Barilla Spa Case Study

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Recommendations to solve implementation problems

- Technological upgrade: Every industry should undergo technology upgrades to keep up with the market. JITD will help Barilla reduce miscommunications, improve tracking of shipments, and help in creating better forecasts of demand. We know that Coca-Cola successfully implemented JITD. It also helped the company to understand the latest trends in key areas.

- Display Benefits: Maggiali would have to try and convince his boss and the CEO by showing them the benefits of this model. They should understand that the situation caused by demand fluctuations is not only an operational issue but also a company-wide and distribution-wide issue.

- Long-term relation: The top management should understand that this would help in establishing a better long-term relation with the distributors and suppliers in the future. He should start a few supplier benefit programs and provide concessions accordingly to retain their suppliers.

- Implementation (Small-scale): Since the implementation requires significant amount of changes it is obvious to expect some resistance. Maggiali should be able to demonstrate how things will work if at all the model is embedded into the company processes. He could achieve it by implementing this in a small-scale unit.

- Create Awareness: Maggiali should create awareness by organizing academic-level workshops for the other departments like sales, marketing, finance and manufacturing. With this he will understand the specific reasons for the resistance and can solve it. He can also gain more support from his fellow employees.

- Win-win situation: Maggiali should create a win-win situation by addressing the concerns of all the numerous parties. Keeping the sales and manufacturing depart in mind; he should adopt new reward structures. The sales-men jobs could be re-structured to increase commitment and satisfaction levels by providing rewards for less average SKU in CDCs and also cut bonus for fluctuations.

- Gain distributors trust: The distributors should be told about their advantages and they would not loose the authority. Also about how they could save money. Maggiali should be able to establish trust among the distributors that their independence is not in jeopardy and come to an agreement with the distributors:

- Fixed pricing through out the year

- Appropriate order limits should be set

- Encourage periodical orders to maintain relation

Personal Takeaways

After understanding what Barilla is going through because of no transparency in the distribution system I would gladly accept the program. The model will definitely reduce the bullwhip effect and also will reduce late deliveries. There is no need to monitor the inventory levels too much as they can be predicted. It will also save a lot of space and cut costs for Barilla. But, if I was the customer, I probably would be very skeptical of Barilla’s intentions. I would be more inclined towards the pessimistic aspect of the implementation rather than looking at the benefits. I would have innumerable number of questions regarding the information I disclose. This would keep me in a insecure position and would eventually degrade my relations with the company.

If JITD does not workout as expected, then I feel Barilla could try implementing JIT (Lean production) approach at the manufacturing outlets since they have complete control over it. Then they would not need the customer’s inventory records anymore in this scenario as JIT production is based on the demand at a particular time. Supply decisions are entirely dependent on the number of orders received. Required goods are manufactured according to the orders made by the customer. No additional information is sought from the customers. They could also reduce the range of products by eliminating the least customers preferred products. This will reduce the need of having too many different product-specific inventories and simultaneously reduce costs.

References

- Barilla SpA (Case A) Harvard Business School

- Supply Chain Management, A Logistics Perspective, by Coyle, Langley, Novcak, Gibson