Barilla

Answer 1:
There were four key issues that JITD was designed to solve 1. Distribution System The main problem in the distribution was the information flow, which takes 10 days lead-time because of the dependency on the communication of two separate firms or two units of same firm. 2. Demand Fluctuations Demand fluctuations occurred due to lack of proper demand forecasting, no order batching, sales discount, promotional discounts, and transportation discounts that caused more variability in demand and we have already discussed that the lead-time was 10 days that ultimately resulted bullwhip effect and the whole supply chain of Barilla started experiencing low profits. 3. Operational Inefficiencies After the Barilla suffered variability in demand, they suggested their distributors to keep high inventory levels. The Barilla carried 1-month inventory in both of their CDCs and to maintain this inventory level they required more pasta production and suffering holding cost of the inventory, which was almost 12% of the product cost. Any reduction in the inventory will save a huge amount of the company. On the other hand, Barilla suffered 7% stock outs in their stores, which resulted in backorders, less sales and lost customers. The stock outs occurred because of no proper inventory management at distributor and store level. 4. Organizational Deficiencies Barillas sales strategy was based on highly promotional activities, which give discounts to its customers from 1.4% to 10%, and its sales representatives were more rewarded as they sell more products to the customers. Currently the promotions are causing a big fluctuation in demand that is making supply chain reliability and an optimal production process virtually impossible.Due to these promotional activities Barilla supply chain was suffering from bullwhip effect.
Implementation of JITD
After the implementation of JITD Barilla was able to forecast demand accurately for promotional and seasonal items with better technology and would be able to plan its production and distribution efficiently, this will result reduction in inventory and stock outs cases because of proper forecasting system. The better production and distribution program enabled Barilla to shorten the lead-time from 10 days to just 3 days.
As JITD was new to the distributors they thought they are losing their autonomy and they showed least trust in JITD.
Answer 2:
Internal conflicts or barriers in creating JITD program are Increase Distributors dependence on Barilla (shift in power towards Barilla) thus Distributors unwilling to share warehouse data Distributor to push competitor products with increased shelf space SKU complexity leading to difficulty in proper forecasting, Inability to run Trade promotions Sales and Marketing feared loss of responsibilities.
The causes of these conflicts are transportation discounts, volume discount, promotional activities, no minimum or maximum order quantities, product proliferation, long order lead times and lack of forecasting systems or sophisticated analytical tools at Distributors end. Barilla will need to convince their distributors to participate in the JITD program. This will be the most challenging part to be able to implement JITD since there is not a lot of trust between the distributors and Barilla and trust is critical in implementing JITD. As Giorgio Maggiali, we would deal with these issues in such a way like sell the idea as a collaborative method of working (both the parties are equal partners), arranging pilot runs at one or two distributor sites, clearly specify the cost-benefit analysis for each distributor, explain the importance of marketing efforts in the new JITD model, get top management support in evaluating and implementation of JITD.
Answer 3:
Barillas customers were so resistant to the JITD idea because they were unconvinced and they were not willing to share warehouse data, they might perceive that power would be transfer to Barilla. They had lack of faith in Barillas inventory management system. Maggiali might be more successful in persuading customer to at least try the JITD program by first making their customers addicted to their JITD idea and then try to built the type of relationship he were looking for, he should try to give more benefits to their distributors if he wanted a desired relationship. he should also try to convince other distributors as well.
Answer 4:
Yes, it would be feasible to implement JITD because the Pasta Market of Italy is price driven and JITD enables Barilla to save its production, and distribution cost and by implementing JITD they would be able to solve their major key problems like high demand fluctuations, high level of inventory and stock outs. Savings from these issues will enable Barilla to be the market leader in the cost driven market and as well as maintain healthy relationships with its customers for longer time. The Barilla would convince its customers to implement JITD by showing them cost benefit analysis of the JITD and ensure them that they are paying for the increased services. However, Barilla would need high investment to implement the JITD to its customers and it requires intensive trainings to the workforce that requires time but once it is done the whole distribution of the Barilla would be beneficial to implement JITD.

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