Business Analysis
Introduction: -
Barilla has encountered many areas of their manufacturing and
distribution processes that, for many reasons, could be vastly
improved. To try to improve these areas, top logistics management
decided to try to implement a JITD (just in time distribution) system,
similar to VMI (vendor managed inventory). The management felt that
they could cut back on problems such as wild demand swings and stock
outs by using this method. Their distributors also felt a great deal
of pressure to increase their inventory to prevent these stock outs
while also ADDING items that they did not already carry, which would
lead to even more inventory. Many employees in the logistics
department thought the distributors should carry more inventory to
deal with the stock outs but other knew the current inventory was
already too much. This discrepancy in the department was also a cause
of the inefficient supply chain.
Diagnose the underlying causes of the difficulties that the JITD was
created to solve. What are the benefits and drawbacks of the program?
The growing burden that was caused by wide demand fluctuations on
Barilla’s manufacturing and distribution system was the genesis for
the proposed “Just-in-time-distribution”, following on the lines of
just in time manufacturing (made famous by Toyota Production System.).
Brando Vitali, the erstwhile director of logistics, proposed this
system and his follower – Giorgio Maggiali, has made attempts at
implementing this system across the supermarket (chain and
independent) part of the distribution chain.
While introducing the concept, Vitali proposed a deviation f...
... middle of paper ...
...Thus, we propose that a pilot
implementation at the DO level, using an independent supermarket, be
carried out and the results tabulated.
Then after it had been fully implemented and some savings had been
achieved, we would use that distributor as an example to show the GD’s
how exactly they would be saving money and how it would work. We
believe that once they see REAL results and not just proposed savings,
they will jump right on the bandwagon. Also, this would help with the
sales representatives. Instead of diminishing their responsibilities,
you could have them sell JITD. They would be going from distributor
to distributor convincing them to implement the new system instead of
trying to convince them to buy pasta. This would make them feel like
they were still needed and lessen their resistance to the idea.
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Bed Bath & Beyond (BBBY) is a publicly traded company that trades on the NASDAQ, (Bed Bath...Common, 2016), and an “interesting proposition for investors these days because its stock price is right around half of its March 2014 closing peak of $80.48 per share - but the company has been engaging in stock buybacks and has started to pay a quarterly dividend” (Lara, 2016). A small annual dividend for this slow growth company (BBBY, 2016) of a mere $.50 with a current yield of 1.12%, plus a special dividend of $0.125 (Bed Bath...Common, 2016) yet, well below the
By case study evaluation I observed the main problem that is face to the Barilla “Manage the distributer unexpected demand” this problem covers different areas like as delay delivery of distributor order because in order fulfillment lot of complication involve due to which it takes eight days after the order was placed and ended fourteen days after the order was placed, effect the promotion of company product in the market.
In the retail stores, managers are complaining of frequent stock outs even though the DC is full of merchandise, which is not moving enough through the supplier, DC, and retail stores. The inventory issue also ties in with transportation problems where accurate lead and delivery times are non-existent. The inventory turnover is not at its full potential because if the DC has merchandise yet the stores are stocked out, the inventory is frozen and will become obsolete.
The JITD system has the potential to substantial reduce costs if it is implemented correctly. In order to do so Barilla should begin implementing JITD within its own Depots and expand with pilot projects with the Distributors. The aforementioned analysis discussed a variety of methods bywhich to make such implementation more viable than it was in the past. However, such a list is in no way conclusive. Ideas such as reducing the number of SKUs and rearranging distribution channels should also be explored in the long term as they can also result in substantial cost savings.
Business Analysis and Recommendations The world has moved at a considerable pace in the last few decades.
