Considering the current situation of Barilla’s distributional system, which is characterized by a high unpredictabiliy of sales due to high volatility in weekly customer orders and leads to improvement possibilities in terms of operating efficiency and cost penalties, Barilla should change to JITD.
There are different reasons for the fluctuation (Exhibit 1) in demand of their products:
• No minimum or maximum order quantity requirements
• Long order lead times (average: ten days)
• Transportation and volume discounts
• Promotions support
• Improvable customer service and communication btw. Barilla and clients.
This causes some problems for Barilla. As they have a relatively unflexible production line (with high costs when changing to produce another product), it is not easy for them to avoid inefficient production or excess finished goods inventory. Also, distributors have relatively high excess inventory to keep products bought on any type of promotion in stock, e.g. to achieve quantity discounts.
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