What is the impact of fluctuating demand on operations?
Because of the way Barilla’s manufacturing process works, demand fluctuations have a significant impact on the company’s operations. Tight heat and humidity specifications in factory tunnel kilns require very specific sequences of pasta production, which means Barilla has limited flexibility in ramping up (or ramping down) the production of pastas experiencing unexpected demand levels. Furthermore, because of extremely high holding costs, it is simply not economically viable for Barilla to maintain substantial finished goods inventories to guarantee fulfilling distributors’ fluctuating order quantities. Demand…show more content… This reduces the flexibility of the system and makes other problems associated with the supply chain worse. If they offered only a single packaging option for each pasta, then any unit of inventory of that pasta would be interchangeable with any other unit. The system now treats them as two entirely different products that cannot be substituted for one another in the supply chain.
What are the internal and external barriers to implementation of JITD? What actions should Giorgio Maggiali take to deal with these?
Barilla’s main internal source of barriers were from the sales and marketing department. They feared that operations would assume many of the sales and marketing responsibilities and sales would flatten. Currently, sales representatives spend 90% of their time at the store level. The JITD program, however, is focused on strengthening the distributor relationship with Barilla. Maggiali should highlight that operations will be focusing on the distributor relationship and request that sales and marketing continue to focus on the retailer relationships. Operations has a better understanding of the challenges that a distributor will have and can offer more value to the strengthening of those relationships. Sales and marketing will drive sales up through the stores. The JITD program essentially uses the point-of-sale data from the retailers, though one step behind; as such, sales and marketing will be directly
