Barilla Spa, Just in Time Distribution Essay
Barilla SpA, an Italian pasta manufacturer, is experiencing amplified levels of inefficiencies and rising costs due to variability in demand from its distributors. The main problem addressed in this case is how to effectively implement JITD system suggested by Giorgio Magialli, the Director of Logistics by resolving the issue of gaining control over the fluctuating demand.
Barilla has a very complex distribution network including independent third party distributors and due to such a multi-echlon network, Barilla has been experiencing large amounts of variability in demand which are resulting in operational inefficiency and increased manufacturing, inventory and distribution costs.
The proposed JITD system …show more content…
Besides, the distributors, the internal Barilla's sales force were also reluctant to these JITD implementation, as they were sacred of losing their jobs, if the ordering process was automated and the Barilla would not need them for going to the field and putting their efforts to convince their distributors to order more quantities and get sales incentives. Recommendations:
The first approach to effectively implement JITD is to convince and educate the internal sales force and the distributors of the benefits of Collaborative Planning Forecasting and Replenishment (CPFR). In order to condense the Bullwhip effect being experienced by Barilla, their supply chain would have to be centralized.
The JITD will work, only if Barilla gains control over the inventory throughout their supply chain. Since the pasta industry in Italy is not yet geared towards tracking the point of sales data through scanners and barcodes, hence each stage has to collaboratively make ordering forecasts based on the end customer sales data. The JITD system will eliminate the fixed costs in ordering for distributors through an effective centralized system through out the supply chain and for Barilla, they can improve