Jit and Marketing Strategy
The Concept of Just-in-Time Delivery and Its Implications on the Marketing Strategy of a Company. by Mara Bateman July 26, 2008
1. Diagnose the underlying causes of the difficulties that the JITD program was created to solve. What are the benefits and drawbacks of this program?
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?
3. As one of Barilla's customers, what would your response to JITD be? Why?
The underlying pasta demand pattern in Italy is relatively flat. The pasta demand pattern at the distribution centers (DCs) shows a rather large fluctuation. The extreme fluctuation in Figure 5-3 on page 150 is truly remarkable when one considers the underlying aggregate demand for pasta in Italy.This appears to be because of the channel policies and dynamics:
Cause of demand fluctuation:
Transportation discounts
. Volume discount
. Promotional activity
. No minimum or maximum order quantities. Product proliferation
. Long order lead times
. Poor customer service rates. Poor communication
What is the JITD System?
– Decision-making authority for determining shipments from Barilla to a distributor would transfer from the distributor to Barilla
– Rather than simply filling orders specified by the distributor, Barilla would monitor the flow of its product through the distributor’s warehouse, and then decide what to ship to the distributor and when to ship it.
Key elements of JITD:
Replace the current delivery pattern with one that it better suits the entire channel (i.e., sequential myopic optimization vs joint optimization).
ﰁ JITD program eliminates a “false” economics that drive traditional ordering processes.
Key concept of JITD:
Replace sequential optimization with global optimization. Who will optimize?Eliminate some of the ‘false’ economics that drive traditional ordering processes
Implementation Issues
1. Diagnose the underlying causes of the difficulties that the JITD program was created to solve. What are the benefits and drawbacks of this program?
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?
3. As one of Barilla's customers, what would your response to JITD be? Why?
The underlying pasta demand pattern in Italy is relatively flat. The pasta demand pattern at the distribution centers (DCs) shows a rather large fluctuation. The extreme fluctuation in Figure 5-3 on page 150 is truly remarkable when one considers the underlying aggregate demand for pasta in Italy.This appears to be because of the channel policies and dynamics:
Cause of demand fluctuation:
Transportation discounts
. Volume discount
. Promotional activity
. No minimum or maximum order quantities. Product proliferation
. Long order lead times
. Poor customer service rates. Poor communication
What is the JITD System?
– Decision-making authority for determining shipments from Barilla to a distributor would transfer from the distributor to Barilla
– Rather than simply filling orders specified by the distributor, Barilla would monitor the flow of its product through the distributor’s warehouse, and then decide what to ship to the distributor and when to ship it.
Key elements of JITD:
Replace the current delivery pattern with one that it better suits the entire channel (i.e., sequential myopic optimization vs joint optimization).
ﰁ JITD program eliminates a “false” economics that drive traditional ordering processes.
Key concept of JITD:
Replace sequential optimization with global optimization. Who will optimize?Eliminate some of the ‘false’ economics that drive traditional ordering processes
Implementation Issues