Barilla SpA Case Study
Barilla SpA Case Study
Barilla SpA, the world's biggest pasta manufacturer, has continuously experienced problems with increased costs and inefficiencies in their operation. The fluctuations in demand have caused Barilla SpA's manufacturing costs, inventory costs, and distribution costs to go up. Issues that influenced the demand fluctuations are the discounts Barilla SpA offers on both price and transportation, the compensations for sales representatives that is based on the volume of goods they sell to the distributors, and long lead times between time of order and time of delivery - just to name a few.
The idea of JITD is to allow sales and inventory data to be shared along the supply chain. By doing so, Barilla SpA can use that data from its distributors to better understand the demand of its products and perform better forecasting. The results would be lower transportation costs due to better shipment planning, increase manufacturing efficiency, reduce inventory costs, and less stock outs for its distributors. This will benefit both Barilla SpA and its distributors, but resistance from the distributors and Barilla SpA's internal opposition makes it difficult to implement such strategy. Barilla SpA's sales representatives were afraid of losing their jobs because they felt with the JITD in place; they will no longer be needed. Also, it would essentially eliminate the current compensation system, meaning they would make less money. As for the distributors, the idea of providing sales data to others was unheard of at the time. The distributors did not trust Barilla SpA with their private information, and felt that they would lose control of their own operations if they had agreed with Barilla SpA.
Despite of all the internal and external resistances and doubts, I still think JITD is feasible for Barilla SpA, and they should continue to try and implement it due to the large savings and increased efficiency that JITD will bring to both Barilla SpA and its
Barilla SpA, the world's biggest pasta manufacturer, has continuously experienced problems with increased costs and inefficiencies in their operation. The fluctuations in demand have caused Barilla SpA's manufacturing costs, inventory costs, and distribution costs to go up. Issues that influenced the demand fluctuations are the discounts Barilla SpA offers on both price and transportation, the compensations for sales representatives that is based on the volume of goods they sell to the distributors, and long lead times between time of order and time of delivery - just to name a few.
The idea of JITD is to allow sales and inventory data to be shared along the supply chain. By doing so, Barilla SpA can use that data from its distributors to better understand the demand of its products and perform better forecasting. The results would be lower transportation costs due to better shipment planning, increase manufacturing efficiency, reduce inventory costs, and less stock outs for its distributors. This will benefit both Barilla SpA and its distributors, but resistance from the distributors and Barilla SpA's internal opposition makes it difficult to implement such strategy. Barilla SpA's sales representatives were afraid of losing their jobs because they felt with the JITD in place; they will no longer be needed. Also, it would essentially eliminate the current compensation system, meaning they would make less money. As for the distributors, the idea of providing sales data to others was unheard of at the time. The distributors did not trust Barilla SpA with their private information, and felt that they would lose control of their own operations if they had agreed with Barilla SpA.
Despite of all the internal and external resistances and doubts, I still think JITD is feasible for Barilla SpA, and they should continue to try and implement it due to the large savings and increased efficiency that JITD will bring to both Barilla SpA and its