Barilla Spa (A) Case Study Essay

Executive SummarySales voices at the Barilla SpA, grounds largest pasta producer, be seeing customers changing due to long re-order lead-time and frequent stock-outs. Even with a high inventory levels, Barilla is still not capable to cope with the fluctuating pick out. The fluctuation in demand is seen as the bullwhip effect that is caused by sales strategies that have been put into place that is very crossway focused. This causes excessive demand from week to week depending on the product that the promotion or incentive is been aimed towards. thither is also a lack of data sharing and poor communication by dint ofout the only fork over chain which does not bring visibility for production forecast. With the Just-in-Time Distri neverthelession (JITD) that was brought in from the logistics manager, neither internally nor outwardly is supporting the new system.With the lack of understanding of the new system and the positive results it provide bring, it will be hard to convince buy-ins from different angles. The first should be tested first from Barillas issueledge facilities and streng past out the methods and be able to visualize the improvements to the rest of its supply chain. During the implementation and test phase, in that location should be dedicated teams which monitor the data and metrics coming from the new system. Daily meetings should be held to discourse issues and steadiness them as quickly as possible. As inventory levels drop, issues with the diffusion system will spread out which provides a priority of issues to resolve. Once the system has been proven, the results will be the biggest selling points to have the implementation through the whole supply chain and for everyone to understand its benefits.Issues IdentificationBarilla is experiencing issues to meet their fluctuating demand from the distribution centers even when carrying additional inventory throughout the supply chain. Brando Vitali has came with a proposal of a Just-i n-time Distribution (JITD) but neither the sales team in Barilla or the buyers at the distribution centers are agreeing with the approach. At the same time, these teams are already noticing that our customers are leaving due to the lack of servicing we are able to provide. Distribution centers were asked to carry more inventories to prevent occurrences of stock outs but the suggestion was not accepted. In return, they issued a complaint regarding the number of SKUs Barilla has which makes it impossible to manage and the long manufacturing lead-time due to the tight heat and humidity specifications. Environmental and Root Cause AnalysisFluctuating DemandThe fluctuation in demand is caused by a combination of reasons. The trade promotions and volume discounts that Barilla uses as sales strategies are one of the biggest influences. on that point were also no limits to the quantities that the distributors are allowed to order per each canvass period. The incentive program for Barillas sales representatives is also causing inconsistency to the demand they would be pushing for the SKUs that would bring them a higher incentive.Barilla is also experience a growth in their export market it was pass judgment to reach 20-25% per year. With this increasing growth, Barilla does not have any sophisticated forecasting technique that would set up them to meet the demand. There is a minimal visibility for Barilla to see where the volatility is in the demand is coming from. This is creating the Bullwhip Effect throughout their whole supply chain. The poor communication and cooperation between retailers, distribution centers and maker is the reason that they all are maintaining higher inventory than required. Resistance to ChangesThere were many resistances to this new enterprise when it was being brought up internally and externally. When there is a lack of understanding of the results that a new initiative will bring, there will always be resistance to change. Sales team fears that that they would see a reduction of responsibilities and distribution centers were defensive when they misinterpret the approach as saying they dont know what they are doing.Alternative and/or OptionsAlternative 1 Continue to promote the Just-in-time Distribution (JITD) initiative To be able to eliminate the Bullwhip Effect, there must be an cast up in visibility through the whole supply chain. With smash communication and an understanding and trust between vendors, it will eliminate the volatility in demand. This will improve the service levels from distributors to retailers and at the same time reduce the inventory carrying monetary value. With the visibility, it will better Barilla to forecast their demand and improve their production planning process. While achieving this, it will reduce their manufacturing cost and their inventory cycle.Alternative 2 Eliminate product focus sales strategiesInstead of promoting particular products in each canvass period that will cause excessive demand, Barilla should maintain a uniform competitive pricing through the year. Barilla should also eliminate their product-focus incentive policy for their sales representative and take a crap incentive programs that will not allow them to focus on a particular SKU.Recommendations and murderBarilla should continue to promote the Just-in-Time Distribution initiative. As this is a new concept for the distributors and retailers, Barilla should prove out this initiative at their own facility. With the results, they can then have bigger bargaining major power to promote this idea to its whole supply chain. As for anything else to be successful in a company, it is important for top management to be actively involved. Employees need to be aware of the importance of this project in order for it to be successful and for them to understand positive results it will bring to the company.During the implementation, there would be decline in inventory levels. Before, the inv entory levels were used as a buffer to hide the problems that prevents us from running(a) with a lower inventory level. As we decrease the inventory levels, the problems will arise and it will delineate for us what issues we need to resolve as a priority. If the problem requires a longer time to resolve, then the inventory levels can be raise to prevent affecting customers from stock-outs. Then the focus would be to resolve the issue and the inventory levels can be lowered again. With this approach, it will help prioritize the issues that need to be address and which ones will help lower our inventory levels.Monitor and ControlTo monitor the affects of this initiative, there are a few key performance indicators that need to be set-up. Stock Out Rate This will immediately intend the trend with the current system and be able to visualize that JITD will increase service levels. Inventory Levels Visualize inventory levels at all firms to demonstrate the win-win scenario that this i nitiative will bring. Re-order Lead-time To show with the increase communication, it helps for manufacturers to respond faster There should be daily meetings held with the key departments to ensure that the information is communicated in an effective manner. The meeting should be held at the same time in the same form to create a drum-beat system that will create a habit for the stakeholders to inform of any issues that they have risk and to gather as a group to resolve.