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BARILLA

What exactly is causing the distributors order pattern to look this way?

Barilla SpA is the worlds largest pasta


manufacturer
The company sells to a wide range of Italian
retailers, primarily through third party distributors
During the late 1980s, Barilla suffered increasing
operational inefficiencies and cost penalties that
resulted from large week-to-week variations in its
distributors order patterns

What are the underlying drivers of the fluctuations?


Causes of Demand fluctuation

Transportation discounts

Volume discount

Promotional activity

No minimum or maximum order quantities

Product proliferation

Long order lead times

Poor customer service rates

Poor communication
What does the underlying consumer demand pattern for pasta look like in Italy?
What is the impact of demand Fluctuation

Because the plant has high product change


over costs, Barilla has either inefficient
production or excess finished goods
inventory
Utilization of central distribution is low Workers

Equipment

Transportation costs are higher than necessary

JITD SYSTEM

Decision-making authority for determining shipments


from Barilla to a distributor would transfer from the
distributor to Barilla
Rather than simply filling orders specified by the
distributor, Barilla would monitor the flow of its product
through the distributors warehouse, and then decide
what to ship to the distributor and when to ship it.
Replace sequential optimization with global Optimization
Eliminate some of the false economics that
drive traditional ordering processes Managing stock is my job; I dont need you to see my
warehouse or my figures.
I could improve my inventory and service level myself if you would deliver my orders more quickly; I
would place my order and you would deliver within 36 hours.
We would be giving Barilla the power to push products into our warehouse just so that Barilla can reduce
its costs.

SALES Resistance

Our sales levels would flatten if we put the program in place.

How can we get the trade to push Barilla product to retailers if we dont offer some sort of incentive?
If space is freed up in our distributors warehousesthe distributors would then push our competitors
product more than ours.
the distribution organization is not yet ready to handle such a sophisticated relationship.Demonstrate
that JITD benefits the distributors (lowering inventory, improving their service levels and increasing
theirreturns on assets); Run experiment at onor more of Barillas 18 depots
Maggiali needs to look at JITD not as a logistics program, but as a company-wide effort; Get top
management closely involved
Trust

Benetton

Seven Elevan
EXECUTIVE SUMMARY
With the proper utilization of proper supply chain practices Seven-Eleven had realized unique growth in
the business.Seven-Eleven have found better ways of developing their CDC as well as DSD that is
through information knowledge expertise with their business functions to deliver frequent product
services of varied items and the engagement assurance given to thecustomers.
The advantage of successful and improved implementation of chain Seven-Eleven effectively tripled
the buying power and also accessed new products.. The distribution systems of Seven- Eleven were reengineered and the Combined Distribution Centers (CDC) have been introduced by the company to
better manage the flow of products into the stores. With the implementation of CDC and DSD (Door
Store Delivery) centers allow smoothing of
distribution operation to the stores and the provision of better quality and better information of supply
and deliveries is available and the control of the supply chain is achieved. The implementation of
technology POS (Point of Sales) helps to move ahead and give additional boost to the profit of seveneleven.
BACKGROUND:

Seven-Eleven Japan Company was founded in the year 1973 and had its first store in Tokyo, and by the
year 2004, Ito-Yokado group owned the company and thus, managed successful supermarkets in Japan
and that, Seven-Eleven had realized unique growth in the business sector. This report will be focusing
and deal with several discussion and case analysis of Seven-Eleven Japan Company within the rising
truth of Seven-Eleven as a leading convenience store chain as it can be within Japanese retail business
functions. The critical analysis will incur as to how the company does its business operation reflecting
their supply chain management as well as upon valuing their logistics into a more effective and reliable
perspective. The understanding and execution of supply chain process and outcomes have to be
present and supply chain analysis of Seven-Eleven is given more weight and value. The
utilization of supply chain strategy of Seven-Eleven and such performance drivers upon the balance
nature business responsiveness and the awareness of certain risks involved.
ANALYSIS:
According to seven-eleven filling in the entire map of Japan is not our priority. Instead, welook for
demand where Seven-Eleven stores already exist, based on our fundamental area dominance strategy
of concentrating stores in specific area Seven Eleven continues to grow during the prolonged 1990s
downturn. From 1991 to 2002
the stores increased from 19603 to 42000. As percentage of all retail stores in japan this shows an
increase from 1.2% to 3.2%. By 2004 its operating income reaches to 165.7 billion yen, positioned it as
a leader not only in convenience store but also in Japans retail industry. Extensive franchise network
played a key role in the daily operations. With the help of
franchise network they:
Boosted distribution efficiency
Improved brand awareness
Increased system efficiency
Enhanced efficiency of franchise support services
Improved advertising effectiveness
Prevent competitors entrance into the dominant area
Thus improved franchise networking helps seven-eleven to increase their profit allow it to continue its
domination.
With the leading domination in the market Seven-Eleven in 2004 change the standard size of new
stores from 125 square meters to 150 square meters. Seven-Eleven starts too emphasized more on
regional merchandising to attract the local preferences in terms of food items, beverages,
magazines etc. This helps them to increase
the sales:
In short we can say that Seven-Eleven have done the following:
Store assessment that increased productivity of inventories and store space within consumer
interface
Optimized time and cost in with the help of Seven-Eleven replenishment system
Efficient promotion in maximizing total system efficiency of trade and consumer promotion
Product introduction reflect effectiveness of new product development and introduction activities
Strength

DSD (Direct store delivery) and CDC (Combined distribution centre) makes seven eleven
networking strong.
Combined distribution system saves time.
Seven Eleven effectively does Micro matching of demand and supply.
Seven Eleven have various Franchises which also help in stronger branding.
Implementation of IT like connecting through ISDN, wide screen graphic display helps in smoothning
of flow of information.
Seven Eleven have very effective store management and transportation system.
Risk:
Dedicated employees needed as there is a hard work for the inventory movement.
Improving ability means reducing constraints is the biggest risk.
As seven eleven had drastically reduced the vehicles they dont have any backup plans. If
thevehicle .
breaks down the system of delivery breaks down.
Seven eleven is connected through IT systems if IT system breaks down their whole system breaks
down which is the biggest risk in their networking.

CONCLUSION:
Thus we realize that by integrating the supply chain certain constraints of business can be minimized
and customer service levels can be improved through executing information12 technology systems.
Thus, with the help of models like CDC and DSD incorporate better, more valuable supply chain
network expecting solid store chain ground. Moreover,adaptation of IT implementation incurs a
substantial use for Seven-Eleven. The company in its business services can require precise
infrastructure within their distribution center enabling effective information flows and streamline
supply logistics. Thus right logistics and collaboration upon providing imperative business operation
benefits considering the majority of customers worldwide.
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