Barilla Case Study

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CHALLENGE

OPTION

PRO

CON

Stock-outs

Control customers inventory replenishment

- CDCs & DCs inventory levels reduction;

- Reduction of number of SKUs

- Responsibility for stock-outs and / or backorders

High demand fluctuation

Introducing efficient forecasting system

- Order lead time reduction;

- Backorders reduction;

- Increasing flexibility of the distribution system

- Customers education;

- Developing new incentive bonus system for sales representatives

Communication gap

Customer-oriented supply chain management system

- Reestablishing customer trust;

- Low demand fluctuation

- Sharing sensitive information with customers;

- Changing sales representatives work pattern

Sales representatives JITD support

Develop new system of incentive bonuses

- Improving of information flow;

- Promotion of new company strategy sales representatives

- Sales representatives resistance;

- Lower sales within transition period;

- Potential reduction of number of sales representatives

Convincing customers to participate in JITD

Running a pilot model

- Showing real results and profit margins

- Customer fear of loss of autonomy;

- Sharing sensitive information with 3rd parties

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Recommendations

The following is a summary of my recommendations:

1. Consider JITD not a logistics tool but the company strategy (see Exhibit 2 for Balanced Scorecard);

2. Implement JITD pilot program for one of Barilla-run depots;

3. Implement a one-year JITD pilot program with one of the distributors carrying limited amount of Barilla SKUs in limited quantities, e.g. DO Cortese. They can be offered long-term transportation discount and partial reimbursement for JITD software;

4. Develop new incentive pay system for sales representatives;

5. Develop new discount and promotion system;

6. Set up minimum and maximum order quantities for GO s and GDs.

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Implementation

RECOMMEN-DATION

ACTIVITY

IN CHARGE

Logistics (L)

Sales (S)

Human Resources (HR)

Administrative (A)

Finance (F)

SUPPORT

Logistics (L)

Sales (S)

Human Resources (HR)

Administrative (A)

Finance (F)

TIMELINES

Short term (ST)

Medium term (MT)

Long term (LT)

Introduce JITD as the company strategy

Review company strategies and customer relationship policies

L

A, S

LT

Implement JITD for one Barilla-run depot

Choose depot

L

S

ST

Buy and set-up JITD software and hardware

A

L

ST

Train depot personnel and sales representatives

HR

L

ST

Evaluate JITD performance

L

S

MT, LT

Reveal JITD performance to customers

S

L

LT

Implement JITD for DO Cortese

Introduce JITD program to Cortese

L

S

ST

Negotiate terms of Cortese participation in JITD pilot program

S

L