Barilla Spa Case Study.
Najib abdi
DSCI 434
3/24/2011
Barilla SpA
Case Study
1. Diagnose the underlying causes of the difficulties that the JITD program was created to solve. What are the benefits and drawbacks of this program?
One of the underlying causes of the difficulties that the JITD program was created to solve was the effects of inconsistent demand that came from Barilla’s distributors. The extreme demand variation strained Barillas manufacturing and logistics, and made very hard for Barilla to meet that demand. For example, as noted on the case “the specific sequence of pasta production necessitated by the tight heat and humidity specifications in the tunnel kiln made it difficult to quickly produce a particular pasta that had been sold out due to unexpectedly high demand” (Barilla SpA).
One of the benefits of implementing the JITD is to reduce the manufacturing cost. As Brando Vitali then Barilla’s director of logistics explained “we could try to reduce our own distribution costs, inventory levels, and ultimately our manufacturing costs if we didn’t have to respond to the volatile demand patterns of the distributors” this meant JITD will help reduce the costs associated with distribution channels, likewise distributors would not need to stock inventory that exceeds their real demand, and intern help them reduce their cost. Another benefit is that JITD will help improve Barilla’s visibility with trade and make the distributors more dependent on Barillas. As Vitali said “I think JITD should be considered a selling tool, rather than a threat to sales. We’re offering the customer additional service at no extra cost. In addition, the program will improve Barilla’s visibility with the trade and make distributors more dependent on us-it should improve the relationships between Barilla and the distributors rather than harm them.” Though this would require daily sales data input from distributers on products they shipped out from their warehouse to retailers during previous day
DSCI 434
3/24/2011
Barilla SpA
Case Study
1. Diagnose the underlying causes of the difficulties that the JITD program was created to solve. What are the benefits and drawbacks of this program?
One of the underlying causes of the difficulties that the JITD program was created to solve was the effects of inconsistent demand that came from Barilla’s distributors. The extreme demand variation strained Barillas manufacturing and logistics, and made very hard for Barilla to meet that demand. For example, as noted on the case “the specific sequence of pasta production necessitated by the tight heat and humidity specifications in the tunnel kiln made it difficult to quickly produce a particular pasta that had been sold out due to unexpectedly high demand” (Barilla SpA).
One of the benefits of implementing the JITD is to reduce the manufacturing cost. As Brando Vitali then Barilla’s director of logistics explained “we could try to reduce our own distribution costs, inventory levels, and ultimately our manufacturing costs if we didn’t have to respond to the volatile demand patterns of the distributors” this meant JITD will help reduce the costs associated with distribution channels, likewise distributors would not need to stock inventory that exceeds their real demand, and intern help them reduce their cost. Another benefit is that JITD will help improve Barilla’s visibility with trade and make the distributors more dependent on Barillas. As Vitali said “I think JITD should be considered a selling tool, rather than a threat to sales. We’re offering the customer additional service at no extra cost. In addition, the program will improve Barilla’s visibility with the trade and make distributors more dependent on us-it should improve the relationships between Barilla and the distributors rather than harm them.” Though this would require daily sales data input from distributers on products they shipped out from their warehouse to retailers during previous day