.

Barilla experiences wild fluctuations in pasta demand while variability in end-customer

demand is quite small. This amplification in demand variability in the supply chain is
known as the bullwhip effect, and it strains Barillas manufacturing and logistics
operations. Several factors contribute to this effect:
1. Transportation discounts, which induce distributors to order larger quantities less
frequently
2. Trade promotions and volume discounts that create demand fluctuations.
3. Delivery lead times of an average of 10 days from Barilla to the distributors.
4. Product proliferation, which makes forecasting more difficult.
5. Poor communication between parties in the supply chain.
6. Sequential decision-making process in the supply chain, i.e., no collaboration.
The JITD program transfers decision-making authority for determining Barilla-distributor
shipments from the distributor to Barilla. Rather than simply filling orders specified by
the distributor, Barilla would monitor the flow of its product through the distributors
warehouse, and then decide what to ship to the distributor and when to ship it.
This system alleviates many of the problems listed above, and enables Barilla to make
manufacturing and logistics decisions that benefit the entire system.

b. The most significant internal barrier to JITD is raised by the sales reps, who feel that
JITD would diminish their role in managing inventory and setting up promotions,
potentially threatening their job security. Giorgio Maggiali needs to explain and
demonstrate to the sales force that the proposed program would in fact increase customer
service level by reducing stock-outs, and potentially lead to cost savings. Ultimately,
JITD would help the sales reps to manage the orders more efficiently by increasing
visibility of the demand process. JITD is not a substitute for the sales force; it is a tool
that is made available to them for better customer service. Also, Maggiali needs to
explain that JITD is a company-wide effort, essential for Barilla.s long-term success.

demand by determining agreed-upon supply limits, thereby reducing the bullwhip effect.