Barilla Case: Causes of Fluctuation

When it comes to the production of these products and how much the company should produce each year many factors come into play. Some of these factors include weather, taxes for that year, wage increases, outbreaks of pests destroying crops, human error in the production line, increased gas and diesel fuel prices, and so on. Many of these factors are random events from nature or a new law implemented by the government that puts strict regulations on the production of a certain product. For instance, in 2014, a major drought occurred in the Midwest states, which resulted in low water resources and the reduction of feed for cattle produced that year. This resulted in an increase in beef prices and the reduction of beef produced for that year (Midwest 2014). Events like this can make or break a business and it’s up to the owner of the

The JIT approach to manufacturing involves timing the delivery of resources so that they arrive just when needed. Inventory optimization models help the firm determine how many of which items in which sizes should be delivered to each specific store during twice-weekly shipments, ensuring that each store is stocked with just what it needs. Trucks serve destinations that can be reached

- well-organized of the distribution of the manufacturer will lessen the shopping delays of raw materials

distributors would have to submit their Stock Keeping Unit (SKU) so that Barilla can control it.

Reduced need for higher capacity at the supplier. This would be reduced because suppliers would not need to size their operations to deliver on the “one shot large volume order” and would be able to space these in time with orders at

A third factor contributing to the Bullwhip Effect is the specific production process of pasta. Barilla cannot re-act to demand changes quickly enough, due to production restrictions as e.g. heat and humidity specifications. That means, if a product is out of stock it cannot be produced and delivered immediately.

Looking at the fluctuation in Exhibit 12, one could expect that poor coordination in the supply chain would increase costs. Provide a discussion for the cost of poor coordination in Barilla’s supply chain. Items to consider here include production changeovers or setups, inventory levels, facility utilization, transportation costs, quantity discounts and promotions, canvas periods etc.

We prefer the EOQ/ ROP system as gains from reducing the order/ production size (gains in terms of less value of inventory being produced) which though lead to increase in setup cost far outweigh the gains from Blanchard’s current system (gains in terms of reduction of setup cost) while, costs are that of the value of inventory being produced.

JITD created lot of internal barriers to Barilla; while some of the concerns are easy to overcome others would need more convincing. For example, the sales department, sales representatives receive more on their compensation through commission from their sales. JITD would cut or reduce to zero most of sales people responsibilities, which in turn will squeeze their commission, as one sale man said “Our sales levels would flatten if we put this program in place”. As noted in the case most of the sales come from the

Because the product was leaving the warehouse and getting to stores quicker, I was able to reduce the storage space which was an initial problem so the increase of costs because of it decreased. The stores showed a moderate increase in profit.

As a result of this overproduction, another negative effect of just-in-case manufacturing is a decrease in cost efficiency. The most obvious costs would include storage and warehouse expenses (Conrad “The Advantages of…”). In order to have these large inventories, there have to be places to hold such large quantities of goods. Storage costs comprise of preserving the accumulated product to ensure that it functions properly. If the cars or parts are unable to perform, stock might have to be discarded, increasing physical waste. The products lost mean that money and opportunity for profit are lost. In addition to storage costs, there are also warehouse expenses, in which energy consumption, personnel, and assorted equipment are needed to maintain the facility and product. Since our just-in-case manufacturing method requires that we make large amounts of cars, we need places to store them. The more product, the more warehouses, which means there are more warehouse costs that will diminish any profit that we make.

As argued by Lubben (1988), JIT allows businesses to have better management since this ensures that there is no loss as there is sufficient number of clients requiring the equipment. This reduces her to deal with huge deliveries when the clients’ numbers are not increasing. (Lubben, 1988, p.4) also suggested the idea of JIT that “... major elements of manufacturing – capital, equipment and labour are made available only in the amount required and at the time required to do the job.” So it is a good practice by utilising JIT approach as it reduces wastes and ensure the correct amount of equipment is available (Lubben,

This gives the illusion of lower cost of goods sold (and thus higher profits) but it is, in fact, just a temporary capitalizing of the fixed manufacturing costs due to inventory build up.

These theories have been used by Nissan to improve their productivity. However JIT and Lean Combined together makes Toyota Production System. For more clarity I am discussing each theory individually first is JIT is a continuous process and it forces problem by reduced inventory. With this theory only material are called when they are needed according to the demand. The JIT is also broken down in to five segments which are JIT Partnerships which exist when a supplier and a purchaser work together with open communication and a target of removing waste and lowering down the cost. The second is JIT layouts which is designed to reduce the movements. JIT materials layout place material directly where they are needed. The third is JIT inventory which works to overcome any hurdle if arises in the way. The fourth is JIT scheduling where effective schedules are communicated both within the organization and to outside suppliers. By being able to utilize these methods Nissan would able to overhaul their process and work to create a JIT environment to utilize all methods and start saving tremendous amount of overhead and expenditures. Like other theories there are some advantages and disadvantages of JIT. Advantages include efficient replenishment systems, more free space, less manpower required to maintain the inventory levels. The disadvantages are Vulnerable to any demand fluctuation caused by reason i.e. natural disaster, dependency on their supplier is high because of the timely

The findings will demonstrate that Di Bella Coffee is one of Australia´s leading specialty coffee chains and is starting to expand into the international market successfully. The combination of a high quality product, the focus on customer service and new innovation together with the strong brand image have led to Di Bella Coffe´s success. In order to stay competitive and profitable in the coffee market and to meet consumer demand, Di Bella Coffee will need to evaluate the changing needs of the coffee