Q1. What are the reasons for the increase in variability in Barilla’s supply chain?
Variability in supply chain arises due to variability in demand which can be attributed to the following:
1. Volume and Transportation discounts: A full truckload entitled the distributor to a 2-3% discount by Barilla. In addition, the sales reps could offer 4% discount on a purchase of minimum 3 truckloads. This may have wrongly incentivized the distributors to wait for longer durations and in turn reduced inventory which led to stock-outs.
2. Promotional activities: 10-12 canvas periods (on different product categories) each lasting for 4-5 weeks made it convenient for the distributor to stock as much as he could during these periods which led to highly …show more content…
Leads to high costs
Q3. Can the JITD strategy solve the operational problems faced by Barilla?
Key features of JITD mentioned in the case are o VMI - Vendor-Managed Inventory Concept o Treats end-customer as the Input o Aims at managing the Input filter that Produces the Orders o Decision-making authority for determining shipments in hands of Barilla o Barilla would monitor the flow of its products through the distributor’s warehouse, and then decide what to ship to the distributor and when to ship it o Distributor provides Data on the shipment and current stock levels for each SKU
Issues Resolved by JITD
1. High Inventory Levels o With more sophisticated technology and application of forecasting techniques, Barilla will be able to better forecast demand fluctuations o Accurately predict demand for promotional and seasonal items o Better production planning, packaging and distribution of their …show more content…
Information Systems
Issues Unresolved by JITD
1. SKU complexity – can be solved by applying the 80/20 Pareto rule to keep complexity down in the SC system
2. No cost benefit analysis – This analysis would help convince others to support the new model
3. Failure to bring all stakeholders on board
4. Incentive system may no longer be appropriate
Q4. Discuss the implementation issues of the JITD strategy.
1. Internal Issues o Job Loss – JITD does not require as many sales reps to market/ promote products, since a portion of their current duties include inventory management and order processing for Barilla’s customers. o Incentive based pay changes – The sales force fear that they would lose control over their compensation methods because the system would move towards a “pull” based supply chain. o Lack of Belief – Information was not presented to demonstrate the actual benefits of JITD implementation. Hard facts and figures would help to sell the concept. They felt that JITD was too complex, and that trade promotions cannot be run with JITD
2. External Issues o Lack of Trust o Fear of
Variability in supply chain arises due to variability in demand which can be attributed to the following:
1. Volume and Transportation discounts: A full truckload entitled the distributor to a 2-3% discount by Barilla. In addition, the sales reps could offer 4% discount on a purchase of minimum 3 truckloads. This may have wrongly incentivized the distributors to wait for longer durations and in turn reduced inventory which led to stock-outs.
2. Promotional activities: 10-12 canvas periods (on different product categories) each lasting for 4-5 weeks made it convenient for the distributor to stock as much as he could during these periods which led to highly …show more content…
Leads to high costs
Q3. Can the JITD strategy solve the operational problems faced by Barilla?
Key features of JITD mentioned in the case are o VMI - Vendor-Managed Inventory Concept o Treats end-customer as the Input o Aims at managing the Input filter that Produces the Orders o Decision-making authority for determining shipments in hands of Barilla o Barilla would monitor the flow of its products through the distributor’s warehouse, and then decide what to ship to the distributor and when to ship it o Distributor provides Data on the shipment and current stock levels for each SKU
Issues Resolved by JITD
1. High Inventory Levels o With more sophisticated technology and application of forecasting techniques, Barilla will be able to better forecast demand fluctuations o Accurately predict demand for promotional and seasonal items o Better production planning, packaging and distribution of their …show more content…
Information Systems
Issues Unresolved by JITD
1. SKU complexity – can be solved by applying the 80/20 Pareto rule to keep complexity down in the SC system
2. No cost benefit analysis – This analysis would help convince others to support the new model
3. Failure to bring all stakeholders on board
4. Incentive system may no longer be appropriate
Q4. Discuss the implementation issues of the JITD strategy.
1. Internal Issues o Job Loss – JITD does not require as many sales reps to market/ promote products, since a portion of their current duties include inventory management and order processing for Barilla’s customers. o Incentive based pay changes – The sales force fear that they would lose control over their compensation methods because the system would move towards a “pull” based supply chain. o Lack of Belief – Information was not presented to demonstrate the actual benefits of JITD implementation. Hard facts and figures would help to sell the concept. They felt that JITD was too complex, and that trade promotions cannot be run with JITD
2. External Issues o Lack of Trust o Fear of