Assignment 2

ID: 6406963

INSE 6290

1. Barilla owned and operated an extensive network of 15 plants located throughout Italy including large flour mills, pasta 17 plants, and fresh bread plants, as well as plants producing specialty products such as cakes and croissants. The product line was divided into 2 categories Fresh products which had 21 days shelf life and fresh bread which had 1 day shelf life . The second is Dry products including dry pasta , cookies , biscuits , flour and breadsticks. The products were shipped from the plants to Central Distribution centres(CDCs) . The products were distributed to Supermarket chains by Grand Distributors(GDs) and to Independent supermarkets by Organised Distributors(DOs) . Hence due to the variety of products made by Barilla like dry , fresh and their different types were made to ship to their destination by different distributors which were the reasons for the increase in Barillas supply chain .

2. To cope up with the increase in demand variability Vitali came up with a plan that rather than sending products to the distributors the products should be shipped directly to the

stores in the perfect amount that is not more nor less according to the demand only. Hence by distributing only the sufficient amount rather than building enormous stocks the distribution costs and inventory costs can be reduced and hence reducing the production cost . This is called Just In Time Distribution (JITD) . Salespersons or the distributors were against this approach as it will diminish their role in the sales market.

3. Transfer on demand information across the supply chain plays a major role . By exchange of information between the manufacturers and suppliers the manufacturers manufactures the goods in the amount as demanded by the customers. The Distributors demands the quantity to be manufactured rather they are Grand Distributors or Organised distributors and they distribute it to the required supermarket chains and independent supermarkets respectively. But an approach called JITD was established in which the goods were distributed directly to the customers rather than piling up the stocks by the distributors . Hence exchange of information plays a very important role because if the manufacturer doesnt know the amount to be produced how the customer will be satisfied.

4. The VMI strategy can solve the operational problems faced by Barilla because in JITD Barilla will be in charge of the channel between the CDCs and the distributors . Hence unlike other supply chains in which distributors place orders in JITD Barillas own Logistics Organization will specify the appropriate delivery quantities which will meet the customers need and will also evenly distribute the workload on Barillas manufacturing and Logistics system .

5. There were conflicts about the role of the distributors in the supply chain and severals concerns were shown by marketing organisations . Vitali gave reasons that JITD should be considered a selling tool, rather than a threat to sales. They will be offering the customer additional service at no extra cost. The program will improve Barilla's visibility with the trade and make distributors more dependent on us-it should improve the relationships between Barilla and the distributors rather than harm them. The information regarding the supply at the distributors' warehouses provides us with objective data that would permit us to improve our own planning procedures. All the goods which are required will be manufactured rather than keeping stocks in the warehouse . A strategy named VMI was also established to counter these problems and make both ends satisfied .