Question

The purpose of this assignment is to identify and apply OSCM concepts/tools to solve problems in managing operations and supply chains. Students are expected to find an interesting OSCM problem from the real business world, think about how you can apply the OSCM concepts/tools that you learn in this course to solve the problem, and write up a report based on your analysis. More specifically, each student should: • Find a problem in managing operations and supply chains from the real business world (from work or from any business articles/cases) • Identify specific OSCM concepts/tools that can be applied to the problem • Apply an appropriate OSCM concept/tool or a set of appropriate OSCM concepts/tools to propose a solution to the problem • Analyze the expected results that may be obtained when the solution is implemented. The report should be 8-10 pages in length including the cover and appendices, with 1” margins on all sides, double-spacing, and 12 point font. The cover of the report should include title, class code and name, section number, student name, and date of completion.

1. Abstract (150 words maximum) - Summarize the entire report, including problem statement, OSCM concepts/tools that have been applied to the problem, and expected results of the proposed solution.

2. Background information - Clearly state whether the problem is from work or from business articles/cases. If it is from business articles/cases, provide its source (title, author, name of the journal, date published). Briefly introduce the company background (e.g., name, products, business size, location, internal/external interesting facts, and etc.).

3. Problem Description - Describe the problem clearly and specifically. - You should focus on a single problem, although you can introduce several other issues for informational purposes. - This section must include a problem statement starting with, e.g., “This paper considers the problem of determining …”, “The main problem of the firm is how to ...”, and etc., either in the beginning or at the end of the section.

4. OSCM concepts/tools that can be applied - Describe what specific OSCM concepts/tools can be applied to the problem and why they are appropriate to the problem. This section should make it clear that you understand the concepts/tools you are about to use.

5. Application of OSCM concepts/tools - Choose an OSCM concept/tool or a set of OSCM concepts/tools among the ones provided in section 4 and apply it to propose a solution to the problem. - This section should include your work/calculations in detail to show how you have applied the OSCM concept/tool(s) to develop the solution.

6. Analysis of expected results - Analyze the expected results of the proposed solution. - The expected results may include cost/revenue impact and/or improvement of supply chain performance. You must be specific to receive full credit. - Discuss the pros and cons of the suggested solution.

7. Conclusion The meaning of an OSCM problem will become clearer as you study this course (see the textbook contents). An OSCM problem may involve process design and improvement, supply chain management, capacity planning, inventory management, quality management, project management, production planning and control, forecasting, facility location and layout, supplier management, etc. You are encouraged to find a problem from work if you have relevant work experience, so that you may apply the concepts/tools learned from this course at work. However, if you want to find a problem from business articles/cases, you can find one from any journals/newspapers such as The Wall Street Journal, Business Week, Forbes, Harvard Business Review, and so on. Or you can surf the Internet to find an interesting

Answer 1

Company- Barilla SpA

THE PROBLEM

The case of Barilla SpA involves challenges linked to the changing order patterns of distributors. The company experiences difficulty in predicting demand for its products. Also, the fluctuations in demand lead to problems in manufacturing and inventory management. Thus, Barilla SpA managers must determine the factors and drivers of the problematic distributors’ order pattern and fluctuations. It is sought to implement a continuous replenishment program, under which the responsibility for determining shipment quantities to the distributors would shift from the distributors to Barilla. There is also support and resistance within Barilla's different functional areas and within the distributors Barilla approached with the proposal.

CAUSE OF DISTRIBUTORS’ ORDER PATTERN IN BARILLA SPA’S NETWORK

The distributors’ order pattern is caused by the lag in distributors’ response in placing their orders. There will always be delays in placing orders with Barilla SpA. However, distributors have different levels of delay. Some of the distributors have longer delays. This condition is problematic because delays lead to greater fluctuations in orders. For example, even a small delay in a Grande Distribuzione (GD or large distributor) leads to significant fluctuations in orders at Barilla SpA because a large distributor carries a big inventory and delivers truckloads of Barilla SpA products to large supermarket chains.

These delays among Barilla SpA distributors are partly due to the lack of full automation of the process. The distributors do not have sophisticated computer systems for this purpose. Thus, the firm is left to handle the outcomes of these inefficiencies of the distributors. In this case, Barilla SpA’s concern is on minimizing these delays. The just-in-time distribution (JITD) methodology is supposed to enable the firm to readily respond to changes in demand.

REASONS FOR VARIABILITY IN DEMAND:

• Transportation discounts
• Volume discounts
• Promotional activities
• No minimum or maximum order quantity specified by the distributor.
• Product proliferation
• Long order lead times
• Lack of forecasting system or sophisticated analytical tools at distributer level.

UNDERLYING DRIVERS OF FLUCTUATIONS FACING BARILLA SPA

An underlying driver of the fluctuations is the change in retailer activity. For example, retailers are facing increased pressure because manufacturers like Barilla SpA continue to push new and more products to them. Retailers are compelled to change space allotment for products for certain periods of time. The adjustments lead to changes in their inventory, which in turn affect the inventory of Barilla SpA distributors.

Another underlying driver of these fluctuations is the change in consumer demand for Barilla SpA products. Consumers have changed their buying behaviors. This is especially so in the advent of increased competition, aggressive marketing, and other factors. Still, these changes in consumer demand are magnified because of inefficiencies among Barilla SpA distributors

JUST IN TIME DELIEVERY(JITD):

• Vendor managed concept of inventory management.
• Treats end customer as input.
• Decision making authority in the hands of Barilla .
• Barilla would monitor the flow of its products through distributer’s warehouse and then decide shipments.
• Distributer will provide data on the shipment and current stock level for each Barilla SKU.

JITD INTERNAL RESISTANCE BY SALES REPRESENTATIVES:

• Sales representatives feared reduction in responsibilities.
• Risk of inability to adjust to the new system in case of stock outs.
• Lack of infrastructure to handle JITD.
• Inability to run trade promos.
• Unsure about cost benefits.

JITD EXTERNAL RESISTANCES:

• Unconvinced distributers
• Distributers unwilling to share ware house data to Barilla.
• Perceived power transfer to Barilla .

METHODS OF COUNTERING RESISTENCES:

• Demonstrating that JITD will benefit the distributer also.
• Conducting pilot experiments at individual stores.
• Obtained great success in pilot implementation.
• Taking various stakeholders in good faith.

RESULTS OBTAINED & CONCLUSION:

Barilla was able to implement successfully its JITD concept after a pilot trial at one of its stores. JITD was then successfully adopted at all of Barilla centres. The distributers also realised slowly the advantages of JITD. It resulted in improved efficiency of supply chain and distribution and ultimately customer satisfaction increased. All these efforts bought Barilla much ahead of its competitors.