Barilla Operations Case

glasswort quality ____________________________________________________________ ______________ Overview of kelpwort glasswort appears to be in a commodity industry, suggesting flavorless penury. barilla positions themselves as the bloted, premium, dry pasta. Their enounce qualifiers atomic number 18 consistency and quality, and their order winners are brand recognition and variety in shapes. In situation their product line is extensive 800 products. However, Barilla faces take fluctuations that strain their add together chain operations and making it difficult to foreshadow product demand.Barilla proposes a Just in Time Deli actually brass to jockstrap improve margins. Our overall recommendation is that a JITD delivery system is premature, and sooner we recommend building a parvenue teaching focussing system to resolve the information bottleneck between customer and the producer and set incentives at each stage in the supply chain to slim down inventories. Onl y then can a JITD delivery system be properly evaluated. The Impact of fluctuate Demand on OperationsFluctuating customer demand results in higher(prenominal) armory for distri justors who carry a cross-section of product lines, as demand among product lines fluctuates in atypical ways. Certain lines ordain stock out, while early(a) inventory testament merely sit. Thus the sitting inventory creates higher carrying costs. Unanticipated demand go away result in higher stock without sufficient information to forecast demand. This is a mismatch in inventory allocation, and a information-transmission issue.Since the manufacturer cannot anticipate which lines lead be in greatest demand, lead snip is increased, as the manufacturer cannot tailor production to the increased demand until ascertain which line to produce. These lead times essentially result in a whip-lash effect, in which the factories over-react to stock outs. This results in higher inventory and higher costs. These hi gher inventory costs contribute to the lower margins and stock outs impair Barillas brand equity as a premium brand a premium brand should not have empty shelf space. The causes of the fluctuating demandThe underlying causes include customer demand, customer bell sensitivity, some seasonality, the manner and duration of the promotions, the lack of sufficient information to anticipate demand, and the fragmented information stream from small shops. Customer demand is not well recorded. Though pasta volume tends to be steady opposite than some seasonality, demand among varieties is uncertain, and this scats up the supply chain. Furthermore, the extensive product offerings agnise it difficult to determine if certain lines are purchased as a championship for others.One aspect of this uncertainty is the fragmented information stream that results from the many an(prenominal) small shops, each conducting inventory at different times, with few incentives to forefront information ups tream except when they decide to place a new order. This lack of real-time info about customer demand other than periodic orders is a large barrier to accurate forecasting. The promotion twist may be exacerbating the demand problems. We do not contend the windows of promotions, but narrow promotion windows should increase ability to forecast demand, suggesting that they do not use promotions that are narrow enough to predict demand. inseparable and External Barriers to Implementation of JITD First of all, there is an information bottleneck undecomposed past the customer, and the information relating to beat and timing of demand does not flow directly up the Supply Chain. Instead Shops, Distributors and Barillas Factories are forced to use existing orders to inform their supply decisions. Barillas Long lead time 10 days combined with distributors reviewing inventory levels once a week, does not allow orders to catch up with the demand. This will make the accurate forecasting that Barilla needs to perform JITD very difficult.Distributors distrust giving Barilla info. Barilla has inadequately explained toe electromotive force costs savings that could result from reducing inventory. Distributors also fear that they will lose the volume discounts they currently receive if the JITD system results in little batches. Externally there are concerns that greater dependence on Barilla due to a smaller inventory would place them at attempt of supply chain interruption. Our recommendations to deal with the barriers to implementation Barilla could vertically integrate, buy the distributors, and centralizing shipment information.Alternatively, we think that incentives could be aligned better to hike up the free flow of information up the supply chain and tranquillize distributors regarding discounts. To reassure distributors, we would recommend basing discounts not on individual shipment size, but monthly volume, so that they would, on average, receive the same disc ounts under JITD. Also, Barilla should use promotions with short terms to create set periodic demand for promoted products. Rewards should be established as incentives to distributors and retailers to better document sales volume. This could clothe in electronic barcode readers and tracking technology.Similarly, Distributors should be educated about the particularised gains that they could realize by assisting Barilla to produce more efficiently, including improved margins and cut back lead times. With accurate delivery, retailers only need to maintain minimum amount of inventory and thus reduce the inventory management cost. Good incentives will produce good information. Accordingly, we recommend, building a new information management system that better gauges distributor and retailer statistics to provide accurate customer demand. Only when demand can be forecast can a JITD systems efficiency be properly evaluated.