Barilla Spa Supply Chain Case Study

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Barilla Spa (A) Case Questions

1. Diagnose the underlying causes of the difficulties that the JITD program was created to solve. What are the benefits and drawbacks of this program?

2. What conflicts or barriers internal to Barilla doe the JITD program create? What causes these conflicts? As Giorgio Maggiali, how would you deal with these?

3. Why are Barilla's customers so resistant to the JITD idea? How might Maggiali be more successful in persuading customer to at least try the JITD program?

4. In the environment in which Barilla operated in 1990, do you believe JITD would be feasible? Effective? If so, which customer would you target next? How would you convince them that the JITD program was worth trying? If not, what alternatives would you suggest to combat some of the difficulties that Barilla's operating system faces?

5. In general, if one party is to make the inventory replenishment decisions for the system, who should it be? Why is it Barilla who is making the decision? Why doesn't Barilla pass information to the distributor and let the distributor make the "system-optimal" decision?

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http://home.comcast.net/~wade.mckelvey/barilla.pdf

See the following. Hope this will help.
The JITD initiative at Barrila drew a lot of internal and external objections, which made it unsuccessful in terms of implementation. An in-depth analysis of the Barrila's case reveals the various sources of objections. The JITD idea as an attempt to solve the traditional problems within the uncertainties-affected supply chain is commendable. But the problem lies in its lack of tactics to win the stakeholders' support. Possible solutions corresponding to different aspects of problems are discussed along with the problem analysis. Finally, a stakeholder consortium based on a real-time vendor managed inventory system is suggested.
Diagnose the underlying causes of the difficulties that the JITD program was created to solve.
Barilla faced a wild demand fluctuation that made them hard to control the inventory and has a low order fill rate. The amplification of demand fluctuation along the upper stream of the supply chain is known as bullwhip effect. The reasons of causing the bullwhip effect in the Barilla case are as following

1. Poor forecast capability: The demand variability is huge but the production line of Barilla cannot afford frequent changes in order amount due to the long setup process. As Barilla's forecast capacities are poor and unreliable, they will either need to build up huge inventory or lose the customer fill rate, none of them is favorable. The Barilla customers will face stock out due to the low fill rate of Barilla.
2. Batch order: Barilla's marketing policy encourage customer to order huge amount. The big order policy (refer to Conflicts internal to Barilla) makes GD/DO stock outs by buying the wrong product a lot but having no extra space or money to buy the correct product to meet the demand.
3. Lead-time: there is a long production line setup time
4. Sequential decision process: order decision reflects the demand long time age.
5. Price variation: the price are not fixed, customer sometime delay their order for better price or stock inventory.
6. High Inventory at distributors and No Space or further investment available: The distributors have huge inventory and stock outs rate, which indicates that new product keeps coming out while old products still keep their spaces.

Advantages of JITD:
The JITD is designed to solve the Bullwhip faced by Barilla. The centralized inventory control provide the following benefit:

Þ Decrease the Total Inventory in the Whole Supply Chain: JITD helps to reduce inventory held at the distributors since it builds inventories at the central warehouses and then delivers only the quantities required by the end-users through checking inventory at the distributors more frequently. Theoretically, it eliminates the needs for each distributor to hold it own "Safety Buffer" which causes demand fluctuation. Therefore, it benefits the distributors through releasing their inventories space and cost. Actually, the distributors will be more competitive to react to the demand variability, such as, new product, after season stock, etc. Enables Barilla to monitor the true daily demand. It
1. Eliminates the demand variation caused by batch ordering.
2. Aggregates demands from all distributors and offset the demand changes of different market places.
3. Better forecasting the truly demand.
Þ Better Customer Fill Rate both in Barilla ...