Barilla Spa Case Study

SCM450W
Riley Kleppe

The Barilla group is the largest pasta manufacturer. Many challenges arose in terms of
managing its supply chain operations. The case study explores how the company's centralized
manufacturing and distribution system led to problems such as stockouts and high inventory
costs, and how the company attempted to address these issues through various strategies,
including the implementation of an innovative just-in-time distribution system.
Underlying problems experienced by Barilla were primarily caused by the highly variable
and unpredictable demand for Barilla's products, which made it difficult for the company to
forecast demand accurately and to manage inventory levels efficiently. The underlying causes
of these difficulties included promotions and discounts, lack of communication, and the
bullwhip effect. Barilla's sales and marketing teams frequently offered promotions and
discounts to customers, which led to surges in demand that were difficult to predict and
manage. The centralized manufacturing and distribution system also made it difficult for the
company to communicate effectively with its customers and to gather accurate information
about customer demand. Furthermore, the variability in demand was amplified as it moved
upstream through the supply chain, leading to the bullwhip effect, which further increased the
level of uncertainty and variability in demand. The JITD program was intended to address these
difficulties by allowing Barilla to better manage its inventory levels and production schedules.
Under the JITD program, Barilla would receive daily demand data from its customers and would
be responsible for managing the inventory levels at the customer's warehouse. This would
allow Barilla to reduce the variability in demand and to better forecast future demand, resulting
in a more efficient supply chain. The benefits of the JITD program include reduced inventory
cost, improved customer service, and improved forecasting. On the other hand, drawbacks
included resistance from distributors, implementation costs, and dependency on customer
data.
The JITD program created several conflicts and barriers internal to Barilla, which were
primarily caused by resistance to change and conflicting priorities within the company. These
conflicts included: resistance from sales and marketing teams, resistance from manufacturers,
and conflicts between functional areas. Barilla's sales and marketing teams were resistant to
the JITD program, as they believed it would limit their ability to offer promotions and discounts,
which were a key part of their sales strategy. Barilla's manufacturing teams were resistant to
the JITD program, as they believed it would require them to produce smaller, more frequent
batches of pasta, which would be more costly and less efficient. Finally, there was a lack of
communication and coordination between functional areas within Barilla, which led to
conflicting priorities and goals. If I were Giorgio Maggiali, I would take the following steps to
deal with these conflicts. First, I would work to build a coalition of supporters within Barilla who
are in favor of the JITD program. This coalition would include key stakeholders from sales,
marketing, manufacturing, and other functional areas. I would then communicate the benefits
of the JITD program to all stakeholders, including how it would help reduce costs, improve
customer service, and increase efficiency. Continuing I would address the concerns of
stakeholders who are resistant to the JITD program and work with them to find solutions that
meet their needs while still achieving the goals of the program. Following these three I would,
pilot the JITD program with a small group of customers and demonstrate its success before
rolling it out to a wider audience. Lastly, I would closely monitor the results of the JITD program
and adjust as necessary to ensure its success. This would include gathering feedback from
customers and stakeholders and making changes to the program based on their input.
The response of Barilla's customers to the JITD program varied. Some customers were
supportive of the program and saw benefits in terms of reduced inventory costs and improved
product availability. Other customers were resistant to the program, as they felt that it would
give Barilla too much control over their inventory levels and limit their ability to manage their
own supply chains effectively. If I were one of Barillas customers my response would mostly be
positive in terms of the JITD program. Although many people are hesitant to change, I would be
willing to participate in the JITD program, as I would see the benefits of improved product
availability and reduced inventory costs. Furthermore, as a customer I would like to see the
product on the shelves 100% of the time at a cost that is fair. If I have control over the success
of the JITD program I would be willing to participate and provide accurate data in a timely
manner.
In the environment in which Barilla operated in 1990, the JITD program could have been
feasible, but it would have required a significant amount of effort to overcome the internal
resistance to change within Barilla and to convince customers of the benefits of the program. If
Barilla were to pursue a JITD program or similar kind of program, it would need to target
customers who have a high degree of trust in Barilla and who are willing to collaborate closely
with the company. These customers would need to be willing to share their demand data with
Barilla and to allow the company to manage their inventory levels to some extent. To convince
these customers that the JITD program was worth trying, Barilla would need to communicate
the benefits of the program, such as improved product availability, reduced inventory costs,
and increased efficiency. The company would also need to demonstrate the success of the
program through pilots and case studies and work closely with customers to address any
concerns or issues that arise during the implementation process.