Loading presentation...

Present Remotely

Send the link below via email or IM

Copy

Present to your audience

Start remote presentation

  • Invited audience members will follow you as you navigate and present
  • People invited to a presentation do not need a Prezi account
  • This link expires 10 minutes after you close the presentation
  • A maximum of 30 users can follow your presentation
  • Learn more about this feature in our knowledge base article

Do you really want to delete this prezi?

Neither you, nor the coeditors you shared it with will be able to recover it again.

DeleteCancel

Make your likes visible on Facebook?

Connect your Facebook account to Prezi and let your likes appear on your timeline.
You can change this under Settings & Account at any time.

No, thanks

Barilla case study - Operations Management

UCS Smurfit MBA Group 7 assignment
by

Diarmuid O'Sullivan

on 29 July 2013

Comments (0)

Please log in to add your comment.

Report abuse

Transcript of Barilla case study - Operations Management

Diarmuid O’Sullivan
Neil Krige
Barilla Case Study
Contents
Line flow production line
Q1: "Diagnose the underlying causes of the difficulties that the JITD program was created to solve"
Line flow production
2 main barriers/ conflicts
Q2: "What conflicts or barriers, internal and external, does the JITD program create?"

"What causes these conflicts?"
Perceived loss of power/ influence
Causes of Internal Resistance
Internal resistance
Questions
Mahesh Rajendran
Zahirah Sukran
Brief Introduction to Barilla

Q1: "Diagnose the underlying causes of the difficulties that the JITD program was created to solve"

Q2: "What conflicts or barriers internal and external to Barilla does the JITD program create? What causes these conflicts?"

Q3: "As Giorgio Maggiali, how would you deal with these? What action will you take?"
Italian pasta manufacturer

Founded in 1875

Largest pasta manufacturer in the world

Consistent growth year on year
Stock outs = revenue foregone for both Barilla and retailers
Huge cost involved
Markdowns
vs
Unpredictable market demand
Inflexible - long changeover time
Wild fluctuations in demand


Order cycle time of 10 days
Disconnect
Resulting in...
Not enough inventory
or
Too much inventory
Small range of highly similar products

Large volumes at controlled rates

Tightly coupled linear sequence

Product (or customer) dictates layout

Line must keep running

Inflexible - greater changeover time
Pedrignano plant
The myth...
The reality...
Most technologically advanced pasta plant in the world
Fully automated, 120m long production lines
90 tonnes of pasta per day (= 1 blue whale!)
Staff travel within plant on bicycles
Unable to quickly match demand with supply
Demand
Supply
Standard deviation of 23 tonnes per day
Precise heat and humidity specifications
"Pasta consumption was relatively consistent throughout the year"
yet
"Extreme demand variability"
"Few had sophisticated forecasting systems or analytical tools for determining order quantities"
Fluctuating demand
Distributors unable to accurately predict demand
Place orders only once per week
Caused by...
Exacerbates fluctuations
Production
Production plant
Central Distribution Centres
Central Distribution Centre
(CDC)
Distributors
The supply chain
Sales & Marketing team
External resistance
Distributors (procurement teams)
Fear of job losses
Risk aversion - distrust of change
The "human factor”
Causes of External Resistance
Perceived loss of power/ influence
Fear of job losses
Risk aversion - distrust of change
The "human factor”
Similar causes
The 4 Vs
Volume
Variety
Variation
Visibility
Low
High
High
High
High
Low
Low
Low
The issue lies here...
Range
Quality
Low cost
Dependable supply
Just in time distribution (JITD)
Introduce accurate forecasting (time series analysis)
Match demand with supply
Move from capacity lagging to capacity smoothing
Supermarkets
The Consumer
The field
Q3: "As Giorgio Maggiali, how would you deal with these conflicts?"

"What action will you take?"
Barilla use an inappropriate supply chain
fast response
low throughput time
low cost
minimal inventory
Recommend moving to efficient supply chain
JITD can enable this
Overcoming internal resistance
Mon
Tue
Wed
Thu
Fri
Sat
Sun
Mon
Tue
Wed
Order placed
Thu
Fri
Average delivery day
Resistance!
Overcoming external resistance
Clear comms campaign needed to allay fears
Consider co-locating teams to improve communications
Human solution to a human issue
Current distribution pattern
Need to expand capacity by 200%
Proposed distribution pattern
Recommendations
JITD initially identified by Vitali - drawback is lack of computer systems among retailers
Vertical integration of supply chain
Start with biggest supermarket chain customers
Consider subsidising computer systems for them
Then roll out to independent supermarkets and 'signora Marias'
Reduced range = fewer changeovers = more predictability
800 different SKUs currently offered - different shapes, packaging, sizes, promotions, etc
Cuts out the middle man

Redeploy CDC staff to depots
Forecast horizon
Retailers receive order fulfilment in 24/ 48 hours
Mon
Tue
Wed
Thu
Fri
Sat
Sun
Mon
Tue
Wed
Order placed
Thu
Fri
Receive delivery
To match this, JITD needs prediction horizon of 18 days
Sat
Sun
Mon
Tue
Wed
Delivery window
Order received
Barilla depot
Barilla depot
Retailer
'Comfort blanket'
14 days
2 days
2 days
The bullwhip effect (Lee and Padmanabhan, 1997)
'In a supply chain for a typical consumer product, even when consumer sales do not seem to vary much, there is pronounced variability in the retailers' orders to the wholesalers'
Restructure customer incentives
Introduce discount for most consistent orders month on month
Reduce dependency on trade promotions
'The dumbest marketing ploy ever' (Lee and Padmanabhan, 1997)
Full transcript