CASE ANALYSIS

Submitted by: Team-1, EMBA-07 (IITB & WASHU)

 Executive Summary Analysis: Barilla SpA (A)

Demand Fluctuations and Inventory Management:

• The most significant obstacle that Barilla needed to overcome was the volatility in
demand for dry products, which placed a significant burden on the company's
manufacturing and distribution operations. Inventory management was another
significant problem. Because of the volatility of the weekly demand, it was difficult to
keep appropriate inventory levels and swiftly make certain varieties of pasta due to the
complex production needs for those types of pasta. Because of the capricious nature of
the orders placed by distributors, Barilla was forced to maintain expensive inventories
of finished items, which effectively held the company, hostage. This circumstance
brought to light the necessity of a more effective inventory management system, such
as the suggested JITD, in order to better align output with actual demand, minimise
the costs and inefficiencies associated with huge inventory holdings, and better align
production with actual demand.

Resistance from Stakeholders:

• Despite the apparent benefits of JITD, it was met with significant resistance from
various stakeholders within Barilla and its distribution network. Customers were
unwilling to relinquish control over their order quantities and provide detailed sales
data necessary for improved demand forecasting. Internally, Barilla's sales and
marketing teams were also resistant, perceiving the JITD concept as infeasible or even
dangerous to their sales. They were concerned about potential reductions in sales,
difficulty in adjusting shipments, and the readiness of distributors for such a system.

Trade Promotions:

• The JITD programme was in direct opposition to Barilla's usual sales strategy, which
placed a significant emphasis on various types of promotions in the trade market. A
traditional distribution structure, in which customers were accustomed to receiving
frequent incentives, was the focus of Barilla's sales approach. These campaigns, which
typically involved volume discounts and incentives for full truck-load purchases,
played a significant role in pushing Barilla's products farther into the grocery
distribution networks. However, if Barilla implemented the JITD system, the
relevance of these promotions would be reduced because the company would be able
to essentially dictate the quantities of product deliveries and the delivery timetables
based on actual demand data rather than promotional endeavours.
Lack of Sales Data:

• Inadequate Sales Information One of the most significant obstacles that had to be
overcome in order to successfully deploy the JITD system was the inadequate sales
information that was provided by distributors. For the purpose of demand forecasting
and determining the ideal delivery quantities and timetables, the JITD concept
significantly relied on data that was both accurate and up to date. Barilla had a tough
time efficiently planning and optimising their production and distribution processes
because customers were hesitant to submit the necessary data.

The complexity of Barilla's Product Range:

• The vast product range offered by Barilla, which includes a variety of pasta and bread
goods sold under three separate names, provided an additional degree of intricacy to the
process of putting JITD into practice. It was difficult to standardise the JITD process
across all product lines because every product had its own manufacturing requirements,
demand patterns, and distribution networks. In addition, the extensive product selection
may make it challenging for Barilla to raise its own inventory for particular products,
which the sales and marketing teams feared could be required under the JITD method.

Communication and Change Management:

• In order to adopt JITD, Barilla and its distributors needed to make significant
modifications to their existing processes and operations. This presented a challenge for
Barilla’s change management team. To address the concerns and objections of the many
stakeholders, such changes required excellent communication and change management
tactics. However, Barilla had a difficult time persuading distributors of the merits of
JITD, which resulted in a sluggish adoption rate for the programme. In addition, there
was an absence of internal communication regarding the advantages of JITD, which
resulted in resistance from the marketing and sales departments. This brought to light the
necessity for a more robust strategy to change management, one that includes clear
communication of the benefits of JITD, addressing the concerns of stakeholders, and
providing proper training and support during the transition.
Recommendations:

• Pilot Program: In order to illustrate the benefits of JITD, Barilla should launch a pilot
programme with distributors who are ready to participate. The successful outcomes of
this trial can later be used as evidence to persuade additional distributors and internal
stakeholders.

• Stakeholder Communication: In order to address the concerns of both internal and

external stakeholders, a communication plan that is both clear and concise should be
devised. It is necessary for Barilla to convey the message that JITD is not a danger but
rather a tool that may help everyone involved increase their productivity and lower their
costs.

• Training and Support: In order for JITD to be successfully implemented, Barilla needs
to offer distributors both training and assistance. This may entail assisting them in
modernising their ordering processes and systems.

• Modify Trade Promotion Strategy: In order to lessen the amount of variation in

customer demand, Barilla should think about adjusting its trade marketing approach.
This could be accomplished by distributing promotions more evenly throughout the year
or by providing discounts that are more reliable.

• Gradual Implementation: Barilla needs to take into consideration the possibility of

implementing JITD in stages, beginning with those products whose demand patterns are
more easily foreseeable. As the efficiency of the system is demonstrated, it will become
possible to apply it to add items with changeable demand.

• Collaborative Relationship with Distributors: Barilla ought to make it a priority to

develop a more cooperative working connection with its distributors. This could include
exchanging more information with one another, participating in activities that include
joint planning, and working together to improve the overall performance of the supply
chain.