Barilla Case Study - Jitd Program

Thoughts on Supply Chain Management

The JITD program was supposed to tackle the uneven distribution workload Barilla encountered with its distributors. In order to achieve this, better demand forecast was needed with the support of the distributors.

Benefits of the program are below.

- Barilla’s own logistics organization would be allowed to specify the appropriate delivery quantities that would more effectively meet the end consumer’s needs

- It would also allow Barilla to distribute the workload on manufacturing and logistics systems more evenly

Drawbacks of the program are below.

- Higher investment costs such as training

- Since JITD is a new concept, and has not tried out before, there is a risk that serious errors may occur during the implementation process, and this would ruin all previous efforts

The value chain consists of five major components, and it can be represented as SIPOC, where S is Supplier, I Input, P Production, O Output and C Customer.

Between C and P, there are also the distributors, wholesalers and retailers.

It is almost impossible to develop an accurate sales forecast because the market is constantly changing. Factors affecting the market situation are also changing. Without an accurate sales forecast, it is difficult to achieve JIT. This is basically a paradox. No enterprise is able to develop an accurate sales forecast, and without an accurate sales forecast, it is not possible to achieve JIT. Is there really no way out? How about Dell? Dell basically builds computers on a BTO (build-to-order) basis, and this makes JIT possible. But how many enterprises can really deliver products on a BTO basis? What are the requirements to produce on a BTO basis? Barilla definitely was not one of them.

Communication here is the critical success factor. The supplier, in this case, Barilla, has to collect information from the distributor, and the distributor has to be able to collect information from the wholesaler, and then the wholesaler has to do the same from the retailer. It is basically a communication network, or the communication system. If the chain breaks down, then basically the communication system is not going to work. Data integrity is also important. Even if the communication system works out smooth, but if the data quality is poor, it is also not going to work.

Standardization is then one of the ways to tackle inconsistency and also to improve transparency.

Resistance to accept changes is also another major obstacle in the implementation of any new concepts. It is human nature not to take risk. If the existing system works perfectly well, why should the new system