BARILLA SPA

[Group 7]

Q1. Diagnose the underlying causes of difficulties that the JITD program was
designed to solve. What are the benefits and drawbacks of this program?
Answer:
Barilla faced enormous fluctuations in demand, despite pasta being a nonseasonal product with low variation in demand at the customer end. This is a
characteristic problem in supply chains known as Bull-Whip Effect. This has
arisen due to:
i.
ii.
iii.
iv.

Large number of SKUs close to 800 leading to product proliferation

Trade, Volume & Transportation discounts provided by Barilla.
Lack of communication & coordination in the supply chain, with each
actor making sequential & independent decisions.
Large lead time of 10 days for Barilla to fulfil the distributors orders.

The Benefits of the program are:

i.
ii.
iii.
iv.
v.

Reduced lead time between Barilla & Distributors and Distributors and
retailers.
Decreased overall supply chain costs in terms of logistics & inventory.
Better planning of manufacturing resulting in decreased manufacturing
costs.
Reduced inventory levels at Distributor & retailer level while increasing
service levels.
Reduction in the Bull-whip effect.

Drawbacks of the program are:

i.
ii.
iii.

iv.
v.

Sharing of proprietary information of Distributors with Barilla.

Loss of control over ordering by the Distributors.
Distributors may push Barillas competitors who still follow the
traditional system, as their products would be overstocked at
distributors.
Sophisticated demand forecasting systems required.
Supply chain more sensitive to unpredictable situations like labour
strike etc.

Q2. What conflicts or barriers internal to Barilla does the JITD program create?
What causes these conflicts and how can they be handled?
Answer:
Problems:
i.

ii.

The single biggest threat faced by the JITD program is from the sales
representative, who feel that with the new program their responsibility
and power of managing inventory & trade promotions would diminish.
This may in turn threaten their jobs itself.
Some other concerns raised are sales levels falling and losing the
flexibility to satisfy variable demand & offering trade promotions.

Solutions:

i.

To handle the internal resistance, Maggiali needs to communicate clearly

the benefits of JITD and it is a means of facilitating the sales force in
fulfilling their targets instead of a system to replace them.
The best way to demonstrate this is to adopt the JITD program on a pilot
basis with some of the willing sales representatives and distributors to
highlight the efficacy of the new system. The maxim of Seeing is
believing would work.
An external reputed Supply Chain consultant can also be hired to
implement the process such as to ensure fairness of the process. JITD
would increase the visibility of the demand process & would increase
service levels by reducing stock-outs leading to cost savings.

ii.

iii.

Q3. As one of Barilla's customers, what would be your response? Why?

Answer:
As a customer, I would not be willing to take part in the JITD, because I would be
losing control over my inventory levels and my ordering capacity. I would ask
Barilla to clearly demonstrate that how I am benefitting from the JITD before I try
the new system.

Q4. In the environment detailed in the case, is JITD feasible? If yes, which
customers would you target next? How would you convince them that it is worth
trying?
Answer:
Yes, as in the environment detailed in the case JITD is feasible. For this I, would
target customers on two criteria:
i.
ii.

Whose demand variability is exceedingly high.

With whom I (Barilla) has very good relations.

Based on the above two criteria, I would convince at-least one of my customer to
try JITD and see the benefits for himself.
How I would convince:
i.

ii.

iii.
iv.

I would in consultation with my willing customers would hire a reputed

supply chain consultant who would impartially explain to my customers
the benefits of JITD.
I would establish clear metrics like service levels, fill rate, inventory
levels, profits and cost metrics before-hand to compare the before
implementation and after JITD implementation scenarios.
I would offer to make good any loss my customer suffers because of
JITD implementation.
I would further sign a NDA with my customer where I would not share
any of his sales data with any of his competitors.