...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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...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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...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 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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...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 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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...SUPPLY CHAIN INVENTORY MANAGEMENT SUBMITTED BY A CASE STUDY OF BARILLA SpA. Table of Contents 1. Executive summary 2. Body of the repot 3. conclusion Executive Summary Barilla SpA is the case study that I will be examining in this paper presentation. I will be looking critically into some of the issues why the Just-in-time-distribution (JITD) program that was proposed by Brando Vitali who had served as Barilla’s directors of logistics before Maggiali had met a strong resistance both from the distributors and the sales and marketing organization. Vital had proposed 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 system. Was this program necessary at this time? Is it that both the distributors and sales and marketing organization do not understand the benefits of the program? Do they see it as a program that will distort all what they passive to be running smoothly? Should this program have been introduced at this time? Who stands to gain from this program? Will this program actually reduce cost from logistics as envisaged by Vitali? Will this program address the thinning margin that is being...
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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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...CASE STUDY Barilla JITD Program Implementation Executive Summary Barilla SpA an italian pasta manufacture has decided to implement JITD program for its dry product range to meet market sales demands by introducing forecast feedback into production system. Barilla products comprises of 800 SKUs mainly divided into two major product categories Fresh and Dry having 65% and 35% of total Barilla product. Barilla owns two distribution centres and one depot to handle all of its products for downstream distribution. Mainly two CDC are responsible for distribution of Dry products to main stream and regional markets. JITD program faced internal resistance by Barilla's commission based sales force due to lack of knowledge and need of a program like JITD. Issue(s) Identification Internal resistance by Barilla's sales force Poor communication internally and out side the organization with customers and ultimately with end consumers. Cultural within organization and outside Customers are not willing to share the data due to unfamiliarity of the program and in some case its more to cultural issue. Environmental and Root Cause Analysis Complex production system No forecasting or sales data available Canvas based sales system Large no of SKUs (800) Alternatives and/or Options Barilla's top management should pursue sales force to understand the need of JITD and should be on board with this program. Implement a JITD program within Barilla's...
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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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...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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...CASE STUDY BARILLA SpA (A) TABLE OF CONTENTS PAGE 1 COVER PAGE PAGE 2 TABLE OF CONTENTS PAGE 3 EXECUTIVE SUMMARY PAGE 4 ISSUE IDENTIFICATION – IMMEDIATE ISSUE PAGE 4 ISSUE IDENTIFICATION – SYSTEMIC ISSUES PAGE 5 ISSUE IDENTIFICATION – SYSTEMIC ISSUES CONTINUED PAGE 6 ENVIRONMENTAL & ROOT CAUSE ANALYSIS PAGE 6 ALTERNATIVES AND / OR OPTIONS PAGE 7 ALTERNATIVE AND / OR OPTIONS (CONTINUED) PAGE 8 RECOMMENDATIONS & IMPLEMENTATION PAGE 9 IMPLEMENTATION PLAN PAGE 9 MONTIOR AND CONTROL PAGE 10 MONITOR AND CONTROL (CONTINUED) EXECUTIVE SUMMARY Barilla SPa(A) was the world’s largest pasta producer during the 1990’s and held a significant market share in Italy and Europe. They produced dry pasta, fresh pasta and bakery items at several factories throughout Italy. Their route to market was through central distribution centers which they owned who in turn sold Barilla products to other distribution centers who sold to the retail stores. Barilla was experiencing huge fluctuations in demand for its products, which was causing serious stock outs at the distribution centers and ultimately on the retail store shelves. Taking into account the manufacturing process time line, the non-existent forecasting of customer demand from the distribution centers, the ever increasing Bullwhip Effect, MY DECISION is to implement a Just in Time Distribution System (JITD), with a staggered implementation approach. I will first approach all Management with my implementation...
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...Barilla SpA Case Study Operations Management Prabir K. Bagchi, Ph.D. April 11th, 2012 [pic] Jason Grossman_____________________________________ Odelya Hayon_______________________________________ Evan Kline__________________________________________ Stephen Nason_______________________________________ Victoria Portale______________________________________ Current Problems Barilla SpA is the world leader in producing and selling a multitude of different pastas and baked goods, however, after reviewing Barilla’s case study, we took note of all of the underlying factors that are preventing the company from maximizing their productivity and ultimately, maximizing their profitability. Barilla faces a number of issues that are limiting the company’s ability to maximize profit, reduce costs, and ensure adequate available inventory levels. Barilla's main issues include extreme demand fluctuations, extensive lead times, an insufficient channel of communication between several distribution partners, high inventory carrying costs, and their current discount/promotion programs. The coupon and discount system that Barilla advertises to their distributors is a major factor contributing to their detrimental demand fluctuations. Barilla offered volume discounts including paid transportation to distributors, 2-3% price-breaks for full-truck orders, and even greater discounts (around 4%) in some instances where a given buyer placed purchases of three or more full-truck orders...
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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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...Session 5 Case Study: Barilla SpA Executive Summary In order to reduce the strain that fluctuating demand is putting on our manufacturing and logistics systems, I am moving forward with an action plan to implement Just-in-Time Distribution at Barilla. Under the Just-in-Time Distribution system, Barilla’s internal logistics will determine the optimal levels of distribution necessary to meet customer demand. While we are likely to face opposition to this program, it is vital that the entire organization understands the process efficiencies and bottom line savings that will result from this distribution system and that there will be a positive impact on the entire manufacturing and distribution channels. Over the next two months, our sales and management team will be visiting a select number of distributors in order to sell-in the JITD program that will result in the sharing of information, in both directions, in order remove any environment of doubt our customers may have. Our sales team will act as our lead in the gathering and distributing both hard and soft data and maintaining relationships with our distribution customers. The program, once implemented, benefits distributors by lowering inventory, improving service levels and increasing return on assets (ROA). In addition, our manufacturing and logistics systems will be relieved from the pressures of fluctuating demand. I will be scheduling a meeting with the entire sales and...
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