Breadilla
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What are the problems and difficulties facing the supply chain? What is their impact? Diagnose their underlying causes.
Some of the problems that are driving Breadilla to examine supply chain alternatives are:
Excess Inventory
Distributor and Retailer out of stocks
Uneven Production scheduling
The impact of these is:
Reduced profitability
Cost of capital used to support excess inventory
Poor relations between parties in the supply chain
Potential decrease in customer or end loser loyalty
The underlying causes include:
Lack of information sharing and centralized forecasting
Promotional Activities
Volume Discounts
Incentives for sales representatives may cause them to push customers to order more product than they need in order to help the sales rep hit personal sales targets
Seasonal Demand (to a lesser degree)
Commodity nature of product causes spikes in demand when price is lowered
Manufacturing Process (not very flexible)
How does the JITD program hope to correct these problems? What are the benefits and drawbacks of the program?
The JITD program hopes to correct the problems by minimizing the spikes in retailer and distributor orders that are based off either real or perceived changes in demand. In theory, this will result in a lower level of inventory needed throughout the system and improved customer service because out of stocks will be reduced and order time tables should be met automatically.
Benefits:
Reduced Inventory Levels (because safety stock is no longer necessary)
Reduced volatility in demand
Better production planning for Breadilla
Could produce more loyalty to Breadilla by retailer and distributor if program is successfully implemented
Drawbacks:
Sales people might not be as motivated
Competition might gain an advantage if Breadilla only offers a JITD system and competitors offer other more standard options and the benefits to its customers (lower inventory, better fill rates) dont offset the increased costs