Supply Chain Management
The following questions help understand the Barilla Case in your packet. 1. Diagnose the underlying causes of the difficulties that the JITD program was created to solve. What are benefits and drawbacks of this program?
The JITD system was created to solve two problems that the Barilla was facing to: 1) the effects of fluctuating demand; and 2) the stockouts issue that strain Barilla’s manufacturing and logistics operations.
1) Barilla can make better delivery decisions;
2) Barilla can forecast the market demand more precisely;
3) Barilla will more effectively meet end-consumer’s needs and more evenly distribute the workload on its manufacturing and logistics systems;
4) Barilla can reduce the inventories of Distribution Centers.
1) Sale Persons lost their incentives, because the sale will be predictable or flat.
2) It will be difficult to run trade promotions with JITD.
3) Cost might increase due the needs to increase internal inventories
4) It might create stockouts problem instead of solving it.
5) Customers need to improve their equipment and share their sales data that they are reluctant to do.
6) The customers might work with other vendors for their extra space for inventories.
2. What conflicts or barriers internal to Barilla does the JITD program create? What causes these conflicts? As Giorgio Maggiali, how would you deal with these?
1) Internal resistance comes from the sales and marketing departments. They were concerned that if there was a strike or other interruption in production, the risk of stockouts would increase.
2) They also thought that sales figures would be reduced and that the new system would not be flexible enough to respond to changes, and that sales promotions would no longer be possible.
3) Another concern was that if the shelves in the distributors’ warehouses were not full of Barilla products, their competitors will move in and fill the space and then the distributors will push sales of competitor products instead of Barilla products.
4) The lack of sufficient flexibility in production, and the reward structure for sales representatives. The flat sales structure will take away the bonus for sales people and it will be hard to maintain trade promotions under the JITD.
5) Also sales people are worried that they will lose “power” because the functioning areas of marketing and sales will be narrowed.
Maggilai should convince his own boss and the CEO of the value of the proposal, because the implementation of the JITD needs to be companywide. The CEO and top management should make clear to everyone that this is in the best interests of the company and give them some time to get used to new situation. Companywide, the view should be adopted that the relationship with distributors is a long-term one, a partnership, and should be managed accordingly i.e. joint learning, sharing successes, sharing and aligning long term expectations, and having multiple points of contact through formal and informal channels Vitali sees the JITD as a selling tool, so the sales team needs to be persuaded of the value of his selling tool. The reward structure for sales people could be reorganized, for example some of their KPI’s could be related to reduction in inventory, getting accurate data from stores about sales. The jobs of the sales people could be redesigned to introduce more job commitment from sales; idea to design satisfaction into the job could include job enlargement, job enrichment, job rotation, empowerment and team working. 3. As one of Barilla’s customers, what would your response to JITD be? Why?
The customers may mainly consider: 1) how the program help with the stockouts, flexibility and delivery time all at a lower cost; 2) how the program will influence the independent distributors’ business.
As Mr. Vitali said that the JITD system would more likely make the distributors