levels of inefficiencies and rising costs due to variability in demand from its distributors. In order to restore things to order and to improve margins‚ Giorgio Magialli‚ the Director of Logistics at Barilla wants to implement a Just-In-Time Distribution (JITD) system that was proposed by his predecessor Brando Vitali. This system is completely different from the existing setup and is being opposed by both the distributors and Barilla’s Sales and Marketing Department. Introduction Barilla SpA
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shop‚ restaurant‚ online wine store‚ etc.). In the In the United States‚ there is a unique distribution system‚ which resulted from the aftermath of Prohibition. Commonly called the “three-tier system‚” it says that producers sell to distributors‚ distributors sell to retailers‚ and retailers sell to consumers. Consumers are sometimes considered a fourth tier‚ but most wine industry professionals only refer to the three tiers‚ as it is the “pipeline” of wine into the mouth of a consumer. Generally
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Barilla Case Study There are some issues currently faced by Barilla. One is that demand fluctuates extremely because distributors order weekly and it is hard to predict the demand on a weekly basis. Another is that there is a significant pressure to manufacture because lead-time and perishability of product vary so much. It’s very hard to speed up the process because each type of pasta requires specific heat and humidity level to dry them properly. In addition‚ Barilla has to make both dry
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traditional model startsed with manufacturers building computers‚ they distributed them to dealers who sellold them. Dell started with selling PCs directly to end users. In China they also used the ‘dual system’ model (using both direct sales and distributors). An important feature necessary for the direct sales model to be successful is an efficient supply chain. Dell had this efficient supply chain‚ you can call this another FSA was its efficient supply-chain.as well. The macro-level requirements
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Everyday people can become distributors for your company and bring the products to their local market. This is based on the philosophy that people are willing to purchase products or services more readily from people they know and trust‚ rather than from a sales rep. Compensation is performance-based as there is often a pay grid in place for satisfying certain quotas. Having this kind of pay structure in place reduces the risk for the business owner for if a new distributor does not perform‚ the financial
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amplified levels of inefficiencies and rising costs due to variability in demand from its distributors. The main problem addressed in this case is how to effectively implement JITD system suggested by Giorgio Magialli‚ the Director of Logistics by resolving the issue of gaining control over the fluctuating demand. Barilla has a very complex distribution network including independent third party distributors and due to such a multi-echlon network‚ Barilla has been experiencing large amounts of variability
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levels of inefficiencies and rising costs due to variability in demand from its distributors. In order to bring things back into place and to improve margins‚ Giorgio Magialli‚ the Director of Logistics at Barilla wants to implement a Just-In-Time Distribution (JITD) system that was proposed by his predecessor Brando Vitali. This system is entirely different from the existing setup and is being opposed by both the distributors and Barilla’s Sales and Marketing Department. In this report we have studied
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Executive Summary Barilla‚ the leading pasta manufacturer in Italy‚ faces increasing problems related to demand fluctuation. Their distributors also suffer from high inventory holding costs and low service levels on the other hand. This report explains‚ why the company and their distributors are troubled with this situation and how Barilla intends to solve it. The problem Barilla experiences is called the “Bullwhip Effect”‚ i.e. that demand variability increases when moving up the supply chain
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more difficult to forecast. Distribution Process First of all‚ there is no limitation for order quantities size of the distributor‚ which results in various demand quantities and high level of fluctuation. Second‚ distributor’s ordering pattern and volumes is varied from each other‚ which makes demand various from time to time. In addition‚ most distributors’ inventory systems are simple‚ and few had forecasting systems or sophisticated analytical tools for determining order quantities
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approach: rather than send product to the distributors according to their internal planning processes‚ we should look at all of the distributors’ shipment data and send only what is needed at the stores-no more‚ no less. The way we operate now it’s nearly impossible to anticipate demand swings‚ so we end up having to hold a lot of inventory and do a lot of scrambling in our manufacturing and distribution operations to meet distributor demand. And even so‚ the distributors don’t seem to do such a great job
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