BARILLA CASE STUDY
As one of the largest company in Italy that manufactures pasta, Barilla has done so much to meet the expectations of their customers. In Italy, Barilla makes sure its products reach the consumers through third party distributors (Simchi-Levi David, Philip Kaminsky and Edith Simchi-Levi 1). However, these distributors are unreliable. They often make Barilla suffer many cost penalties. Most of the distributors do not have constant or regular orders. These irregularities is due to transport costs, variations in consumer demand, long order that take long to be met and other causes of demand fluctuations (Simchi-Levi David, Philip Kaminsky and Edith Simchi-Levi 1). After a long dilemma, the company’s Executive Director of Logistics, Mr Brando Vitali, came up with an idea of Just –In –Time- Delivery system (JITD) (Kannan 2). The major concern that this system was meant to solve is the timing in distribution processes.
The distributors were asked to share their sales details with Barilla so that they could determine the best way of sending orders to ensure the demands of the people are met appropriately without compromising the fate of the company and that of the distributors. In addition, Barilla Company would be in a position to have a rough estimate on the no of products the distributors could handle and would have a better timing in delivering them when needed(Kannan 2). In such a case Barilla will be in a better position o determine the sequence of distribution much better than their distributors.
JITD was considered the best solution because it would look into a number of things for example, bad forecasting by the distributors, nature of promotion, cost of production, cost of transportation and many more(Kannan 3). By allowing Barilla to know their (distributors) sales record, it would help in enhancing demand management, planning that is collaborative and increased aggregate demand to have smooth running of the company(Kannan 4).
However, the customers of Barilla were not satisfied with the idea of JITD system. Their main argument was that they did not trust Barilla idea of wanting them to share their sales pattern with them. This would mean that, they would consider the distributors who sell more and in the end, the small distributors would not have enough supplies to make enough profits. Another issue is that, the consumers felt that Barilla Company would use their house wares as dumping areas to reduce cost. In case they manufactured more and felt that the products would go bad quickly, they would find ways of dumping them with their distributors (“Barilla SpA (A) case study” 3). They were also afraid that Barilla would control them through setting minimum and maximum order requirements.
In order to persuade barillas customers to try the JITD systems, Maggial should talk to the distributors and persuade them to try the system. In this case, they should not sign a contract agreement, but put the idea on probation (Khan, Muhammad F.H, et al 4). This would help in building a company- distributor relationship that allows trust to prevail. In addition, Maggial should prove to the customers that power would not be shifter to Barilla but it would be on both ends.
The JITD system would be successful if it manages to solve the problems of distribution that are because of high demand fluctuations. This means high implementation costs will be incurred especially while training those responsible in making the system work (Khan, Muhammad F.H, et al 5). It will take time for the workforce involved to adopt but if done appropriately the system would benefit both Barilla and their customers.
Works Cited
Barilla SpA (A) case study. 2010. Web 28 Oct. 2012.
<http://cba.uah.edu/guptaj/m690/Barilla.pdf>
Kannan,Vijay. n.d. The barilla case. Web 28 Oct. 2012.
<http://www.scribd.com/doc/13987764/Barilla-and-the-JITD-System>
Khan, Muhammad F.H, et al. 2010. “Barilla SpA” case analysis. Web 28 Oct. 2012.
<http://www.scribd.com/doc/45505982/Barilla-Spa-Solved>
Simchi-Levi David, Philip Kaminsky and Edith Simchi-Levi. n.d. Barilla case study. Web 28 Oct.
2012.
<http://www2.newpaltz.edu/~liush/MOIT/Barilla%20Case%20Study.pdf>
