Barilla

What is the JITD program? Evaluate it from the perspective of Barilla and an independent distributor. What kind of products might such a program is best suited for?

The pasta supply chain suffered high inventory levels at each segment of the supply chain; stock-outs at the distributor’s level and the customer’s demand variability magnified the problem. To overcome this demand variation, a JITD system was proposed. This system required the distributors to share their sales data with Barilla, who would then forecast and deliver appropriate amounts of products to the distributors at the right time in order to effectively meet demand. This was a radical change from the current and more traditional supply-chain setup where the distributors were not sharing any data and could place orders at will and availability of demand information at store levels is hard to get.   A JITD system utilizes a vendor-controlled inventory scheme to combat a distribution problem of Barilla SpA. It eliminates some promotions to reduce demand variability, deliver more frequently with mixed order in full truck load. It asks for demand forecast information, as vendor managed inventory information.

From the perspective of Barilla, implementing JTID would help them in reducing their distribution costs, inventory levels and the manufacturing costs. Overall Barilla’s visibility with trade would improve and the distributors would be dependent on Barilla. In addition, the information regarding the supply at the distributors warehouses would provide the company objective data to improve their planning procedures. There were also certain concerns with implementing the JTID program as the company could face that customers stock out of their products, hamper their ability to run trade promotions and also competitor’s threat to fill their products in distributors warehouses.

For distributors, a JITD program would help to reduce inventory held since central warehouses only deliver the quantities...