Barilla Sp (A) ABCD Harvard Case Solution & Analysis

Barilla Sp (A) ABCD

Answer 1

As mentioned, the organization has started facing issues with respect to its Just-In-Time-Distribution program. Bullwhip effect was found to be the basic reason behind high variance whilst placing orders. The concept of the bullwhip effect can be defined as the trend that has been observed as huge variation in demand from the customers. The major reason behind the bullwhip effect was the swings that were coming in the overall supply chain of the company. Barilla is the manufacturer of pasta and headquartered in Italy. The two primary products of the company are dry and fresh products that account for 75% and 25% of the sales respectively. Finished goods were shipped to central distribution centers who then distribute the products to retailers. During 80s, the company confronted with the bullwhip effect that was backed by erroneous estimation for demand and fluctuations in demand that in turn result is inefficiencies in the overall supply chain of the company. Further, it leads towards in competencies in manufacturing, production, inventory and distribution. Exhibit 12 from the case study has shown that variance in terms of demand was extremely high and that results in bullwhip effect. The main reason behind the variability was a trade promotions.

Figure 1: Bull-whip effect

Answer 2

The primary purpose of Barilla to introduce JITD approach was to bring improvements in the overall distribution process of the company. With the help of this approach, the management at Barilla believes that they would be able to diminish the workload and bring efficiency in the overall operations. Further, implementation of JITD would help the company to make an enhancement in its competitive position in the market. Moreover, this would also contribute as a positive role towards organizational and distributional development. A major problem in the company, such as the bullwhip effect can be removed or at least decrease by the implementation of Just-in-time-distribution approach. With the help of JITD approach, the company would be able to identify the quantity and demand that is required to fulfil the customer’s expectations. It also helps the company in avoiding waste and loss in inventory. Before the implementation of JITD, the company itself and its distributors were faces high cost as the concept of demand and supply forecasting was missing. Because of this, the company faced various issues that include stock-outs and excessiveinventory.  Additionally, ithelps the company to forecast the actual demand that in turn would make everything aligned.

Answer 3

After facing issues and pressure by the distributor and the management itself, they have decided not to send products to the distributors according to their internal planning processes instead the company needs to evaluate their distribution channels by scrutinizing the data prior to shipment and send only what is needed at the stores. The concerned authorities in the company believe that if the distributors can produce and handle inventories, problems related to stock-out and bullwhip effect has never emerged.

Director of logistics, Brando Vitali believes that the way the company is operating, it has become nearly impossible for a company to anticipate demand swings that in turn result in holding a lot of inventory. Additionally, they also believe that the distributor doesn’t seem to do the job servicing for their retailers. The distribution centers were also facing stock-outs despite holding inventory for weeks. In addition to that, teaching distributors about the algorithm and software related to demand forecasting, order generation will end-up Barilla highly dependent on distributors.

Answer 4

Being a distributor of Barilla, to some extent, the continuous replenishment program would be risky from the distributor’s side for various reasons. As mentioned, the company had faced a lot of issues in convincing distributors to follow Just in time distribution because nobody wants to do experiments at first. In addition to that, the sales of department of the company and the sales reps were against of JITD approach and thus it created a question mark in any distributor’s mind. In addition to that, selling company’s data to another company might not be ethically and morally right for many distributors, and they might perceive it a privacy worsening. Furthermore, being a distributor, the biggest risk faced was related to the failure of the JITD that in turn will result in losses. In order to gain distributor’s confidence, the company needs to show them results that ensure them in creating fruitful results from the implementation of JITD approach. The LEGO group is found to be very innovative in terms of advertising their products and making their customers happy and satisfied. Management at LEGO knows that managing customers are said to be the most difficult tasks for the companies to perform. In order to make it successful, the company has made direct contact with its customers along having systematic collaboration with its customers................

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