Barilla Spa Essay

684 Words3 Pages
Executive Summary Just-in-time distribution—or JITD—is Barilla’s effort to drive efficiencies in their distribution of dry products (75%) and fresh products (25%) to the market. The incentive for JITD was to help alleviate some of the dissimilarities in manufacturing as to more efficiently produce and deliver dry products to their customers. The issue, from a quantitative perspective, is that the average order is 300 units, but the σ = 227 units. This unevenness has led Barilla to hold inventory on-hand, which is negatively impacting their operation. JITD is being considered to improve operations for both Barilla and their customers, by determining the quantities and delivery schedules, rather than current approaches and procedures of responding to erratic demand patterns. This would help with eroding margins that both manufacturers and retailers are experiencing, by shipping product only as needed rather than holding large quantities of stock in both Barilla’s facilities. What are the underlying causes of the difficulty that JITD is expected to solve? The underlying causes of the issues that JITD is trying to resolve are: • Issue: Erratic demand / poor forecasting, which is driven by: o Manual process at the retailer level of both checking and conveying inventory needs o Customer behavior, which is driven by outside forces, such as competitors’ offerings, incentives, trends, etc. o Barilla’s own sales incentives drive erratic trends in purchasing large quantities (driven specifically by bulk discount incentives) • Issue: Inventory limitations and distribution centers and retailers, which are driven by: o Physical space limitations (shelf and floor space) o Competition’s need for space, incentives to retailers and distributors, etc. o Built ideally for steady-state demand (one shelf space for one product at a set volume) • Issue: Long lead time for

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