Write 5 pages thesis on the topic supply chain mangagement. Are all these SKUs necessary, profitable, and providing value to the company Many products may make good marketing sense, but Barilla’s margins may be affected by the costs of the equally complex supply chain needed.
b. Complacency of internal sales and marketing staff: If their reaction to JITD is any indication (p. 99-100), this may be most serious cause. Perhaps, they were just poorly managed because they did not buy the idea that a more efficient distribution system would result in higher sales and profits. Or worse, to satisfy unprofitable market demand and meet sales quotas, the sales team couldn’t refuse requests of distributors and retailers even if the company’s profitability suffered in the process.
c. Old-fashioned distribution system: JITD was a partial solution superimposed on an existing distribution channel that proved non-scalable with sales volumes increases. JITD, by shifting control over buyer information from distributors to Barilla, marked a big difference in the dynamics of the supply chain to which existing players inside and outside the company found difficult to adjust. Poor planning and forecasting also shows how ‘old-fashioned’ (p. 96) is the distribution system that may have worked when sales volumes were still low and manageable.
d. d. Poorly designed marketing incentive system: Marketing incentives should push the product and add predictability to market demand, but despite having a system in place every four weeks (p. 96-97), Barilla continued to experience variability in orders.
Barilla has to address these underlying causes when implementing JITD that is, like all supply chain management systems, a support activity to major strategic decisions.
2. Discuss the benefits and drawbacks of the JITD program.
a. The JITD was designed to give the following benefits to Barilla and its distributors:
i. Better service to the end-customer who will get the product when needed.
ii. Barilla and distributors can build a stronger partnership because of the mutual dependence created. Properly managed, this is good for both.
iii. More stable timing of orders, generated on a predefined basis, assures better product quality.
iv. Distributors will experience lower stockout and inventory levels and improved fill rates from Barilla and to the end customer. This means lower planning and ordering costs, and higher profits, for distributors as these costs are shifted to the manufacturer.
v. Distributors can provide better quality service to end customers.
vi. Barilla will find forecasting easier, plan its incentives better, and improve its inventory and procurement plans. Product returns will be lower as only those that could be sold given the stable end-customer demand will be delivered.
b. However, JITD also has some drawbacks:
i. Every employee at Barilla and distributors must fully understand and accept the program. Total participation is needed so that this change to the way things are done can be properly managed.