GLOBAL LOGISTIC MANAGEMENT

GROUP ASSIGNMENT
BARILLA BARILLA SpA CASE STUDY

By :
1065452 Bulgan Amarsanaa
1065456 Erdenesaikhan Jargalsaikhan
1075443 Rika Juliana Pajrin

DEPARTMENT OF INDUSTRIAL ENGINEERING MANAGEMENT

COLLEGE OF ENGINEERING
YUAN ZE UNIVERSITY
2018

This study source was downloaded by 100000774251170 from CourseHero.com on 09-09-2022 03:45:46 GMT -05:00

https://www.coursehero.com/file/34853541/Barilla-SpA-case-study-1docx/
 Brief Description
Barilla SpA is world’s largest pasta manufacturer from Italy. Barilla distribute their products largely
to its retailers through third-party distributors. In the late 1980s, Barilla encountered extreme
fluctuating demand patterns from its distributors. The problem as the impetus of new improvement
proposed to solve the demand fluctuation by implementing JITD program which is inspired by JIT
program. Under JITD program manufacturer will be the one who responsible to determine shipment
quantities to the distributors based on the information sharing from distributors and manufacturer
internal forecast. However, Barilla distributors show refusal against JITD implementation.

Questions
1. Diagnose the underlying causes of the difficulties that the JITD program was created to
solve. What are the benefits of this program?
a. Problem background
 Extreme demand fluctuations, week to week variation in distributors order patterns
 Pressures to manufacturing in terms of production lead time and perishability of product
 High inventory carrying cost and manufacturing cost because operational inefficiencies
 Inadequate product availability leads to low service level
 Distributors unable to carry large number of SKUs
b. JITD benefits
Expected benefits for manufacturer
 Manufacturer can decide how much to ship to distributors which increases efficiency of
manufacturing and logistics distribution system.
 Better demand forecasting ensures robust and responsive supply chain
 Reduce inventory carrying costs and increase profits.
 Increase supply chain visibility
 High bargaining power over distributors.

Expected benefits for distributors

 Reduce inventory carrying cost and increase profits.

 Flexibility in supply chain network provides response rapidly.
 Better forecasting accuracy that close to customer demand leads to improvement of
service level, higher margins and higher inventory turnover.
 Warehouse space will be diminished because the inventory will be based on demand.

2. What conflicts or barriers internal to Barilla does the JITD program was created to solve.
What causes the conflicts? As Giorgio Maggiali, how would you deal with this?
JITD internal resistances
 Sales representatives are disturbed that their responsibilities will be diminished.
 Unable to execute quick shipment may lead to stock out
 Unable to run trade promotion
 Lack of infrastructure to conduct JITD program
 Doubness about cost reduction efforts

Maggiali must present JITD not as a logistic department effort but as a company-wide effort. He
needs to get top management involve in this program. He has to embrace other related
department to support the program by showing the concrete resuts, therefore He needs to
demostrate his proposal by running experiment several times is distributor sites. He could show
2
This study source was downloaded by 100000774251170 from CourseHero.com on 09-09-2022 03:45:46 GMT -05:00

https://www.coursehero.com/file/34853541/Barilla-SpA-case-study-1docx/
 the benefits of JITD program so that each of the department would like to give their support. His
proposed program JITD is a complete shift in Barilla’s business model. For this reason, He
should present this method as a case that will increase sales revenue, lower manufacturing cost,
and increase quality operations. Presenting his management on these three aspects will ensure
them to see the increased profitability that will come as a result of JITD.

3. As one of Barilla’s customers, what would your response to JITD be? Why?
As a customer of Barilla obviously will not fully trusted to allow Barilla to control all
forecasting and distributing of the products. As Customer tends to dislike because there will be
no more power to placing orders upon some products. Customer is unwilling to share data that
might be secret because it is the way they got the profit. The effort of forecasting measures will
be wasted because it will be taken over by Barilla. The risk of understocked or overstocked in a
period of time possibly to happened and customer inventory service level will be decreasing.
Over stocked will become a big trouble to customer warehouse create new additional inventory
carrying cost. And also under-stocked situation can lead to losing cutomer’s customers to its
competitor.

To be a part of JITD, customer needs to be convinced whether the Barilla company is completely
ready to manage this program. Barilla needs to provide offical contracts that will share the
benefit or will bear the loss together. Other incentives can be inisiated to support the program for
example like the manufacturer will do the buyback or penalty for delayed delivery.

4. In the environment in which Barilla operated in 1990, do you believe JITD would be
feasible? Effective? If so, which customers would you target next? How would you
convince them that the JITD program was worth trying? If not, what alternatives would
you suggest to combat some of the difficulties that Barilla’s operating system faces?
The assumption is JITD program is arranged in year 1990 with many limitation of system inside
Barilla company. At this stage, Barilla company is still doubted to present the JITD system
feasibility and effectivity. The huge investment to start JITD program is one of the reason to
oppose the program. JITD is very good information sharing application in supply chain
management however Barilla is not yet ready to perform the program under many limitations. It
can be suggested to implement other alternatives.
 Improve demand planning accuracy.
 Reduce number of SKU to decrease variability.
 Reduce or probably eliminate the promotion program to customers or distributors
because this lead to higher demand accumulation during the promotion period.
 Reward sales representative based on overall company performance not by personal
sales performance.
 Offer collaboration incentives to distributors
 Keep the assessment period the same but stagger the end dates for these periods over
sales representatives to smooth demand flustuation.

3
This study source was downloaded by 100000774251170 from CourseHero.com on 09-09-2022 03:45:46 GMT -05:00

https://www.coursehero.com/file/34853541/Barilla-SpA-case-study-1docx/
 5. Compare the JITD strategy proposed by Barilla to the celebrated JIT strategy developed
by Toyota and others.
JITD is adopted from popular Just-in-Time Toyota Production System (TPS). Principle of JITD
is similar to prior JIT in TPS, replenish the finish good based on customer demand through
sharing distributors data. Another strategy that can be implemented in a company is Lean
Manufacturing.

JIT Toyota Production system determined demand of products for one whole year period, the
production planning will set the schedule of production, share the number of parts needed for
daily production to the suppliers. Toyota manufacturing factory only received fixed number of
assembly parts not more not less. Toyota factory have zero inventory for assembly parts and
finished good.

Lean Manufacturing works based on value stream mapping. Identify the value added flow and
eliminate all the things that will not give value to the production process or in a system. The
efficiency in matter of usage of time, material, people and other will be achieved. Lean
manufacturing capture all efforts for continous improvement.

In Barilla company, it will be difficult to implement JIT through downstream supply chain
system. While the upstream supply chain is not ready plan production based on demand sharing
from distributors. Long lead time of production process and distribution process generate
extended respond time to customer demand. Even company forcasting system is not able to
adjust real market demand. It is better for Barilla comapny to evaluate their business process
before implementing the JITD. Start from uptream supply chain which is the accurate demand
forecast, efficient production process until optimization route of product distribution.

4
This study source was downloaded by 100000774251170 from CourseHero.com on 09-09-2022 03:45:46 GMT -05:00

https://www.coursehero.com/file/34853541/Barilla-SpA-case-study-1docx/
Powered by TCPDF (www.tcpdf.org)