Global Supply Chain Management
Case Discussion Questions
The underlying causes of difficulty that the JITD program was created to solve were stock outs and high levels of inventory. These were both caused by demand uncertainty. There were several inefficiencies due to demand uncertainty; there were long lead times and it was costly for Barilla to try and quickly produce their products. They had poor forecasts due a poor flow of information which led to a bullwhip effect, which in turn led to high inventories when demand forecasts were high and stock outs when demand forecasts were low. Under the current system there is a difficulty of Barilla anticipating demand swings, and in turn they are forced to hold extremely high inventories to satisfy demand and yet they still end up scrambling in their manufacturing and distribution operations to meet demand. And despite holding massive amounts of inventory, rush manufacturing/distribution they still often were faced with stock outs. There are several benefits of the JITD system. Barilla would be able to ship products only as they were needed with more accurate forecasts, the JITD system would provide these more accurate forecasts. This in turn would allow Barilla to create a more coordinated delivery schedule. There would be a benefit from this through out the supply chain as there would be a reduction in costs; a more coordinated delivery schedule would reduce distribution costs, more accurate forecasts which would allow for delivery of products in quantities required, which would reduce inventory costs, while still allowing fulfillment of demands and avoiding stock outs. Ultimately the JITD system would also allow Barilla to benefit from a reduction in manufacturing costs, as they could manufacture products more cost effectively in coordination with the more accurate forecasts. The JITD system would allow them to flexibility in responding to an unchangeable input, that being order...
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