Boeing Australia Case Study

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Executive Summary

Barilla is operating in a very old-fashioned distribution system that needs to be changed. Implementing this new JITD will increase efficiency across the supply chain. The system will reduce manufacturing costs, increase supply chain visibility, increase distributors’ dependence on Barilla, establish better relationship with distributors, reduce inventory level and most importantly improve manufacturing planning and forecasting using objective data. This JITD will see Barilla’s supply chain synchronized from manufacturing to end - users.

Strategically, the best decision for Barilla is to implement the JITD program. This will allow for greater capability and flexibility to respond to inputs from end-consumers. In the JITD system, each distributor would provide Barilla with data from products that they shipped to retailers in previous days as well as current stock levels for each Barilla SKU. This data would then be used to make forecasting and replenishment decisions. The will result in a smoother running operating system and excellent customer service.

To prove the credibility of JITD and win over apprehensive customers the involvement of top management will be employed. Within the next six months Maggali and top management team will analyze daily shipment data of the distribution chain. Next a database of historical and present demand patterns of distributors will be created and shipments will be simulated with JITD in place. This system will reduce stock out rates and inventory levels while increasing service levels. Next, experiments will be run at the Pedrignano depot and then the Milano depot. This will establish the credibility of JITD and win over distributors and retailers who are apprehensive in buying into this new system.

Approximately ten top managers, from customer service managers to vice presidents, logistics, purchasing, sales and marketing and information technology managers will be involved in the decision making, implementation and monitoring of this new system. This will prove credibility of JITD and convince customers that change is inevitable and in this this case the benefits will be mutual.

Issues

Deciding whether or not the Just In Time Distribution (JITD) model should be implemented into Barilla”s operations.

Barilla is suffering from escalating operational inefficiencies. The company is being burdened by demand fluctuations in its manufacturing and distribution systems. Also, this large weekly variation in distributors orders is increasing overhead costs.

Trying to convince internal and external customers of the benefits of JITD

Barilla’s customers are unwilling to give up authority to place orders as they please. The lack of faith in Barilla’s inventory management also made some customers reluctant in giving detailed sales data so that Barilla could improve its forecasting demands. Customers perceived this JITD move as a quest by Barilla to transfer power to themselves. Internal customers are also resistant to this change as they as they view this concept to be infeasible and or dangerous.

Environmental and Root Cause Analysis

There is a growing burden that demand fluctuations are imposing on the company’s manufacturing and distribution system. Vitali has suggested for years that the company implement this innovative JITD which is modeled off JIT manufacturing. Vitali proposed that rather than follow the practice of delivering products to Barilla’s distributors on the basis of whatever orders distributors placed with the company, Barilla’s own logistics organization would instead specify delivery quantities that would more effectively meet end users’ needs and would also more evenly distribute the workload on Barilla’s manufacturing and logistics. This was heavily resisted both internally and externally. External people are saying that Barilla wants power over its distributors and wants to manage their inventory for them....
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