Barilla SpA (A)

BeerGame
Single SKU Single player at each tier No promotions, volume discounts No individual incentive system No economies of scale in mfg or transportation No uncertainty except demand (orders)

Only two problematic factors: No visibility of POS (No communication except with immediate customer) Misperception and mistrust

Barilla SpA
Diagnose underlying causes of problems? Benefits and drawbacks of JITD? What conflicts does JITD create? As one of Barillas customers, what will your response to JITD be? Can JITD be feasible? Effective?

Underlying causes of problems

Poor communication & transparency; distributor decides orders based on its own opaque rule Transportation discounts Volume discounts Promotional activity No min or max limits to order quantity Product/SKU proliferation Long order fulfillment lead time (relative to distributor stocks) Poor service levels induce abnormal behaviour of retailers Sales compensation system Channel structure & policies distort consumption pattern!

Bullwhip effect!

Barilla plant

Barilla DC

Distributor

Retailer

Consumer

Max order/ Min order > 100

Impact of this order pattern on the SC

Hi changeover cost of mfg Ineff. Production or excess FG inventory (protect production from mkt flucuations!) CDC utilization is low Extra trucking capacity or short-notice contracts Excess storage space and inventory at distributors Do promotions really work in the long run?

Will JITD work? How?

What needs to change?

Information and its flow Structure Procedures (rules) Who decides the rules?

What are each stakeholders fears? How to address those?