Barilla Case: Key Assumptions And The Statement Of Issues
Executive Summary
My decision is to implement Just in time distribution (JITD) to Barilla Distributors to reduce distribution costs, inventory levels and manufacturing costs. This would enable Barilla to improve relationships with their distributors and provide them with more objective data so that they can improve their own planning procedures. Barilla Operations will have more control on what is being shipped out so that shipments can be planned to optimize full loads. Manufacturing costs can be reduced if schedules are planned in order to enhance operations output….i.e. Reduce down times and ensure long runs of like products to reduce energy costs. They would also be able to achieve financial gains by reducing the large amounts of inventories currently being carried and optimizing manufacturing schedules.
Key Assumptions
• It is anticipated that we can improve our own forecasting system to make productive use of the data received to be able to execute the JITD program.
• Distributors will need to provide data on what has shipped out to retailers and current inventory levels on a daily basis as replenishment decisions would be made based on this data.
• It must be anticipated that there will be significant amount of cost incurred as Barilla will need to support their customers in setting them up with bar-code scanners and computer linkages in order to gain information on their sales data. This will enable Barilla Operations to get the information that they require without resistance from their customers.
• We will need to convince our own internal sales and marketing organizations of the benefits of the JITD program and enforce the financial benefits that can be achieved as we will need their support in order to proceed.
• By implementing the JITD concept to our distributors, Barilla will be able to reduce the inventory levels significantly and reduce the percentage of stock outs to the retailers by holding inventory in the products that they will
My decision is to implement Just in time distribution (JITD) to Barilla Distributors to reduce distribution costs, inventory levels and manufacturing costs. This would enable Barilla to improve relationships with their distributors and provide them with more objective data so that they can improve their own planning procedures. Barilla Operations will have more control on what is being shipped out so that shipments can be planned to optimize full loads. Manufacturing costs can be reduced if schedules are planned in order to enhance operations output….i.e. Reduce down times and ensure long runs of like products to reduce energy costs. They would also be able to achieve financial gains by reducing the large amounts of inventories currently being carried and optimizing manufacturing schedules.
Key Assumptions
• It is anticipated that we can improve our own forecasting system to make productive use of the data received to be able to execute the JITD program.
• Distributors will need to provide data on what has shipped out to retailers and current inventory levels on a daily basis as replenishment decisions would be made based on this data.
• It must be anticipated that there will be significant amount of cost incurred as Barilla will need to support their customers in setting them up with bar-code scanners and computer linkages in order to gain information on their sales data. This will enable Barilla Operations to get the information that they require without resistance from their customers.
• We will need to convince our own internal sales and marketing organizations of the benefits of the JITD program and enforce the financial benefits that can be achieved as we will need their support in order to proceed.
• By implementing the JITD concept to our distributors, Barilla will be able to reduce the inventory levels significantly and reduce the percentage of stock outs to the retailers by holding inventory in the products that they will