Barilla Case: Difficulties and Benefits of JITD Program
Barilla Case
1a. Diagnose the underlying causes of the difficulties that the JITD program was created to solve. What are the benefits of this program?
There is a large variability in demand. (GD’s and DO’s order once a week, in varying quantities, causing a bullwhip effect). This is strange, as the total market is relatively flat and nearly completely saturated. Because pasta is so common in Italy, people usually stick with their choice of brand, which is why demand should be stable for Barilla’s products. Therefore, the problem must be with distributors and/or retailers, not with actual demand of end-customers.
The benefits of the JITD program are that
Because Barilla would be in charge of the channels between the CDC’s, GD’s and DO’s, communication in the supply chain should go more smoothly. As a result, the variability in demand would decrease, so as to prevent a bullwhip effect.
Due to improved channels, the agents in between the CDC’s, GD’s and Do’s would become obsolete, lowering the price of the final product for customers. This also applies to the brokers for the Signora Maria Shops.
Production variability would flatten, which is a good thing because there is little flexibility in the production of pasta.
Service level of GD’s and DO’s would improve, because they would never be out of stock. But they would also have less stock overall, decreasing inventory costs. This would also apply for Barilla’s CDC’s.
1b. What conflicts or barriers internal to Barilla does the JITD program create? What causes these conflicts? As Giorgio Maggiali, how would you deal with this?
Sales representatives would be afraid to lose their jobs
They fear not being able to adjust shipments quickly in case of changing selling patterns or increased promotions
Increased risk of having to sell ‘no’ to customers.
These conflicts are caused by a reasonable fear of change in their working environment.
As Giorgio Maggiali, we would explain to our sales
1a. Diagnose the underlying causes of the difficulties that the JITD program was created to solve. What are the benefits of this program?
There is a large variability in demand. (GD’s and DO’s order once a week, in varying quantities, causing a bullwhip effect). This is strange, as the total market is relatively flat and nearly completely saturated. Because pasta is so common in Italy, people usually stick with their choice of brand, which is why demand should be stable for Barilla’s products. Therefore, the problem must be with distributors and/or retailers, not with actual demand of end-customers.
The benefits of the JITD program are that
Because Barilla would be in charge of the channels between the CDC’s, GD’s and DO’s, communication in the supply chain should go more smoothly. As a result, the variability in demand would decrease, so as to prevent a bullwhip effect.
Due to improved channels, the agents in between the CDC’s, GD’s and Do’s would become obsolete, lowering the price of the final product for customers. This also applies to the brokers for the Signora Maria Shops.
Production variability would flatten, which is a good thing because there is little flexibility in the production of pasta.
Service level of GD’s and DO’s would improve, because they would never be out of stock. But they would also have less stock overall, decreasing inventory costs. This would also apply for Barilla’s CDC’s.
1b. What conflicts or barriers internal to Barilla does the JITD program create? What causes these conflicts? As Giorgio Maggiali, how would you deal with this?
Sales representatives would be afraid to lose their jobs
They fear not being able to adjust shipments quickly in case of changing selling patterns or increased promotions
Increased risk of having to sell ‘no’ to customers.
These conflicts are caused by a reasonable fear of change in their working environment.
As Giorgio Maggiali, we would explain to our sales