MK-II Assignment Barilla Spa(A) Name: Rachit Devendra Pradhan Roll no: 2013PGPM039 Q1.

Define Objectives of Barilla /Distribution/Sales. Ans. Objectives of Barilla 1) Implement JITD (Just in time distribution) taking into account the demand fluctuations. 2) Demonstrate distributors the benefits of JITD as a company -wide effort rather than a logistics program by closely involving top management. 3) Gaining the credibility of distributors and sales department by convincing them with win-win concept by running JITD on experimental basis at one of Barillas 18 depots. 4) Information Centralization for effective inventory management system. Objectives of Sales and distribution 1) Positioning the brand as the highest quality, most sophisticated pasta product available. 2) Focusing on developing and strengthening relationships with Italian families using messages. 3) Achieving sales target in allotted canvas period keeping the volume discounts and trade promotions into consideration. 4) Keeping the inventory level in check along with careful addition of items they currently did not carry to their product offerings and minimize the stock out rate. Q2. Propose a solution that will address objectives and be acceptable to all parties. Ans: In my opinion Barillas management should rate the KPIs as follows (Most important to least) Cost> Speed> Dependability> Flexibility> Quality In terms of cost, defined as the most important KPI in the operation strategy, the management team should listen to the concerns of Mr.Maggiali and ask for more details on numeric and financial results on the curse of inventory. All the concerns of Mr.Maggiali , clearly show that focusing on inventory and distribution chain management can result in major cost savings.

Short term Solution: 1) Involve top management level and look for their buy-in that high inventory and demand fluctuation is not an operational issue but companywide (First level) and even distribution Chain wide (Third level) problem 2) Focus on first level (company internal,inter-department)issues in distribution. Involve sales team in inventory /distribution management .some changes in bonus calculation of sales team can help Reward for less average SKUs at CDC and warehouses. Cut bonuses for erratic fluctuations. 3) Currently a very accurate and up-to-date market analysis flow from stores by barilla sales representative into CDC exists. This information flow is not integrated into inventory and production management. However the information bypasses DOs and GDs and does not provide any indication on GD and DO inventory or orders; it should be integrated into order forecasting for barillas operations management and can be used as a powerful indicator of actual demand. Midterm Solution 1) Look at the ways to speed up delivery. If the lead time can be shortened and the orders fulfilled quicker, DOs and GDs will start keeping less inventory and probably start ordering most often. 2) Change Sales Practice which cause demand fluctuations .Move away from large, batch orders at discounted prices and introduce periodic orders at agreed prices Discounted periodic trade credits Discontinue canvas periods Discontinues volume discounts Arrange long term distributor agreement covering Fixed pricing year long (Every day low pricing practice like Walmart) Order limits (min max order levels) Encourage periodical orders (i.e distributor agrees to order twice a week for coming 12 months, then the fixed price on the contract can be arranged at lower rate) 3) Run JITD experiment with one of the 18 barilla owned deposits. Long term Solution The ultimate goal of barilla to realize JITD should be leaning towards vendor managed inventory for all channels, as much as possible. Create a 3rd level (Distribution chain information) information network to better focus and analyze the demand. To gain trust and convince distributors that their dependence is not in jeopardy, barilla could propose a joint venture with barilla and the distributors as shareholders that control the sales 2

data from the distributors. By becoming joint owner of this data both parties can benefit without the distributors losing some of their independence. Build trust with DOs and GDs and explore how barilla can help its distributors to meet their strategic objectives. Develop and roll out Demand forecasting system where DOs and GDs can order based on the outcomes of the forecasts. -----------------------------------------------------------------------------------------------------------------------------