Barilla Case Study Solution

3. Analysis of the case

JITD is about delivering the goods to the customer at the right time, right amount and right quality. The idea was to use the actual demand from end consumer as the driver rather than the orders placed by distributors. The demand pull would reduce waste caused by holding excess inventory, and quality will be improved since the production would not be overworked to meet wildly fluctuating orders. The main issue that Barilla had to solve was the ‘Bullwhip’ effect as a result of demand distortion caused by distributors placing orders based on their own demand forecast rather than actual sales figures. When a business cannot forecast the expected demand of products, difficulties arise in determining what products to manufacture

While there is a lack of barcode scanners and computer linkages for small independent shops, Barilla can leverage on the brokers to pass on data direct to Barilla depots. Barilla can encourage them to sign up by promising that adopting JITD would lead to reduced holding inventory and better service to customers. Reduced holding inventory is a key attraction for small shops since the freed up space could be used to offer a greater variety of products. Furthermore, with Barilla responsible for tracking the stock level, the small shop owners which have limited resources to manage their inventory efficiently would be assured that they would never lose customers because they ran out of stock for

Barilla should subsequently continue to ensure that the other distributors come on-board as they account for the distribution of the other two-thirds of the dry products. Barilla should use the successful implementation of JITD for small shops to extrapolate the savings from holding lesser inventory that the larger distributors would benefit from. Barilla should also explain to the distributors that the manufacturing pro-cess cannot be expedited further due to the stringent manufacturing process to deliver quality products. Therefore it is necessary for Barilla to have access to the distributor’s shipping data so as to ensure that the distributors continue to be adequately stocked. This would allow Ba-rilla to be more responsive while ensuring that they meet the desired intent of reducing the distributor’s inventory holding. Furthermore, Barilla could offer strategic partnerships with distributors who are willing to share the possible risk of some inventory holding. According to Wei & Fung (2004), demand fluctuations leading to stock-outs not only leads to costs and losses, but can also lead to severing of the business image when “urgent” orders cannot be delivered. In sum, this relationship would be beneficial to all parties as it would lead to im-proved customer satisfaction. Finally, Barilla must convince the distributors that their data would be secure. As John & Morgan (1989 ) suggests, companies are concerned about their