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Barilla Executive Summary

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EXECUTIVE SUMMARY: Barilla SpA (Case A)

Due to a growing burden on the company and a steady increase in costs due to demand fluctuations imposed on the manufacturing and distribution system, Barilla SpA, an Italian pasta manufacturer expressed that an alternative approach to order fulfillment be implemented. Just In Time Distribution (JITD), proposed by Giorgio Magialli (director of logistics), comes with many pros and cons both for Barilla as well as its distributors and retail partners. Due to the vast distribution network of Barilla, the JITD proposition would empower Barilla with the information (shipment data) needed to only send what is needed at the stores, no more, no less instead of continuing the past practices whereas appropriate levels of product were sent to the distributors according to their internal planning processes. The sharing of sales data with Barilla would allow the pasta manufacturer to accurately forecast and deliver the proper inventories to the distributors at the needed time, creating an effective new distribution process.

Reasons for the fluctuating demand:
1. Trade Promotions: Barilla was able to sell larger quantities of product by offering discounts to distributors that bought in bulk. Promotions came in the form of pricing, transportation, and volume discounts.
2. SKU’s: The enormous range of product line SKU’s caused a robust problem in terms of accurate forecasting. The lack of appropriate technology caused an inability for supplier and manufacturer to remain “connected’ 24/7 in addition to little to no sophisticated forecasting systems or analytic tools for determining order quantities.
3. Sales: Representatives spent 90% of their time working at the store level. Compensation was in place for sales reps to push more products only during promotional time frames for “canvasses”.

Opposition to JITD

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