Ford Motor Company is an American multinational and second-largest U.S base automaker with headquarters in Dearborn, Michigan, manufacturing and distributing their products worldwide. The Ford Motor Company was founded by Henry Ford on June 16, 1903. Henry Ford succeeded in his mission to produce an affordable, efficient and reliable automobile for the masses when the company introduced its highly successful launch of the Model T. The success of the Model T and its high demand lead Ford Motor Company to develop innovative production methods including that standardized parts and, of course, the world’s first moving assembly line for cars. Today the company is a publicly traded company with the New York Stock Exchange and operates over sixty plants worldwide with over 171,000 employees. The company’s automotive products include a full family of
The just-in-time (JIT) inventory system was developed in Japan after World War II, in an effort to control costs during fiscally challenging economic times (Waguespack and Cantor, 1996). The challenge that faced many Japanese companies in the post-War era was to find a way to meet the needs of customers and businesses while utilizing as few resources and as little capital as possible. The Japanese developed these set of techniques in order to control production, limit unnecessary products and reinvest the valuable capital left from the savings back into the business structure (Waguespack and Cantor, 1996). Much of the success of many Japanese corporations over the past four or five decades has been was linked to the principles of JIT (Chhikara and Weiss, 1995).
Leonard Prescott, vice president and general manager of Weaver-Yamazaki Pharmaceutical of Japan, believed that John Higgins, his executive assistant, was losing effectiveness in representing the U.S. parent company because of an extraordinary identification with the Japanese culture.
In the last few decades, America’s automotive industry has been losing revenue, decline of market share, and employment reduction but international business in the auto industry has been the opposite. For instance, General Motors (GM) have been doing poor in the automotive business while Honda, a Japanese manufacture have been increasing their sales, market shares and employment.
According to Srinidhi and Tayi (2004), companies that are flexible enough and are able to change from a JIT system to a traditional inventory system will have a competitive advantage over other firms who do not switch. In such uncontrollable environments, the major benefit of JIT becomes a handicap with the increase in delivery times and the added data handling and coordination required in such times. This leads to a decrease in quick response time, which ultimately leads to increase in costs to the firm.
Inventory management is a method through, which a business handles tangible resources and materials to ensure availability of resources for use. It is a collection of interdisciplinary processes including a full circle from the demand forecasting, supply chain management, inventory control and reverse logistics. Inventory management is the optimization of inventories of manufactured goods, work in progress, and raw materials. According to Doucette (2001) inventory management can be challenging at times; however, the need for effective inventory management is largely seeing more as a necessity than a mere trend when customer satisfaction and service have become a prime reason for a business to stand apart from its competition. For example, Wal-Mart’s inventory management is one of the biggest contributors to the success of the company;
A detailed analysis should be made on performance of 13 distribution centers – capacity, inventory turnover, costs etc. It appears most of the centers should be closed as they serve as excessive link in the supply chain, accumulating high inventory levels.
Sustainable Businesses have become imperative to the corporate industry in part due to global environment awareness. Although sustainability is not a new approach to doing business, sustainable businesses see the value in contributing toward a sustainable society. Today businesses are creating a sustainable strategy aimed not only towards the environment, but have included how the business will operate in the social, cultural and economic environment. Some important practices of sustainable businesses are to be more efficient, attract and retain employees, improve customer and community relations, grow supplier commitments and gain investors’ confidence by doing what is right. Sustainability has already been embraced by consumers, employee, shareholders and stakeholders who are demanding value in products and services but have also become aware of the growing need to protect the environments’ future. One of the most quoted definitions of sustainability comes from the United Nations’ Brundtland Commission in 1987: “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”
All choices made by Seven-Eleven are structured to lower its transportation and receiving costs. For example, its area-dominance strategy of opening at least 50 to 60 stores in an area helps with marketing but also lowers the cost of replenishment. All manufacturing facilities are centralized to get the maximum benefit of capacity aggregation and also lower the inbound transportation cost from the manufacturer to the distribution center (DC). Seven-Eleven also requires all suppliers to deliver to the DC where products are sorted by temperature. This reduces the outbound transportation cost because of aggregation of deliveries across multiple suppliers. It also lowers the receiving cost. The information infrastructure is set up to allow store managers to place orders based on analysis of consumption data. The information infrastructure also facilitates the sorting of an order at the DC and receiving of the order at the store. The key point to emphasize here is that most decisions by Seven-Eleven are structured to aggregate transportation and receiving to make both cheaper.