case barilla spa
TRANSCRIPT
-
8/11/2019 Case Barilla SpA
1/13
Barilla SpA (A)By-
Group A1
-
8/11/2019 Case Barilla SpA
2/13
Q1. What could be the fundamental reasons demand fluctuation experienced by Barilla?
reflection of change in customer preferen
-
8/11/2019 Case Barilla SpA
3/13
Reasons for demand fluctua
Variety of SKUs (dry products800 SKUs, different packaging)
Absence of accurate forecasting tool- Bullwhip effect - amplification of the ordered quan
Average lead time of 10 days
Distributors sales volume varied simple periodic review inventory systems
Promotions, Volume discounts
Sales strategy of Barilla, pastas sold at market price, discounts observed immediately
Truckload dependent discounts
Promotion might result in increased sales followed by no subsequent rise in sales until the next promotion
Sales incentive for representatives
Different for different products in different periods
Stockoutspressure on manufacturing due to longer lead times and product perishabili
-
8/11/2019 Case Barilla SpA
4/13
Q2. What do you think of the JITD Model? Wsolve problems Barilla is facing now? Why?
not?
-
8/11/2019 Case Barilla SpA
5/13
JITD Modelsolution to probl
Just in time distributionWhen and how much to ship?
Barillas logistics organization - specify delivery quantitieseffectively meet demands
Solely focussed on dry products sold through distributors
Distribute workload on manufacturing and logistics systems more evenly
Problems faced
Demand Forecasts - Burden on manufacturing as well as logistic network
Bullwhip effect (Forward buying due to discounts offered may lead to this as well)
Inventory levelshigh carrying cost- operational inefficiency
Each CDC held about a months worth dry product inventory
Distributors and retailers margin might suffer
Small independent shops and supermarkets held approx. 2 weeks of inventory at stor
Unnecessary worker, equipment usage and truck charges
-
8/11/2019 Case Barilla SpA
6/13
JITD Evaluation
Advantages
Better planning and promotional activitiesmanagement
Reduced inventory level and hence its carrying cost
Increased supply chain visibility
Increased bargaining power
Reduced burden on both manufacturing andlogistics
Disadvantages
Distributors wont be motivated t Shift of power to the company
Sharing warehouse figures
Empty shelf spaces might lead to
Lack of sophisticated infrastructumodelmay result in stockout
We think that JITD proposal is advantageous and can solve the problems faced by Barilla Need to establish credibility in the system- get top management convinced first followed by externa
Run experiments as a pilot followed by full fledged implementation
Effectively demonstrate the advantages of such a system to the distributorsimproved margins
Information centralization will lead to added advantage in terms of reduced inventory and bullwhip
Additional recommendations-
Have a product code to identify the product in the supply chain for efficient tracking
-
8/11/2019 Case Barilla SpA
7/13
Q3. Do you think JITD is useful for Barilla bufor DOs? What explains the resistance to JI
-
8/11/2019 Case Barilla SpA
8/13
JITD ModelUseful for Barilla and ris
JITD useful for Barilla Vendor Managed Inventory system will allow Barilla
To have access to actual retail sell-through data
To determine shipment quantity and time to distributors
To eliminate Bull-whip effect from the distribution cycle
To control production quantity, leading to costs reduction
To have high visibility and bargaining power
To strengthen relationships as distributors will be more dependent on Barilla
Risky for Organized Distributors (Dos)
Dos will have to share their sales data figures and relinquish their control over stoc
-
8/11/2019 Case Barilla SpA
9/13
Resistance to JITD Model
Internal resistance Sales and Marketing department were not ready to experiment with this
fearing
Flattened sales
Giving shelf space to competitors deliberately
Increased risks of stock outs due to uncontrollable reasons like strikes
External resistance
Distributors were not ready to share detailed sales data
Barillas increased control over inventory management decisions in ware
-
8/11/2019 Case Barilla SpA
10/13
Q3. What was the mistake of Maggiali? What he do now?
-
8/11/2019 Case Barilla SpA
11/13
Mistakes of Maggiali
Lack of conviction Could not convince the distributors about managing their stock
Could not convince them about the inability of Barilla to respond to the highly fluc
within 36 hours after placing the order
Made it look like Barilla had wanted to reduce its own costs only by pushing its prowarehouses of the distributors
Non-involvement of all players in the discussion
Maggiali should have involved all the players i.e. distributors and retailers in the in
regarding JITD
Maggiali should have involved top management of Barilla because it was a compan
logistics one.
-
8/11/2019 Case Barilla SpA
12/13
Recommendations
He should involve top management and publicize the benefits which Marconi had gotten from
JITD. This will reduce the skepticism of the distributors and retailers about J
He should introduce the JITD with Marconi for the trial basis only. The results will automatically
and its customers that the inventory costs have reduced.
Reduction in lead time would lead to the anticipation of the incoming order by studying the d
improve customer service
Maggiali should emphasize on the reduction of lead time due to availability of point-
-
8/11/2019 Case Barilla SpA
13/13
Thank you