Barilla Case Study Background
Barilla Case Study ay griffin In 1875, Barilla was founded in Pram, Italy by Pitter Barilla. In the sass’s the company was passed on two his two sons who led the company through a really strong period of growth. During this time the company transformed into a vertically Integrated corporation and chose to distinguish itself through robust branding. Expansion of the company drove the Barilla brothers into debt, where they were decided to sell the company to an American firm.
However, years later the Barilla brothers were able to buy back their family company.
Fast-forwarding to the times presented in the case, the late sass’s to early sass’s, Barilla owned a very complex network. Their products went from the plants to their Central Distribution Centers :Cad’s) or their private depots. From the Depots it went to small shops and then to the end customers. From the Cad’s it went to mass distributors then to supermarkets, both independent and chains, and finally to the end customers. In a network like this, ideally forecasting should be a core competency to prevent the horrifying bullwhip effect.
However, forecasting was not a core competency for Barilla and during the time Giorgio Magical served as director of logistics the company face very large demand fluctuations that effected the manufacturing and distribution system. Ere reasons Barilla faced such irregular demand is due to the strategy used by the sales and marketing teams. They liked to use promotional selling and they often offered discounts for those who ordered in full truck loads. In addition to this, Barilla is really big with branding so there were some products that had multiple packaging hypes which may have led to a significant increase in SSW.
Just-in-time Distribution CITED) TIT was an idea proposed by the former director of logistics, Brandon Vital, in order to combat the large swings in demand. This idea proposes that Barilla determine the appropriate delivery quantities for their distributors instead of simply delivering Nee they request product.
In order for this to happen, Barilla would need full disability of the need of their distributors. There are many benefits that come along Ninth CITED. One, it reduces costs for the Burial’s manufacturing facilities.
Instead of using the distributors forecast to influence production this will allow the supermarkets forecasts to influence production, which will be somewhat more accurate being that it’s a step closer to the end user. This will help to reduce the lariat that occurs due to the bullwhip effect.
Two inventory levels will be lower, because forecasts will now be more accurate. Implementing the CITED will give Barilla competitive advantage over other companies being that they are assisting their strictures at no extra costs.
Although this idea was proposed with great intentions, it received much backlash from the sales teams and even from some of the distributors. As stated before the sales teams prospered off of the promotions they pushed but they were afraid the implementation of CITED would flatten sales. In addition, decreasing the amounts that the distributors would receive can potentially give their competitors more space in these distributing disabilities, thus giving them an incentive to sell more of their competitor’s products.
Last but not least there was simply no way to ensure that there would actually be cost benefits associated with this idea.
When customers were introduced to JODI they also were very resistance. They didn’t understand what Barilla would be able to offer them, in terms of inventory management, that they couldn’t already figure out themselves. Some simply saw it as an infringement on their data and simply wanted no part.
Recommendation Ninth all of this in mind Giorgio Magical had to make a decision to either abandon his CITED idea or figure out a way to convince the sales and management team to think otherwise. I recommend that he figure out a way to make CITED work.
The CITED definitely has some great benefits but there is no proof that it works and I think a lot of the resistance is stemmed from the fact that there is no substantial proof. I think that some sort of consultant should be brought in to model the as-is supply chain and then model the to-be supply chain if CITED was implemented.
This may not fully invoice the sales teams because models are not 100% accurate and can have a number of assumptions built into them, however it would be accepted better if a consultant confirmed its cost savings. If that went well, I would suggest taking it a small step further before full implementation and piloting this idea with one of the distributors that did agree to relinquishing their data. If this works out well I think more than likely the sales teams will be on board.
If it doesn’t work well after that, Giorgio might want to consider giving up the idea.