Supply Chain Management

October 10
Group 18
Barilla SpA
SATYA SHYAMALA (PGP/20/175) 9916130210
SWATI NIMJE (PGP/20/187) 9911912331
VAMSHI (PGP/20/304) 8500015978
Section A
(1) Diagnose the underlying causes of difficulties that the JITD program was designed to solve.
What are the benefits and drawbacks of this program?
Major issues the JITD program was expected to address were:

Due to bullwhip effect, minor changes in end consumer demand at retailer end was causing
wild swings in order quantities for Barilla.
Shift of focus from orders as the input filter to the demand from the end consumer.
Barillas CDC had to serve orders with extreme demand variability with a COV of ~ 0.75. This
strained the manufacturing and logistics operations.
Benefits of JITD:

Barilla can aggregate the demand from all its distributors and the production scheduling could
be planned accordingly instead of relying upon the highly variable orders from individual
distributors.
Reduced inventory levels at the distribution centres leading to lower inventory holding costs.
Thus, even if Barilla withdraws volume discounts, the costs for the distributors would still be
low.
Distributors would be more dependent on Barilla which would naturally improve Barillas
relation with them due to increased supplier power.
Planned production planning to reduce overall cost of manufacturing.
Drawbacks of JITD:

Risk of stock out of products in case of disruptions in the supply process.

Losing the distributor shelf-space to competition due to reduced inventory levels in the
distributors warehouses.
Inability run trade promotions (in the form of volume discounts to distributors). Thus, reduced
incentive for distributors to push Barillas products.

(2) In the environment detailed in the case, is JITD feasible? If yes, which customers would you
target next? How would you convince them that it is worth trying?
Yes, the implementation of JITD is feasible if Barilla can first address the issues of the distributors
which was proving to be a hindrance for its implementation.
The Barilla-run depots, serving Signora Maria shops must be targeted first. They stock more SKUs
and have lower buyer power and are more scattered compared to those of chain supermarkets.
Moreover, it is easy for GDs to aggregate the demand from all their stores before ordering to reduce
their costs. But it is from the small independent shops that Barilla faces highly volatile demand as
they purchase products from brokers who dealt with Barilla purchasing and distribution personnel.
Convincing the distributors:

Speak to the distributor on importance of JITD and how it will decrease the inventories and
improve their fill rate to their stores.
Spread awareness among distributors about better CSL when JITD is adopted.
Provide an in-house pilots of the JITD and explain the distributor of its benefits. (Similar to
what Toyotas JIT implementation approach).