Supply Chain Management (2014)
Student Name: Marish Raju Durai Raju
NUID : 001945382
Case Study 1:
Barilla SpA (A)
The case study deals with the implementation of Just-in-Time Distribution (JITD) in a renowned pasta producing company Barilla SpA. Barilla SpA was founded by Pietro Barilla in the year 1875 as small shop in Parma, Italy. It soon became the largest pasta producing company in the world. But during the 1980s its manufacturing and distribution system were strained by fluctuating demands from its distributors and incurred high manufacturing costs. In order to tackle the fluctuating demands, Giorgio Maggiali, the Director of Logistics at Barilla Spa wanted to carry out an alternative approach rather than the conventional practice of delivering products based on orders placed by the distributors. He suggested implementing the Just-in-Time Distribution that was proposed by his predecessor Brando Vitali. This system of distribution was criticized and faced resistance externally from distributors and internally by the sales and marketing department. Underlying causes that led to JITD
The case study describes some of the underlying causes that lead to the creation of the JITD program at Barilla SpA. The most important contributing factor was high fluctuations in demand. As seen from Exhibit 12 of the case study, there’s huge variation in the weekly orders received by the company that would amplify by high margin for certain weeks. Variations in demand existed because of heavy advertisements and promotional activities that attracted more customers and distributors. Barilla’s trade promotional strategy was to offer price and volume discounts to distributors and incentives to buyers. As a result of the fluctuating demand there were strains in the manufacturing process in terms of lead time for production. There were high levels of inventory which resulted in high holding costs hindering the profits that could be achieved. Distributors were...
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