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Barilla Case Discussion
1. Why is Vitali concerned about Barilla's approach to order fulfillment?
There are several concerns with the order fulfillment at Barilla. Both the manufacturers and the retailers are suffering from thinning margins and are in need of a system to reduce costs. The current system leaves Barilla with impossible means of anticipating demand swings as well as massive amounts of inventory being "held" at the retailer. Stock-outs are an additional concern in the order fulfillment process. In order to reduce cost and improve service levels, supply chain strategies must take into account the interactions at various levels.
2. What is the approach Vitali suggests for overcoming distribution inefficiencies?
Vitali's suggestion is to collect data from each distributor daily and use the data collected to make replenishment decisions based on forecasts. In order to do so, improvements should be made to Barilla'a forecasting systems in addition to developing a set of decision rules for making decisions based on the forecasting system.
3. Describe the JITD approach.
The JITD (just-in-time distribution) approach ships products as needed, rather than maintaining inventory. The objective is to be efficient and cost-effective across the entire system - total system-wide costs. Each member of the supply chain should be able to make better decisions about planning, scheduling, production, storage and distribution of materials, transportation arrangements, cost management, etc. These decisions should help the entire chain manage customer relationships, understand customer value and manage costs and improve revenues.
4. What does Barilla need for its new JITD approach?
Barilla needs several items in order to successfully implement its new JITD approach. To start, they will need data provided daily from the distributors. Thus, Barilla will need a strong, clear line of communication with the distributors and the distributors must willingly provide the necessary information. Once distributor cooperation is achieved, improvements to the forecasting system of Barilla should be made as well as the development of a set of decision rules to help determine what to send after each forecast.
What are the concerns about the new system raised by Barilla's marketing and sales people and its distributors?
Barilla's sales people are concerned with disruptions in sales levels and increased risk of creating more shelf space for competitors. Marketing people at Barilla have concerns with not being sufficient, risks related to stock-outs, and a lack of trade promotions. Distributors are concerned with efficiency in comparison to the current distributor inventory system.
5. How should Maggiali solve the implementation problems?
Supply chain management should take into consideration every facility that has an impact on cost and plays a role in making the product conform to customer requirements.
In order to solve the implementation problem, Maggiali must develop a strong line of communication with the distributors and retailers. Barilla may achieve this objective if it can successfully convince the distributors of the benefits of implementing the approach. The objective is to be efficient and cost-effective across the entire system - total system-wide costs and thus, provide benefit to the entire. Barilla should concentrate on the benefits all parties can achieve. Cost analyses should be ran to provide an idea of the benefits involved.
In addition to the concerns of the distributors, Maggiali should analyze the cost savings and cost reductions of implementing the approach in order to ease internal concerns. The program should be well-developed and efficient before implementation in order to avoid error and disruptions in distributor operations.
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