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Barilla run
CDC
depots
Customers Customers
SALES AND MARKETING STRAREGY
Sales Trade
representatives Promotions Advertising
• Frequent trade promotions • Heavily advertised
• Take notes on competitors price
• 10 – 12 promotional periods per year • Branded as the highest quality pasta
• Setup in store promotions
• Engaged with famous athletes and
• Have frequent meetings at the (buy anytime, as much as possible)
• Volume discount given celebrities
stores
• Discount for full-loaded truck • Focus on strengthening the concept
• Ordering strategies with store
of “family”
managers
QUESTIONS
2. What conflicts or barriers to Barilla does the JITD program create? What causes these conflicts? As
Giorgio Maggiali would you deal with this?
3. Diagnose the underlying causes of the difficulties that JITD program was created to solve. What are
the benefits of this program?
4. Compare the JITD strategy proposed by Barilla to the JIT strategy develop by Toyota and others?
5. How would you convince that the JITD program was worth trying? If not, what alternatives would
you suggest to combat some of the difficulties that Barilla’s operating system faces?
Discussion question
1.What are the problems Barilla’s operating system faces?
Answer : Barilla suffered increasing operation inefficiencies and cost penalties that
resulted from large week-to-week fluctuations in distributors’ order patterns.
Operating system Problem
Extensive
Inventory
High cost
Stock - Out
Frequency Stock-out
Poor Communication
• The demand from the end customer is the input, not the order placed by
the distributors
INTERNAL EXTERNAL
How to Deal with it?
Sales Representatives Distributors
Reduction on responsibilities Unconvinced Distributors 1. Convincing Upper Management
about JITD’s benefit.
2. Gain trust from Distributors,
Lack of Infrastructure Data Sharing 3. Show Distributors the benefit of
Infrastructure to handle JITD using JITD by running
DC unwilling to share their
experimental projects.
data
4. Engage distributors by sending
Risk of inability to Perceive Power upper Management to convince
adjust when Stock-out Shifting of power to Barilla if JITD program,
sharing Data. 5. Establish good Communication
Infrastructure to handle JITD
6. Prepare decent infrastructure to
empower JITD Program.
DC’s Faith
Lack of Faith towards Barilla’s
inventory Management.
Discussion question
3. Diagnose the underlying causes of the difficulties that JITD program was created to solve ?
Price fluctuation
• Discounts based on transportation and volumes ordered
• Promotional activities and frequent discount offered
There are several significant differences between Barilla’s and Toyota’s JIT strategy. Barilla’s Just In Time Distribution strategy is based on
details derived from the customer’s inventory records:
- Toyota’s JIT production on the other hand makes supply decisions based on the demand at
- Barilla’s Just In Time Distribution strategy is based on details derived from the customer’s
that particular time. For instance, the supply of automobiles and parts by Toyota is done on an
inventory records. JITD requests customer inventory information and proceeds to make
order basis. The entire production process will therefore be focused on the particular orders
production decisions based on these figures. The customer therefore receives a supply of
received from the customers. Goods are produced according to the orders made by the
inventory equivalent to the predictions made by the company.
customer.
- This is different from Barilla’s production process since no information is sought from the - The Kanban concept as applied by Toyota ensures that there are no excesses in the
customer as is done by Barilla and supply decisions are entirely dependent on the number manufacturing process. Preceding processes can only transfer their finished products to the
of orders received next process to avoid inventory backlog. The JITD process on the other hand does not focus on
the individual processes of production but rather ensures that the entire production process is
geared toward producing a certain level of goods. There are therefore no arrangements to
monitor individual processes since the goods introduced in the first process represent the exact
forecasted amount that customers are likely to demand during the particular period.
Discussion question
5.How would you convince that the JITD program was worth trying? If not, what alternatives would you suggest to combat
some of the difficulties that Barilla’s operating system faces ?
In order to convince the stakeholders about the value of JITD, it would be useful to demonstrate that JITD
benefits the distributors (lowering inventory, improving theirservice levels, and increasing their returns on
assets) by running experiment at one or more of Barillas 18 depots. If customers will not agree to JITD, they
may at least agree to collaborative forecasting or increased supply chain visibility
Alternatives suggested: