Week 3 Individual Assignment

Meagan Bare
Week 3 Individual Assignment
OM540 " Professor Gnanendran
March 20, 2016
















Barilla Case Questions
Describe Barilla's manufacturing and distribution operations.
Barilla's manufacturing process includes the following: Using required material, form dough for a particular type and water; make sheet by sequential rolling using the dough; shape pasta using a bronze die; cut to the required length; dry with the use of a kiln to the specifications of the particular product; and weigh and pack.
Barilla's distribution process includes the following: ship products from manufacturing plants to the central distribution centers; independent distributors purchase products from the central distribution center to ship to grocers; distribution through 18 Barilla-owed depots for future distribution to smaller shops; and fresh products followed a different distribution path, avoiding the central distribution centers, ensuring freshness to the market.
What is the problem faced by Barilla? What do you think are the factors causing this problem?
Barilla was suffering from what was called the bull-whip effect. Each supplier was making its own decision on order quantity to reduce their costs, without knowing the upstream or downstream supply chain. Eventually these small variances multiplied into large variances, creating an overwhelming demand pattern for the plant.
The following factors are causing this problem: demand variation from customers; lack of trust in that the goods would be delivered from the upstream suppliers; concentrating on local goals (each supplier reducing their own costs), instead of concentrating on the supply chain as a whole; lack of information between supply chain partners; productions inability to meet the variations in demand; and logistical constraints on meeting variable demand.
Describe the solution proposed by Brando Vitali. Why do you think this would help alleviate the problem?
Just in Time Distribution was the suggested solution. This method is used by many similar organizations with great success. In order for this method to be successful, all supply chain partners must give up their individual control and reply on market information and analytical optimization to determine the products needed and order quantities for each. This method will alleviate the problem by limiting the potential for variation to the customer. No longer will there be a need for risk inventory; instead, each supply partner will only have to meet the forecasted demand. As such, inventories throughout the entire change will be reduced, as will be the financial demand on each. The end result will be great service and low out of stocks to the customer.
What conflicts or barriers internal to Barilla does the JITD program create? What causes these conflicts? How should Giorgio Maggiali deal with these internal conflicts?
The decision control is taken away from each of the supply chain partners, and initially it may be hard to sell them on why they would benefit from such an arrangement. Additionally, this would discontinue sales promotion periods, which differs from the previous dynamic of sales representatives. These type of conflicts are caused by the lack of trust between the supply chain partners, along with Barilla apparent unwillingness to improve their own operations. Sales representatives also appear to have differing goals, which is incompatible with improving operational procedures. Giorgio Maggiali has quite the project on their hands, as trust issues often take a long time to repair. The best way to start this process would be to share some data on the JITD system from similar organizations. The supply chain partners should be motivated by the financial gains once this system is established.
How do you think a typical Barilla customer would respond to JTTD? Why? How would you convince the customer that the JITD program was worth trying? If you are not able to sway the customer, what alternatives would you suggest to combat with some of the difficulties that Barilla's operating system faces?
I think the typical Barilla customer would be a little skeptical that many supply chain partners would be willing to forego control. An analytical report needs to be made available for the customer that would detail the benefits to the customers, the fail-safe procedures, and the immediate benefits. This data would (hopefully) get the majority customers on board to at least try the JITD program. If this method does not work, then the only other option would be to show an example of the JITD program at work. One could use data from a willing like-organization (although this may be hard to obtain), or set up a dual supply chain, in which some customers are willing to participate in the JITD program to detail is benefits to all other prospective customers.