Barilla Distribution System

Operation and Supply Chain Management

Celebrity Cruises Inc. Case

Group F

1. Diagnose the underlying causes of the difficulties that the JITD program was created to solve. What are the benefits and drawbacks of this program?

The main problem that Barilla was hoping the JITD program would solve was the fluctuations in demand caused by the company’s manufacturing and distribution system. The underlying causes of this problem were defined by different factors. First, there was an important fluctuation in the manufacturing process for different Barilla products (time required, plants, perishability…). Second, Barilla was selling its products to a very outdated distribution system and buyers required frequent promotions, probably causing costs inefficiencies for the company. Third, Barilla’s supply chain system itself was outdated: distributors managed their own inventory and manufacturers had to wait for their orders to start producing, which caused delayed lead times because of a lack of information sharing and cooperation. Last but not least, the problem was caused by a lack of an accurate forecasting system, resulting from the previous causes and from the simplistic inventory management (lack of sophisticated and automatized technology to track inventory levels). The general result of those difficulties was high inventory levels and stock-outs.

The JITD program suggested a specification of the appropriate delivery quantities to be manufactured to better meet end-consumer’s need and distribute more efficiently the workload on Barilla’s supply chain systems.

The benefits of this program for the manufactures included reducing the cost of manufacturing and reducing the inventory cycle. In addition, this would increase manufacturer’s forecasting ability and maximize the reliance of distributors upon the information provided by the manufacturers (bargaining power for manufacturers). For the distributors, JITD would improve their levels of responsiveness for...