Barilla SpA Case OPIM 5110. Evaluation of JITD Proposal Why should this work? What are the underlying economics? Who will Benefit? Coordination Concept:

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Presentation transcript:

Barilla SpA Case OPIM 5110

Evaluation of JITD Proposal Why should this work? What are the underlying economics? Who will Benefit? Coordination Concept: Sequential, Myopic optimization SupplierCustomer Joint Optimization SupplierCustomer

Amplification of Orders Placed on Suppliers Consumer Retailer Distributor Barilla DC Barilla Plant

Causes and Cost of Demand Fluctuation Causes of Fluctuation Poor Communication Promotions Volume Discounts Lead Times Number of SKUs Sales Compensation Stockouts No volume Constraints Cost of Fluctuation Production Inefficient Finished Goods Inventory Distribution Inefficiency –Workers –Equipment –Trucks Complexity Distributor Inventory

JITD Implementation problems External Internal Causes Action Perspective

Perspective Distributor’s Barilla’s Who should have decision rights? Type of Information to be transferred Size Capability Geography

Causes of Problems Transportation discounts Volume discounts Promotional activities No minimum or maximum order quantities Product proliferation Long lead time Poor customer service rates Sales compensation system

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