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Barilla SpA - Case Report

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Introduction

Barilla SpA - Case Report Submitted By: Aditya Baswan Dm04005 Ankit Kapoor Dm04013 Ankush Awal Dm04015 Nikhil Lasrado Dm04053 Rohit Ghosh Dm04070 Introduction: - Barilla has encountered many areas of their manufacturing and distribution processes that, for many reasons, could be vastly improved. To try to improve these areas, top logistics management decided to try to implement a JITD (just in time distribution) system, similar to VMI (vendor managed inventory). The management felt that they could cut back on problems such as wild demand swings and stock outs by using this method. Their distributors also felt a great deal of pressure to increase their inventory to prevent these stock outs while also ADDING items that they did not already carry, which would lead to even more inventory. Many employees in the logistics department thought the distributors should carry more inventory to deal with the stock outs but other knew the current inventory was already too much. This discrepancy in the department was also a cause of the inefficient supply chain. Diagnose the underlying causes of the difficulties that the JITD was created to solve. ...read more.

Middle

They felt that if this system were to come into play their responsibilities and importance would be greatly reduced, so they were very much against it. And seeing as these sales representatives have direct contact with the distributors and customers, it would be very easy for them to poison the customers against JITD as well. The sales representatives also mentioned that if Barilla rationalized the shelf space of the distributors then they could carry competitor products with the shelf space created. Also, the distributors were very much against it. They felt like they didn't need Barilla to be telling them how to do their job and also did not like the fact that they had to share data with them. They did not feel that would be benefiting from this and that only Barilla would see the benefits. Also they felt that through this system they would become over dependant on this system as proposed by Barilla and Barilla would then use this system to stock up the distributors with their own products. What conflicts or barriers internal to Barilla does the JITD programme create? ...read more.

Conclusion

They did not want to relinquish control of their inventories to Barilla and were very leery about letting them see all of their sales data. They did not see the benefits in this situation to outweigh the inconveniences they foresaw and basically told Barilla they would never let JITD happen. As customers the main expectations from Barilla would be the following - 1) Least amount of wastage of inventory. 2) On-Time delivery, which would minimize the excess inventory. 3) Maintain an ideal EOQ model. 4) No stock-outs. 5) Maintain JITD model, which would encompass all demand variations throughout the demand period. 6) Reducing cost from distribution channel without compromising on service. Variations in distributors order requirement caused the maximum amount of operational inefficiencies. This variability factor was the major contributing item in Barilla's channel management to be unique. The expected channel management of Barilla would require Barilla to be in charge of the channel between the CDC's & the distributors & decide on timing & size of shipments. Barilla's own logistics would determine the deliverable quantity. Such a model is called Vendor managed inventory (VMI). Production options that Barilla has to meet the expectations of its customers - �Orders come directly from point of supply. �Rationalization of production plants (cost cutting). �Split production lines: mass prod & small specialities. ...read more.

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