Barilla:
Just In Time Distribution, Just in Time
Facilitated by Team 7
Manuel Atanacio
Melissa Debach
Cosmo Kapoor
Wayne Leonard
Molly Neznanski
Allen Sajedi
Problems at Barilla: Illustrated
Problems at Barilla: Business
• High stock out rates
• Long lead times
• Inappropriate Incentives
– Bulk orders
– Purchasing not sales
Problems at Barilla: Production
• Multiple Pasta Varieties
• Cumbersome Machinery
• Inaccurate Forecasting
• Fluctuating Demand
Key Issues
Manufacturing & Production Process
- Equipment limitations
- Production delays
- Costly, time consuming and inefficient
Forecasting
- Low volume production
- Seasonal demand
- Low margins
- High real estate costs
- Requires quick turns, minimal inventory
Alternatives
1)
2)
3)
4)
Maintain status quo
Production changes to
drying process
Implement JITD with existing network
Obtain new network of distributors implement JITD
Alternatives cont’d
1) Maintain Status Quo
- stock out levels remain high
- demand forecasting inaccurate
- long lead times
- costly & inefficient
2) Production Changes
- alter drying process
- variety agility
- costly & slow to implement
- maintain automation
- maintenance friendly
Alternatives
3) Implement JITD: Existing Network
- focus on education
- relationship improvement
- quick implementation
- established network
4) Implement JITD: New Network
- “blank slate”
- trust & commitment
- costly
- slow distributor acquisition
Recommendation:
Alternatives 3 & 4
Existing Network +
- existing relationship
- system education
- build trust
New Network
- “blank slate”
- ground up
- system leaders
= Success
- greater knowledge of customers
- more targeted promotions
- reduced stock out rates
- lead time and cost reduction
Action Plan: Phase 1
- Executive commitments
- Barilla
- Sales and Marketing Discussions
- JITD as a sales tool
- Distributor recruitment
- Relationship management
Action Plan: Phase 2
Sales and Marketing:
Educate Existing Distributors:
1) Cultivate relationships
2) Benefits of JITD
3) Reducing the Bullwhip Effect
4) Triple-A Supply Chain
5) CPFR Model
Recruit New Distributors
1) Embrace JITD methods
2) System leaders
3) Triple-A Supply Chain
5) CPFR Model
Key Success Factor 1
Commitment to:
Triple-A Supply Chain
- Agility of Information Sharing
- Adapt to address customer needs
- Alignment of common interests/values
- risk mitigation
- cost reduction
- optimized customer satisfaction
Key Success Factor 2
Common Parameters
Collaborative Planning, Forecasting
and Replenishment Process Model
-Establish
Partnership
Parameters
- Requires
collaboration
- timing goals
- -Information
sharing
performance metrics
- -Joint
forecasting
procedures
- Common performance metrics
- Joint Business Plan (Policies/Guidelines)
- Address customer needs
- strategic decisions
- Proactive
decision
- information
sharingmaking
- Create joint forecast model
- exceptions
- forecasting rules
- order quantities
Action Plan: Phase 3
Restructure Incentives
Current Incentive
Negative Behaviors
Volume Discount
Frequent Stock Outs
Promotional Pricing
Unpredictable Demand
New Incentive
Positive Behaviors
Accurate Orders
Information Sharing
Sell out Bonus
Varied Shipments
Milk-run Delivery
Frequent Ordering
Uniform Wholesale Pricing
Order by forecasts
Buy back clauses
Order by forecasts
Action Plan: Phase 4
Eliminate the Bullwhip Effect:
- Greater information sharing
- Price stabilization
- Gaming elimination
- Echelon inventory
Conclusion
- Commitments
- Education
- Incentive alignment
- Relationship building
- Implementation of JITD
Questions?