...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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...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 mills, plants and factories located throughout the Italy. Barilla’s success highly depended on its’ quality of product and innovative marketing programs...
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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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...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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...Recommendations Part 7 Recommendations 7 Implementation Part 8 Implementation 8 Monitor and Control Part 9 Monitor and Control 9 Conclusion Part 10 Conclusion 9 Exhibits Part 11 Exhibits 10 Part 1: Executive Summary Barilla is faced with a problematic issue regarding facilitating volatile fluctuations in demand from its distributors. The issue with volatile demand has been identified to be caused by a set of systemic issues: Inefficient forecasting, Overall sales & marketing strategies, and a complicated manufacturing process. In order to address these issues my decision is to implement a ‘Just in Time Distribution’ strategy. This strategy will take forecasting and ordering out of the distributors hands and put it into the hands of Barilla. Distributors will provide inventory and sales data to Barilla via EDI uploads and Barilla will use the information to generate sophisticated forecasting and ship exactly what the distributor requires (no more, no less) exactly when they require it. This strategy will effectively eliminate fluctuating demand, reduce stockouts thereby increasing service levels and reduce costs thereby increasing margins. In order to gain ‘buy-in’ with distributors, Barilla will first implement JITD within the companies own depots. A set of KPI’s have been established to determine the success or failure of the strategy. If and when the strategy is proven to be successful within the depots it can be sufficiently pitched to...
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...Leah Zorzi Barilla Case March 31, 2015 Problem A major problem for Barilla is the fluctuation of demand. For one I noticed many different fluctuations in exhibit 12 with demand from Cortese Northeast DC. This can be caused by many different factors such as seasonal demand. (More lasagna noodles are sold around Easter). A fluctuation in demand depending on seasonality is a predictable. Other factors that affect this is a long lead time (10 days), volume and transportation discounts, large variety of packaging and types of products. Also, there are no minimum or maximum quantity orders. The distributors lack forecasting tools and systems. They take full advantage of promotional transportations discounts, stocking up when this occurs and living off the high volume they purchased when the promotions are not going on. Besides the lack of a forecasting system there is a lack in communication between all segments such as manufacturing, distribution, marketing, and retailers. The complexity of the supply chain also causes Barilla issues. There are a variety of different strategies based upon the different customers Barilla has. For example they sell their products to large grocery stores, as well as small mom and pop places. This ranges the strategies. The demand is unpredictable (also there is no system for predicting demand). A bullwhip effect happens because of the unpredictable demand. The bullwhip effect is seen in exhibit 12 when there are large rises in inventory orders...
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...Executive Summary Barilla SpA is a world largest past manufacturer has experienced a phenomenal growth. The company had pasta share of 35% in Italy and 22% in Europe, plus 29% in Italian bakery product market (p. 2 case). However, it began taken a tall on Barilla’s “manufacturing and distribution system” (p. 1 Case). Without having proper data and control over the orders the company experienced wide fluctuations in demand. As a result Barilla experienced bullwhip effect where forecasting was not centralized but instead done by distribution centers. Giorgio Maggiali took over Brando Vitali as a director of logistics. He followed his predecessor’s vision to create Just in Time Distribution system. However, after two years of trying, little progress was made. Maggiali had met resistance internally and externally. Internally sales and marketing departments were completely opposing new concept. Externally, distributors did not want to relinquish power over managing their inventory. Although “total pasta consumption was relatively consistent throughout the year”, Barilla experienced extreme fluctuations in orders from week to week (Exhibit 12). Barilla’s distributors used different methods to forecast inventory, which was not consistent across the company. There lack of sophisticated forecasting system and no limit on order quantity contributed to fluctuating demand. In addition there were other factors such as too many promotional activities throughout the year. As a result...
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...Executive Summary Barilla Spa, an Italian pasta manufacturer is experiencing amplified levels of inefficiencies and rising costs due to variability in demand from its distributors. A Just in Time Distribution (JITD) system is the leading solution to the problem and will help aid with the bullwhip effect, amplified variation in demand as one moves up the supply chain, Barilla is currently experiencing. The JITD system will be gradually rolled out over a one-year duration to directly impact Barilla’s problem of demand fluctuation, the factors causing demand fluctuation, and the impact of the demand fluctuation problem. Firstly the sales force will get to see the benefit of the JITD system, and understand that the current pricing strategy, ordering process, and lines of communication all contribute to the bullwhip effect, and be reminded that the customer is the end consumer. After internal communication has been established the following factors will be communicated; Barilla is carrying to much inventory, lead times are too high, and the customers are facing out of stock situations which all affect the bottom line of the business. A vendor management team will also be established so that all of the distributors will be aligned with Barilla’s new supply chain functionality. With the implementation of the JITD system the current pricing strategy will be replaced with every day low prices that will exemplify real supply demands versus volume discounts that don’t reflect true...
