Barilla

Topics: Inventory, Supply chain, Supply and demand Pages: 5 (1073 words) Published: May 11, 2014


1. Causes for JITD implementation

There were large fluctuations in the demand of pasta industry and distribution centres kept high inventory because of that reason (they were increasing inventory of items they already stocked and added items they currently did not carry). There was also a stockouts issue that strain Barillas’s manufacturing and logistics operations. The main reason for such fluctuations was the so-called bullwhip effect, which is an observed phenomenon in forecast-driven distribution channels where there is variability up the supply chain. Implementing a good JIT program could solve bullwhip faced by the barilla.

Benefits of implementing JITD

Better responsiveness to demand fluctuations
Prevention of the bullwhip effect
Improvement in manufacturing planning, using objective data
Reduced inventory levels
Better relationship with distributors
Lover costs for the involved in the supply chain

Drawbacks of implementing JIT

Unexpected disruptions in the supply process can damaged the system (strike or other disturbance) Higher possibility of unsuccessful implementation because of the huge internal and external resistance Additional costs of implementing the system

Higher risks concerning the distribution

2. Conflicts and barriers to JITD iplementation

Causes of internal conflicts
Lack of communication of the newly proposed JITD system from top management to different departments. Lack of explanation of the benefits of JITD.
Created distrust in relation to changes.
Lack of inclusion of employees into the planning process of the JITD system. Lack of consideration for the needed adaptation of different departments to the JITD system.

Internal conflicts and barriers
Sales perspective of opposing JITD system:
Fear of diminished responsibilities,
Risk of losing shelf space to competitors.
Marketing perspective of opposing JITD system:
Inability of running trade promotions
Distribution perspective of opposing JITD system:
Possible distrust by the distributors,
Risk of disruption in the supply process and consequently customer stock out. Manufacturing perspective of opposing JITD system:
Unclear benefits of the JITD system (will it really reduce costs?), Risk of having to increase own inventories,
Risk of inability to adjust the shipments accordingly with the changes of selling patterns.

Measures
Develop a communication system of informing employees about JITD (if possible including facts and figures) and include them in the process of developing JITD system. Develop a training system for employees.

Including all parties of the supply chain into the JITD system planning in order to explain them the system, enable them to cooperate in its design, explain its benefits, gain their trust, and get them on board with the idea.

3. Costumers’ response to JITD
Supermarkets: as top management we would accept the program because it can smooth out the bullwhip effect. However attention would be placed if the JITD model would also reduce the needs to monitor goods and fill them, so that the costs for inventories and warehouse space could be reduced. Implementation of system for supermarkets might be expansive, but if it is successful they might implement it for other suppliers too.

Small independent shops and independent supermarkets: we would accept it, because due to the importance of Barilla brand, we cannot refuse the cooperation, but we would have many concerns. We do not know if we can trust Barilla and its new distribution structure. We have concerns about whether they could forecast the demand better than we do since we are the closest to the customer. We also think the information and monitoring system would be quite costly. Guarantee of more frequent delivers from the distributor which would result in an overall inventory reduction (although the inventory is small is small) would tip the scale in favor to try the system. Another good thing that JITD...
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