...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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...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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...SPD4198 Global Supply Chain Management Lecture 7: Strategic Alliance and Outsourcing SPEED, HK Polytechnic University Lesson Seven Strategic Alliance and Outsourcing Barilla SpA Part A Strategic Partnership 2 Barilla Spa Part A 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 3 Barilla Distribution Patterns Barilla Dry Product Factories 65% TL 10% TL 35% TL 18 Barilla-Run Depots Barilla CDCB 90% TL Grande Distributions Distributions Organizers LTL LTL LTL Signora Maria Shops Independent Supermarkets Chain Supermarkets TL = Delivery in truck-load quantities;. LTL = Delivery in less-than-truck-load quantities Shipping percentages are based on product weights 4 Weekly Demand for Barilla Dry Products from Cortese’s Northeast Distribution Center to the Pedrignano CDC, 1989. 5 Questions What exactly is causing the distributor’s order pattern to look this way? What are the underlying drivers of the fluctuations? 6 Causes for Demand Fluctuations Transportation discounts Volume discount Promotional activity No minimum or maximum order quantities Product proliferation Long order lead times Poor customer service rates Poor communication 7 Demand...
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...Executive Summary My decision is to immediately perform a process analysis of our entire procurement process. To this extent I will perform an analysis of the current roles and responsibilities of each person involved in the procurement process from “Need Recognition” through to “Payment”. This will involve defining and changing the roles and responsibilities of some departments and personnel. It will also involve tightening our inventory control practices. I will also be initiating the hiring requisition form to arrange for a new parts driver to perform pick-ups and deliveries. Key assumptions • The problems that we are currently experiencing will continue unless clear definition of roles and responsibilities are given. • There are currently no clear guidelines and procedures for the procurement process including a current process map. • There will be resistance to making the changes from various personnel regarding the change of roles and responsibilities. There may also be resistance from various personnel regarding the tightening of inventory control that will be implemented as his may be construed as a lack of trust. • Our expeditor is unable to carry out his duties of inventory control as effectively as possible due to much of his time being spent doing deliveries and pick-ups for parts. • Unless full control of Purchase Orders are undertaken by designated personnel we will continue to have problems with the 3 way matching process on accounts payable of PO,...
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...Barilla Spa (A) Report on Supply Chain Management Issues Table of Contents Executive Summary Issue Identification Root Case Analysis Alternatives and Options Recommendations Implementation Monitor and Control Exhibits Executive Summary Giorgio Maggiali, director of logistics of Barilla SpA stated the the growing burden that demand fluctuations imposed on the company's manufacturing and distribution system. The solution was proposed as Just In Time Distribution Program. Due to specific Barilla's supply chain system it is not quite simple. Barilla needs to improve their own forecasting system and need to develop a set of decision rules. They need to re-group and decide where to go with JITD. For this purpose the main issues where identified and and recommendations were made. The implementation plan is filled with immediate and short run activities. Barilla enjoys a strong brand image in Italy. It was driven by success as the highest quality pasta for every Italian family - “Where is Barilla, there is a home”. Timely distribution of quality products is a strategic mission Barilla SpA and the recommendations made can be used to reflect and strengthen this mission. Issue Identification The following are the list of issues that must be addressed: • Too many different types of distribution centres • Long inventory time • Small product variety in stores • No minimum or maximum order quantities • Long lead time • ...
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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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...Case Study: BARILLA SPA( A) Problem Statement: Diagnose the underlying causes of the difficulties that the JITD program was created to solve. What are the benefits and drawbacks of this program? Introduction to the Problem: Barilla SpA which was the world’s largest Pasta producing company was facing extreme fluctuations in the order pattern from its distributors. This extreme variation in the order pattern imposed a huge burden on the manufacturing and distribution system of the company. In order to reduce the fluctuation, Giorgio Maggiali (Director of Logistics) wanted to introduce just in time distribution (JITD) but is facing resistance not just externally but also internally. Objective of JITD program: 1) To reduce the extreme fluctuation in demand as clearly illustrated in exhibit 12. The demand pattern shown in exhibit 12 has a high standard deviation of 227 quintals with a mean of 300 quintals. 2) To avoid stockouts like situations as it would lead to opportunity loss not just to the distributor but also to Barilla. With the existing system, stockouts occur quite frequently as illustrated in exhibit 13 Exhibit 12 Exhibit 13 Benefits of JITD program: 1) With the implementation...
