place orders at will. Vitali's proposal came under severe criticism from not only the distributors but also Barilla's own Sales and Marketing department for an array of reasons. Main reasons for fluctuating demand: Promotions: The use of promotions in the form of price, transportation, and volume discounts was the main strategy to sell more products to the distriutors. Sales Reps: The compensation...
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...Executive Summary In this case study response I will be providing analysis and recommendation on how to increase the chances the Barilla’s management idea of JITD would be acceptable and provide the reasons why it should be considered worthwhile. Issue Identification Barilla is a large vertical integrated corporation that makes pasta and bread products with flourmills, pasta plants, and bakery-product factories locate throughout Italy. It has used traditional distribution system, which distributors checked their inventory levels and placed orders with Barilla. However, due to extreme variability in demand from its distributors, the traditional distribution system has strained Barilla’s manufacturing and logistics operations by increasing either inventory carrying costs or stock out costs. The main issue in this case is how to effectively implement Just-in-Time Distribution (JITD) system, which Barilla analyses, forecasts and delivers products to the distributors by requiring the distributors to share their sales data with Barilla. This in turn will decrease Barilla’s distribution costs, inventory levels, and ultimately makes the entire operation more effective. The following lists some other issues Barilla facing when the company tries to implement JITD system: 1. Data sharing: distributors are not willing to lose their control over managing their own inventory by sharing data with Barilla SpA. 2. Forecast techniques: Barilla does not have enough experiences...
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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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...of Maggiali’s predecessor Brando Vitali. Although Maggiali supports JITD, members of Barilla’s own sales and marketing organization do not support the new idea and therefore not cooperating. JITD once implemented was meant to have Barilla produce not on orders from distributors, but according to their own prediction of demand. Barilla’s forecasting methods were poor because when demands fluctuated it affected their supply chain. This was also brought on by the complex distribution system that caused an effect called the bullwhip. The company has three distribution networks; their own depots, grand distributors owned by large supermarkets chains and some organized distributors. Lack of information sharing across the supply chain, especially on the retailer’s part was the main drawback of the Barilla Company. The 10-day lead time too brought about complications. Due to poor predictions on demand, the company experienced inventory problems of stock outs and backorders on a very short period forcing them to maintain a high level of inventory. The company also offered discounts to the retailers that ordered full truck. The retailers utilized the discount advantage and ordered more, which lead to an increase in inventory problems. 2. How can Barilla cope with the increase in variability? The current director of logistics, Giorgio Magialli needs to implement the JITD system to the fullest extent and Barilla’s sales and marketing organization should welcome the idea and support...
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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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...Barilla SpA What underlying problem is JITD trying to solve? And what are the causes of that problem? Barilla SpA experience serious fluctuations caused by small swings of the end customer demands, even it was the biggest pasta manufacturer in the Italy and even in Europe and has a systematic distribution channel over decades. The stockouts caused by the fluctuations gave Barilla SpA and its distributors pressures to have more inventories in the warehouse, which increase the cost of both parties. In addition, incrementally push the distributor to have more inventories of Barilla SpA is more and more impossible, because of the limited shelf spaces and the increasing number of new products. To reduce the costs and improve the service quality between Barilla SpA and distributors, Brando Vitali introduced the concept of Just In Time Distribution (JITD). The JITD system is a forecasting technology that specifies the delivery quantity by using the data from the retailors, instead of from the distributors requests. Are there internal barriers to JITD that would need to be dismantled? There were many barriers to the JITD both from the internal and external, and the internal barrier are from the marketing and sales department because they thought it is infeasible and dangerous. The most significant resistance was from the sales representatives, who believed that the JITD would make them less important because they might lose the control of inventory and promotion management. From a...
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...Barilla SpA Case B a Exe ecutiv Sum ry ve mmar Pasta is a st P taple food of traditiona Italian cu isine, which was tradit o al h tionally produce by hand. However, today many varieties o pasta are commerc ed y of e cially produc ced and are broadly available in su upermarket across th world. Barilla SpA, an Italian ts he w p world’s larg gest pasta m manufactur rer based company, was at one point in the 1990s the w ng a a aly % e. producin 35% of all the pasta sold in Ita and 22% in Europe The previous Director of Logistics Brando Vit was con T o tali nsidered a visionary a and had prop posed the implementa ation of a Ju ust-In-Time Distribution (JITD) model within e Barilla to help comp o pensate for any unfore r eseen varia ation in prod duct orders The new s. Director of Logistics Giorgio Maggiali too on his pre M ok edecessor’ role and f ’s found it ely ng ment the JIT model. He was fac with gre opposition TD ced eat extreme frustratin to implem from bot internal and externa stakehold th a al ders. Magg iali has to f find a way t subdue the to oppositio to the ne JITD mo on ew odel, if he wants to ov w vercome the challenge of having a e es g complex distribution system, an unbending manufac x a cturing proc cess and unprecedent ted number of SKU’s. My decision is for Bar to go fo M n rilla orward with the implem ment of the JITD mode el, which will reduce unforeseen fluctuation in product demand an reduce p w u nd production costs. Buy-in from both the dis stributors...
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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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...Barilla SPA (A) Case Report By CHIEMEKA EZEJIOFOR Table of contents Summary Page Executive Summary 3 Issue identification 4 Root cause Analysis 5 Recommendation 6 Recommendation Implementation Plan 7 Conclusion 8 Part 1 Executive summary Barilla SPA (A), the largest producer of Pasta was founded in 1875, it faced a huge fluctuation on its production because the production was based on the traditional practice of delivering products to distributors based on the basis of whatever order was placed on the company. This resulted in difference or variation of production price, as well as piled up inventory at the distributor’s depot. My decision is to implement the Just in time Distribution (JITD) concepts based on the fact that production and manufacturing is determined by the consumer’s needs and controlled by barilla being able to achieve this by eliminating huge variation for manufacturing and distributors. Furthermore Just In timed Distribution will also avoid the accumulation of inventory at the distributor’s depot. Barilla SPA is a vertical integrated organization, the rise and fall in demand will affect the other arms of the organization since they don’t only manufacture only pasta, its affects transportation, flour mills, sales etc. However, JITD faced some...
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...Barilla SpA Part A Barilla Case Study Phil Kaminsky David Simchi-Levi kaminsky@ieor.berkeley.edu Philip Kaminsky Edith Simchi-Levi Barilla SpA is the world’s largest pasta manufacturer The company sells to a wide range of Italian retailers, primarily through third party distributors During the late 1980s, Barilla suffered increasing operational inefficiencies and cost penalties that resulted from large week-to-week variations in its distributors’ order patterns McGraw-Hill/Irwin © 2003 Simchi-Levi, Kaminsky, Simchi-Levi Exhibit 12 Weekly Demand for Barilla Dry Products from Cortese’s Northeast Distribution Center to the Pedrignano CDC, 1989. Causes of Demand Fluctuations Questions: What exactly is causing the distributor’s order pattern to look this way? What are the underlying drivers of the fluctuations? McGraw-Hill/Irwin © 2003 Simchi-Levi, Kaminsky, Simchi-Levi Transportation discounts Volume discount Promotional activity No minimum or maximum order quantities Product proliferation Long order lead times Poor customer service rates Poor communication McGraw-Hill/Irwin © 2003 Simchi-Levi, Kaminsky, Simchi-Levi 1 Demand Fluctuations Demand Fluctuations The extreme fluctuation in Exhibit 12 is truly remarkable when one considers the underlying aggregate demand for pasta in Italy. What does the underlying consumer demand pattern for pasta look like in Italy? What are the differences and similarities...
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