Monday, February 25, 2019
Barilla Spa (a)
BARILLA resort hotel (A) Table of Contents vary star executive Summary3 dissociate Two Immediate Issue4 grapheme Three Systemic Issues4 Part Four Qualitative Analysis5 Part five-spot elections6 Part Six Recommendation8 Part Seven Recommendations Implementation Plan9 Part Eight Monitor and maneuver10 Part One Executive Summary In company to respond to extreme command variability and incidents of mellowed express come out of the closet rates barilla is before long applying pressure to both its manufacturing and logistics departments to re declivity dispersal centres as quickly as possible. This is resulting in high distri andion costs and a reduction in all over alone profits.In the long term I am recommending that samphire SpA implement a Just in Time Distribution (JITD) remains to reduce excess account and eliminate hold outs at the allocator to market level of the distribution chain. The peeled dodging bequeath take a forecasting and planning arranging based on entropy provided by the distributors on a day-to-day basis. The JITD pull up stakes reduce blood to acceptable levels and bequeath reduce memorandum carrying cots. It allow for also dribble beg resulting in cost savings at the manufacturing and shipping levels. It allow for also provide an opportunity for new gross revenue furtherance signs and levels.Initially the new system forget be implemented on a streamlet basis and at the end of the trial with successful performance indicated the system entrust be presented to inherent departments as sound as distributors. This subject atomic number 18a will be used as a basis for treatment in our w atomic number 18ion meeting at the end of the week. Giorgio Maggiali Director of Logistics kali SpA (A) December 4, 2012 Part Two Immediate Issue kali SpA is experiencing strongy in the manufacturing and logistics sectors of their operation because of an extreme variability in get of their alimentary paste outputions. Though demand for alimentary paste in Italy is matted Barilla has been experiencing sudden spikes in demand for varying types of pasta from different areas. Because of rigorous manufacturing requirements and lengthy lead times from rest homement of order to delivery, stock outs arrest been experienced between the distributors and retail stores. Part Three Systemic Issues gross revenue Operations Nature Tactical measure on the spur of the moment Term Distributors are encouraged to purchase product based on discounts rather than product demand at their customers locations.The sales representatives are abandoned detail sales targets to meet and are conceivably focusing on the discounted products because they are an easier sell to the distributors. Distribution Nature Tactical Timing Short Term and Long Term Lead time from placement of order to delivery ranges anywhere from eight days to fourteen days, though the fair(a) is ten calendar days. This includes production and ship ment of the product. Most distributors do not rely on forecasting systems to place their orders they simply count stock on a cycle and place orders to re subscribe to the introductory level.There is no analysis based on product type, time of year etcetera gestate outs are happening between the distributors and the stores the lead time to fill the product gap is too long. Manufacturing Process Nature Strategic Timing Short Term and Long Term The pasta production do by (particular sizings and types of pasta require fixed heat and humidity settings in the kiln) makes it difficult to replace a specific type of pasta that has sold out at a vendors store because of unusually high demand. The production emergence fagnot be changed or sped up without risking a lower in quality of the product. Part Four Qualitative AnalysisBarilla SpA is the largest pasta producer in the world. They offer both dry and fresh pasta as well as a variety of separate products including cookies, cakes and breads. Currently, the demand for pasta in Italy is flat with only an approximate increase in demand of 1% per year. Barilla competes with other pasta providers (approximately 2,000) by utilizing advanced(a) advertising techniques and by using high quality raw materials in their products. In order to compete in the Italian market they enforce the traditional method of distribution to their customers via their own distribution center as well as a number of independent distributors.Distributors may place orders when they choose apiece year is sectioned off (referred to as hit the books periods) and specific products are offered at discounted rates in an assigned period. The type of product that is offered in apiece contributevass period is decided by the sales department. There are also intensity discounts offered on definite products which may be specialized by the Barilla sales military unit (i. e. free shipping for full truckload orders). Sales module has set sales target s for each johnvass period which results in pressure sales to the distributors.The distributors will purchase more of the discounted products in order that they can pass the savings to their customers to achieve higher sales. The majority of distributors periodically revaluation their stock of Barilla products and place orders with Barilla based on re-stocking to the previous level they had of each product type. Input from the store level is not considered as the main factor in ordering. There are no set tokenish or maximum levels for types of pasta or for size of distributor. Pasta production is time consuming a series of travel are involved that must be followed to produce the quality of pasta that is Barillas exchangemark.The drying process alone takes approximately four hours the settings of the kiln are specific to the size and type of pasta being produced. In rise to power to production time thither is shipping time which varies dependent on the proximity of the manufact uring plant to the distribution center. Shipping encompasses the availability of vehicles and the cost of shipping. The veritable method of ordering means that there are less-than-truckload or LTL shipments pickings place which are more expensive than full-truckload or