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...CASE: Barilla SpA (A) I.Overview of the Case Barilla SpA (Barilla) is a renounced Italian manufacturer that sells several brands of pasta to retailers mainly through third-party distributors. The company was founded in 1875 by Pietro Barilla in Parma, Italy, on Via Vittorio Emanuele. The company passed through the hands of generations from Pietro to his son Ricardo, then to his sons, Pietro and Gianni. The sons “drove the Barillas deeply into debt”; in 1971 the company was sold to a U.S. firm, W.R. Grace, Inc. (Book, 144). Not able to see a profit with their investment, Grace sold the company back to Pietro Barilla. During the 1980s, Barilla relished in an “annual growth rate of 21 percent” with 35 percent being sold in Italy and 22 percent sold Europe. Barilla progressed into a highly vertically integrated company operating flour mills, pasta plants and fresh bread plants as well as distribution warehouses. With growth, there are falls… Barilla was experiencing problems in the manufacturing and distribution systems caused by fluctuations in demand. Giorgio Maggiali, Director of Logistics became extremely frustration with the situation. Mr. Maggiali tried to implement the just-in-time distribution (JITD), which was proposed earlier by his predecessor, Brando Vitali. It was an up-hill battle because “Barilla’s customers were simply unwilling to give up their authority to place orders as they pleased” and did not share their sales data which would have assisted...
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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 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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...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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...Barialla SpA (A) Written case Report for the JITD Program Module # 5 Oct 15, 2015 Table of Contents Executive summary Barilla SpA, an Italian pasta manufacturer is experiencing problems in manufacturing and distribution systems caused by fluctuations in demand. They are the worlds largest pasta producer and are initiating the Just in time Distribution (JITD), which is supposed to help the company to meet the demand fluctuations imposed by the company’s manufacturing and distribution system. The current delivery system at Barilla follows the traditional way of ordering through distribution centres placing orders with the company. Instead Barialla 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 systems. The Just in time Distribution has been met with significant resistance by the distributors and Barilla’s own sales and marketing organizations. After looking at all of the information provided and careful analysis of the problem I have suggested that Barilla should implement the JITD at the pilot level and once successfully implemented with positive results it should be implemented throughout in stages. I will be providing analysis and recommendations on how to increase the chances that the JITD program will work and be accepted and also consider the reasons why it should be implemented. Introduction Barilla started...
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...The case covered Barilla SpA , a food manufacturing company that was trying to solve issues relating to demand fluctuation within its supply chain. The cost of transportation was also higher than normal and Barilla is forced to manufacture goods in terms of production lead time and shelf life of its products. These, coupled with inefficiency in Barilla’s operation due to high product change over cost, led to excess finished goods, high inventory carrying cost for Barilla, and ultimately, the “bullwhip effect”. The underlying causes of these issues, particularly pertinent to demand fluctuation from Barilla’s distributors, are excessive promotional activities, volume discount/order batching, and lack of specified minimum and maximum order quantities. These led to led to poor forecasting, increased lead-time, price variations, and heightened level of inventory. Upper management at Barilla, specifically Giorgio Maggiali, the company’s director of logistics, felt that implementing a sound JITD (Just-In-Time Distribution) program could provide some solutions to these issues. Rather than distributors specifying their own orders, JITD would enable Barilla to monitor the flow of its product through the supply chain (BarillaDistributorsRetailersConsumers), and then dictate order quantity to its distributors, including when these orders would be filled. However, this proposed solution has benefits and drawbacks. JITD is advantageous because Barilla would have better control of its operation...
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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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