Barilla

•Presented by Group 11: Section C

SPA
•Anish Majumder
•Bipul
•Bodhisatya Ghosh
•Sweta Rani Pradhan
•Harikiran
•Rose Apurna Tigga
Q1: Diagnose the underlying cause of the difficulties that the JITD program was
created to solve. What are the benefits and drawbacks of this program?

Ans:-
The basic reason for introducing the JITD (Just in Time distribution) approach was to
improve variation in demands, cooperation, communication and the existing relationships
between the Barilla Spa and the distributors. Furthermore, they also wanted to reduce the
workload on the Barilla spa logistics system and overall manufacturing. Implementing the just
in time distribution approach will also help them in increasing their competitive position and
play an optimistic role in development of the company itself and their distributors. The
fluctuation that needs to be corrected through the implementation of just in time
distribution approach includes the smoothness of demand from the Barilla Spa’s distributors.
Such unnecessary demands or variations are known as Bullwhip effect, which makes quite
difficult for the Barilla Spa to predict and meet the genuine demands from end consumer's.

By implementing the JIT distribution approach the company will know which particular pasta
is more famous in particular season or which product is likely to show a low demand in near
future, etc., Moreover, the range of dry fruits in 800 so it is nearly impossible to predict
demand without a proper forecasting system. By using the just in time distribution approach,
the lead time issue can be removed because currently Barilla Spa is taking around 8-14 days
in fulfilling the order, which is relatively high for such category of products.
 Benefits and Drawbacks of JITD
Benefits Drawbacks
Manufacturer • Difficulty in alignment of all the
• Reduced Manufacturing cost participants( Distributors and the
• Increased Supply chain visibility internal sales and marketing team)
• High bargaining power over • Lack of technology at that point of
Distributors time to implement the JITD system
• Reduced inventory cycle • Lesser autonomy when we move
• A planned production planning is downstream
possible
Distributors
• Reduced inventory carrying cost
• Improved fill rates to Retail store
(Quick response)
• High service level
2. What conflicts or barriers internal to Barilla does the JITD program create? What causes
these conflicts? As Giorgio Maggiali, how would you deal with these?
Conflicts or Internal Barriers : Opposition from Sales & Marketing Team
Causes
Please find the underlying perceptions of the sales & marketing team
 There were agitation of missing out on Incentives
 Panic on reduce roles and risk of stock outs
 Fear of giving up territory to competitors
 Increase in inventory in Barilla and distributors doubt
 Losing the flexibility to adjust to the market demand
 The company would not able to run trade promotions
Dealing with issue
 Changing the incentive structure
The incentive received by the sales rep should be based on the actual sales done by the
distributors rather than the order being given by them
 Free space available by introducing more SKU’s in the shelf space
 Eliminating the stock outs problem and giving better inventory management substitutes the
discounts that they receive
 The total pasta consumption is almost stable throughout the year and there is only 17 %
sales through DO. Temporary shocks could be managed through Barilla run depots
 Sales reps will do auditing for the end retailers
3. As one of Barilla's customers, what would
your response to JITD be? Why?
• If Barilla rewrites the contracts in such a way
that the discounts provided to the
distributors is realized in the form of some
other incentives and if there are some strict
penalties on breach of confidential
information to Barilla, then I would accept
the JITD program.
• This also gives an added benefit of reduced
inventories and give us option to stock more
SKU’s of Barilla.
• Even though there might be a reduction in
inventory levels, unless the above two
conditions are met, we will not accept the
JITD program.
4. In the environment in which Barilla operated in 1990, do you believe JITD (or a similar kind of
program) would be feasible? effective? If so, which customers would you target next? How
would you convince them that JITD program was worth trying? If not, what alternatives would
you suggest to combat some of the difficulties that Barilla's operating system faces?
We believe that the JITD program could be implemented up to the level of the distributor in the
Supply Chain hierarchy. In 1990’s the technology backbone was still in the developing phase &
the retailers were not using barcode-based systems. The IT infrastructure required for successful
implementation was not ready. However, it can be noticed that the JITD program could be very
useful if Barilla were able to help its distributors realize the benefits gained through lower
inventory & improved service levels.
Next Target Segment
• Large Distributors (“Grande Distribuzione”)
How to convince Large Distributors
• Easy to replicate the DO - system
• Demonstrate them the success stories from DO - system
• Incentives may be offered, if required, based on the Total Sales made by the GDs
Suggested Alternatives
• 3rd Party Audits can help reduce Trust Issues prevailing amongst different links of the chain.