FTL shipments. Part Five Alternatives Alternative One Sales ControlsThe Barilla sales department will offer product promotions based on product movement at the region/store level. Volume discounts will be discontinued. Pros Promotions based on sales data from the individual stores will reduce stock outs and will maintain the sales departments relationship with the customer. Cons Distributors lose lose got over the stock and stock levels that they are carrying. Sales of other product lines that Barilla produces will decline and some customers will change to other suppliers for their variety of product. Alternative Two Inventory ControlsBarilla will set minimum/maximum inventory levels for each SKU based on historic al sales data. Safety stock will be produced of the pasta types that regularly stock out at the distributor locations. Pros Instituting set inventory levels for each SKU will ensure a more realistic confer of product for each location. Producing safety stock for the pasta types that spike will reduce restock time and mitigate market share loss. Cons Historic data is inherently flawed because of trade promotions and sight discounts minimum/maximum levels would be skewed.Excess stock would take up a significant amount of space and duplication storage space would need to be obtained. There will be conflict with distributors because of their loss of control and with sales because of the loss of promotional opportunities. Alternative Three Just in Time Distribution (JITD) Product will not be ordered by the distributor but will be supplied by the manufacturer to the distributor based on data provided about the previous days shipments from the distributor to the customers as well as the ir current stock levels of Barilla product.Pros Barilla would ship product only as it was needed rather than having large amounts of excess stock. information regarding supplies at the distributors warehouses would aid Barilla in better their forecasting system. Barilla would have more control over the distribution process. Cons Distributors do not urgency Barilla interfering with their inventory. The sales staff is reluctant to lose their opportunity to meet and exceed sales targets through with(predicate) their promotions. Part Six RecommendationWe recommend the implementation of Alternative Three, the JITD model. JITD will modify Barilla to cut current distribution costs and stabilize supply to the customers. JITD is based on real time data and inventory specific information. Rather than basing product supply on current promotions or volume discounts, product supply is based on historical demand at the specific distributor locations. * This will ensure that customers receive product that they can move rather than being supplied product that will sit on their shelves for extended periods of time. Barilla will be able to reduce inventory levels at their locations because demand will be stabilized and as a result carrying costs will be reduced. * Transportation can be regulated as product delivery is regulated and cost savings can be found through possible transportation discounts (FTL vs. LTL shipments). * Promotions can be tailored to individual products at individual locations. Barilla can manage inventory levels more effectively than the distributors because we have an understanding of all facets of distribution.The distributors do not have a clear understanding of the manufacturing process and the reason for lengthy lead times. Traditional trade promotion and volume discounts will be eliminated by the implementation of JITD. A new promotion structure will be implemented to maintain market competitiveness. Part Seven Recommendations Implementation Plan We believe that to encourage both internal and external partners to embrace the JITD system, Barilla should introduce JITD as a buffer store project at one of the distribution facilities that has experienced extreme demand variability.Customers are resistant to the change because they will lose control over product type that will be carried. They do not want Barilla to push product through their centres to reduce their costs magic spell restricting the distributors role in the delivery system. Barilla can present the data from the pilot project to the other distributors. The data will prove to distributors that implementing the JITD system will be of benefit to them as well as to Barilla. When proposing the JITD system to customers Barilla has to explain that it will * cut off Costs * Reduce Inventory Levels Improve Fill Rate to their Stores Implementing JITD is in the best interests of Barilla, the distributors and their customers. There is internal resistance, primarily from t he marketing and sales group, because there is a lack of understanding about the effects that implementing the system would have on the various departments and their functions and duties. The sales department, in particular, is concerned that a JITD system would reduce their duties and impedes their ability to sell product by removing the current trade and volume purchasing promotions.In order to get buy in from each department I need to have the support of management including DiMaria, the bus of the sales department. Support for the changeover has to be top down as the current problem is not just a logistics issue but is a supply chain issue. Part Eight Monitor and Control The pilot project will be implemented at bottom both months and will be take place over the course of cardinal months. The Key Performance Indicators and measurements are * Customer Demand Levels Success is flat demand or less than 1% variability in demand. Stock Out Levels Success is stock out levels at less than 2% per order cycle. * Inventory Levels Success is less than or equal to 90,000 kilograms of pasta/day at the manufacturing facility and less than 4% excess inventory total at the distributors warehouse. At the end of the three month trial the Barilla management team will follow-up the data and prepare a report to present to individual departments within Barilla and to distributors. If figures, as laid out above, have not been met and then Barilla will continue to maintain the current distribution process.