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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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...Executive Summary Giorgio Maggiali is the director of Logistics for Barilla and was appointed to this position when his predecessor Brando Vitati was promoted. Vitati had proposed a Just in Time Delivery (JITD) model for Barilla. Vitati has commented on the “thinning margins” the industry was experiencing and the need to “take costs out of our distribution channel without compromising service”. He felt operations could be improved if Barilla was responsible for determining the quantities and delivery schedules to their customers. Giorgio is frustrated with the opposition and resulting lack of progress in implementing this new process. My decision upon reviewing the information provided in the case is to recommend that Barilla continue to implement JITD focusing on dry goods shipped to distributors. Maggiali must first convince Barilla’s employees (Sales especially) that the JITD system will be a success before influencing its distributors. Sales personnel and distributors will have to work together to implement the JITD program. The system will require 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 will not only result in better performance in terms of time and money but also promote trust and good relations among all the partners in the supply chain. Barilla made its mark in the world by taking a commodity and selling...
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...our overall inventory levels within the chain and assist us in managing demand, and improve overall company profitability. In order to implement JITD, we require management support in order for this to be successful. Issue Identification Barilla is currently being faced with a decision on where they need to go in respects with just-in-time-distribution (JITD). They need to look at whether this type of program is feasible in their environment and if it makes sense to continue with a JITD system. In order to look at these decisions we need to review some of the issues that JITD system was intended to overcome. Some of the issues that JITD was introduced to overcome are: 1. Demand Fluctuations – There is a high standard deviation of demand on the Barilla Dry products from week to week. (Exhibit 1) 2. Managing the Distribution System – The distribution system along the Barilla supply chain is fully autonomous, the distribution centers order based on their own agendas and pull inventory creating huge demands at times creating a bull whip effect which ultimately increases inventory throughout the supply chain. 3. Operational Inefficiencies – Although the supply chain would ultimately hold approximately 2 months of product Barilla was dealing with stock outs and changing...
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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 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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...distribuidores tinham sistemas semelhantes de previsão ou ferramentas analíticas para determinar as quantidades encomendadas; - se torne difícil “empurrar” as vendas junto dos distribuidores, com a limitação da implementação de promoções comerciais que serviam de incentivos; - devido à diminuição de stocks, se criem espaços livres nos distribuidores que possam vir a ser ocupado por concorrentes. As principais resistências externas advieram dos distribuidores que consideram que a gestão de stocks é uma atividade chave da gestão da sua própria empresa, não estando disponíveis para ceder essa responsabilidade. Estes sentem ainda resistência à passagem de dados das vendas para a Barilla, SA, considerando que se trata de informação demasiado sensível de cada empresa. A nível tecnológico, o JITD da Barilla implica alterações e investimentos nos sistemas informáticos e ferramentas...
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...Executive Summary Barilla SPA, an Italian pasta manufacturer is the world’s largest pasta producer. Due to its multiple distribution channels, the company gradually suffered operational inefficiencies and increasing overhead costs that resulted from fluctuating demand - orders often swung wildly from week to week. Feeling that an alternative approach needs to be implemented for improvement, the company’s former Director of Logistics, Brando Vitali had proposed a new system call ‘Just-in-Time Distribution (JITD). Rather than simply fulfill distributor’s weekly order; the new system requested customer to submit their detail sales data which Barilla could then use to make decision for the “appropriate’ delivery quantities. Unwilling to give up authority and fear of losing potential sales commission or even become unemployed, the new system had met significant resistance within Barilla’s own sales and marketing organizations, and the distributors Barilla approached. The purpose of this report is review the issues and analyze the “Just-In-Time Distribution (JITD) system, in order to further understanding for the decision processes involved in implementing this new supply chain system. Issue(s) Identification As described by Brando vitali: “Both manufacturers and retailers are suffering from thinning margins”. Barilla’s supply chain of dry products was facing significant problems. The following are some of the issues must be reviewed for the company. By viewing...
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