Barilla Spa Case Report

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Barilla SpA - Session 5 Case Report
By: Kevin Samra PMAC ID: 10040240 To: Nikki Raycraft

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Contents
Executive Summary....................................................................................................................................... 3 Issues with Impact Analysis........................................................................................................................... 4 Environmental and Root Cause Analysis....................................................................................................... 5 Alternatives/Options..................................................................................................................................... 6 Recommendation.......................................................................................................................................... 6 Implementation Plan and Monitor/Control.................................................................................................. 7

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Executive Summary
My decision for this case is to implement the Just-In-Time Distribution (JITD) system that was proposed by his predecessor Brando Vitali. This system is entirely different from the existing setup and is being opposed by both the distributors and Barilla’s Sales and Marketing Department. Barilla SpA, an Italian pasta manufacturer, is experiencing amplified levels of inefficiencies and rising costs due to variability in demand from its distributors. In order to bring things back in order and to improve its margins. I have studied the reasons for this opposition by several facts and have suggested recommendations. I suggest that in order to condense the Bullwhip effect being experienced by Barilla, their supply chain would have to be centralized. I have given my rationale for the JITD system to work and have suggested recommendations to resolve all existing issues. I think that a centralized supply chain with Barilla controlling the orders will result in better margins for all the partners. I also believe that by following my recommendations, Barilla will succeed in influencing its distributors and Sales personnel to work together and implement the JITD program. This will not only result in better performance in terms of time and money but also promote trust and good relations among all the partners in the supply chain.

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Issues with Impact Analysis
Issues: Bar-code system will be linked to the supply chain system which will be an added cost to the entire implementation Reduced operational costs and higher profit margins once JITD is implemented

The cost of implementing JITD would be very expensive at all the plant locations and distributors warehouses Distributors may not agree to the idea of having a vendor-managed inventory

The lack of resources and competencies to gain sustainable competitive advantages

It is anticipated that it would take a lot of time and effort before the implementation of the JITD system to the supply chain would be successful

Impacts: For the manufacturer: Increased supply chain visibility Reduced manufacturing costs Increase Distributor’s dependence on Barilla Improvement in manufacturing planning using objective data Reduced inventory levels Better Relationship with Distributors For the distributors: Reduced Inventory holding costs Additional service without any extra cost Improved fill rates to Retail stores

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Environmental and Root Cause Analysis
The decisions at the moment are not advancing the company’s overall operational success; this includes excess inventory, poor forecasting methods, higher manufacturing costs, and higher transportation costs. Also judging by the discussion of the manager from the largest distributor that summed up during a conversation saying “Managing stock is my job” also the sales and marketing personnel felt as if their responsibilities would be diminished if such a program were put in place. The distributors don’t want to...
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