Barilla Case Essay

1981 Words Apr 13th, 2015 8 Pages
Executive Summary
Barilla and its distributors have decided to implement the Just-in-Time Distribution (JITD) approach. This will require a vendor relationship between Barilla and its distributors and investment in sharing information from its customers and the inventory on hand in the distributors’ warehouse. Because of Barilla’s poor performance caused by shortages it is imperative that JITD is implemented in a proper manner that emphasizes the short term and long term gains that Barilla and its supply chain will have. Although most of the implementation can occur in a short period of time, in order for the supply chain to truly be successful, there must be long term investment for the vendor relationship and relationship with its
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Second, Barilla does not set out any order quantity limits from its distributors and there are large fluctuations in their order quantities. Barilla’s mean demand is 300 Quintals, and the standard deviation of demand is 227 Quintals.
Third, Barilla experiences the bullwhip effect because there is a lack of forecasting, long lead times and price fluctuations due to promotional sales (Exhibit 1).
Finally, Barilla’s supply chain is vertically integrated and the flow of information is unidirectional (Exhibit 2). Due to the structure of the distribution channel it makes it difficult for any accurate projections to occur which leads to shortages and stock outs. Barilla shorts their product approximately 7% of the time on a weekly basis.
Distributor resistance
Barilla’s distributors are resistant to implementing JITD for three reasons. First, there is a lack of trust from the distributors that Barilla can properly manage their inventory. Distributors currently feel that Barilla cannot meet the needs of its customers, because they experience excessive shortages and long lead times.
Second, it is also the perceived power transfer by working too closely with Barilla that also makes the distributors resistant to the JITD. For instance, the loss of control of ordering and the authority to make decisions makes its distributors fear they will have no control whether or not Barilla forces them to keep product in their warehouse
Consequently, due to the lack of

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