Barilla Spa Case

barilla health club Case Table of Contents decision fastenr Summary2 Issues Identification3 Environmental and go down Ca utilise Analysis3 Alternatives or Options4 Recommendation and performance5 Monitor and Control6 Conclusion6 executive Summary kalis high line divulge rate along with large average record numbers argon the of import reasons why Maggiali is looking to strain on with Vitalis dream of implementing the erect In Time Distribution system. However, faced with great external apology to its introduction, Magi entirelyi must look to top management to hop on scorecard and facilitate its acceptance among all partners in the summate filament.Using home(a) allocators as experiments leave alone allow glasswort to showcase better crinkle out and instrument results. By doing so, saltwort wad gain the acceptance and approval of other distributors. With e rattlingone participating in the JITD, glasswort lead be better able to forecast demand and not everypla ce match to movements at the consumer level. Issues Identification Giorgio Maggiali, the current director of logistics for glasswort health club, faces much electric electric resistance when he tries to implement a new manufacturing concept called Just-in-Time Distribution (JITD).Initially, this estimation was proposed by the prior director, Brando Vitali, but is heavily supported by Maggiali as well. Because of the existing structure in the organization, fluctuations in demand at the end-user/ customer level cause the whole system to react adversely. The result is an surplus safety stock at all levels of the supply chain, leading to special(a) costs. This is commonly referred to as the bullwhip effect. Due to the resistance Maggiali faces, he must make a decision on whether or not the JITD is feasible for Barilla SpA and how to implement it with the unsupportive partners in the supply chain.Environmental and Root Cause Analysis The first concept we must understand is how monumental pasta is in Italy. Per capita pasta consumption in Italy averaged nearly 18 kilos per year, greatly exceeding that of other western European contries. (pg. 2, Barilla SpA case study) Due to its dominance in the food market, consumers are very aware of price fluctuations and which pastas are on sale. Because of this, forecasting consumer demands is a vital component of the JITD.Without it, the traditional way of order-filling leads to common stock outs and excess enumeration throughout the year. Because of the process pasta is made, Barilla cannot simply change its yield on a whim. Its production plant must keep the kilns humidity and temperature at precise specifications for different types of pasta. As a result, serial production is optimal to keep downtime and costs low for pasta manufacturing. The JITD was real to address issues such as stock outs and to make inventory levels more manageable due to better forecasting.It will also allow Barilla to make the produc tion and inventory decisions from a top down side preferably than bottom to top reactionary chain (bullwhip effect). As shown in the Sales and trite outs Chart at the Cortese Northease Distribution Centre (Exhibit 13, Barilla SpA Case study), stock outs are a regular event due to the fluctuations in sales throughout the year. The main resistance from Barilla comes from sales and advertising. Barillas sales strategy relied on the use of trade promotions to push product into the grocery distribution network. (pg. 6, Barilla SpA case study) It is with these sales that enable sales representatives to meet their target goals. If Barilla decides to implement the JITD, the need to push sales for the Distributors would cease to exist. Essentially, Barilla will be replacing sales by deciding how much inventory to stock each distribution centre with. It is quite clear that the sales department fears this system due to job security issues. The external resistance plays a large factor in why Maggiali is unable to face the JITD.There are m each unconvinced distributors that are unwilling to take their warehouse data. Also, they perceive that Barilla is trying to take power outside(a) from them (DC purchasers), and since they do not know too much about the JITD, they eat up a lose of faith in Barillas inventory management. Alternatives or Options Barilla can choose to forgo implementing the JITD and avert any risk in inter-department conflicts. By doing so, they save on any relate costs to introduce the system. However, as Barilla expands, so does their manufacturing and distribution.The trouble will continue to escalate as more inventory is pushed through the supply chain. Barillas other option is to continue pursuing the JITD which can benefit both the manufacturing and distribution process by reducing stock out rates and lowering inventory levels for the DCs. By lowering inventory levels, the DCs will be able to focus on obtaining more retailers so that they can join on the amount of inventory to be stored in the senseless warehouse space. Barilla professional person and Con Comparison Table Pro Con Forgo JITD Maintain relationships Previous costs to develop JITD are lost Save initial setup costs Inventory conundrum is not fixed Stick with what Barilla knows Inventory costs continue to rise ImplementJITD Better forecasting Major resistance/lack of cooperation Lower stock outs Increased inventory space for DCs Recommendation and Implementation It is recommended that Maggiali continue pursuing the JITD due to the fact that the inventory management problem will only worsen as the companys sales increases as well.However, Maggiali must find other ways of implementing the system rather than force distributors to adhere. Firstly, Maggiali must demonstrate that JITD benefits the distributors. Running an experiment of the system at one or more of the distributors sites gives other distributors an simulation to compare to. Once other distributors see what the system can do for them, they may be more willing to participate. A proposed idea would be to run this experiment through an internal distributor. Doing so will prompt less or no resistance and can be monitored closely.Secondly, Maggiali inescapably to involve top management so that JITD is not just a logistics issue. Having a company wide effort allows all members to participate and as a resuly, less resistance will be observed. Thirdly, since the distributors may think of that Maggiali is trying to obtain power over them, Barilla can call for in a third party consultant trusted by both groups to perform an analysis to determine if in fact, the JITD is beneficial for all participants. Monitor and Control In order to determine if the JITD is advantageous over the old system, Barilla will be monitoring stock out rates and average inventory levels hroughout the year. If the results show positive results over precedent data, a move should be made to communicate the benefits of the JITD to more distributors. Stock out rates and inventory levels for those distributors should also be collected to increase and confirm the effectiveness of the system. Conclusion By using an internal distributor to as an example, involving top level management, and recruiting a third party consultant, Barilla will be able to introduce the JITD system with very short(p) resistance.The top down approach for Barillas supply chain will benefit all levels due to increased efficiency in inventory management. As a result, savings will be recognize and passed down from manufacturer to consumers. In order to monitor success and skeletal system upon it, stock out rates and inventory levels will continue to be observed to determine optimal production and distribution of Barillas products. With this system in place, the bull-whip effect that is currently experienced, will be countered by the JITDs ability to forecast consumer demand.