Barilla SpA

Group 3
Barilla SpA is a food manufacturing company based in Italy. Founded in 1875, the
firm has expanded globally. In this case we deal with the issues regarding channel
distributions.
Initial challenges in the case of Barilla SpA

Most of the challenges were linked to the changing order patterns of

distributors
Difficulty in predicting demand for its products (Forecasting Issues)
Fluctuations in demand lead to problems in manufacturing and inventory
management
Distributors inability to carry inventories on their own
Perishability of products & lead time issues

Thus, Barilla SpA managers must determine the factors and drivers of the
problematic distributors order pattern and fluctuations.
Cause due to Distributors Irregular Order Pattern,
The distributors order pattern is caused
by the lag in distributors response in
placing
their
orders.
However,
Barill
D
distributors have different levels of delay.
a
O
Some of the distributors have longer
delays. This condition is problematic
because
delays
lead
to
greater
fluctuations in orders. For example, even
a small delay in a Grande Distribuzione
(GD or large distributor) leads to
significant fluctuations in orders at Barilla SpA because a large distributor carries a
big inventory and delivers truckloads of Barilla SpA products to large supermarket
chains. This is called as Bullwhip Effect.
Reasons for delays with distributors:

Lack of full automation of the process

The distributors do not have sophisticated computer systems for this purpose
Other inefficiencies of the distributors.

In this case, Barilla to address these concerns have notified just-in-time

distribution (JITD) methodology which says we should look at all of the
distributors shipment data and send only what is needed at the storesno more,
no less
Just-in-time distribution involves rapid response to changes in demand. The
company needs to access data on distributors deliveries to retailers. Based on such
data, the company decides how much product should be delivered to distributors in
a certain timeframe. Thus, the objective of just-in-time distribution is to improve
Barilla SpAs ability to fill orders, satisfy demand and minimize stock-outs.
Benefit of JITD:

Minimum Stock outs and Filling rate improved

Reduced Lead time
Reduced Inventory Holding
High Bargaining Power with Distributors
Planning and Implementation is possible.

But there was resistance to the JITD Programme:

Internal:
External:

Issues with Distributors

Shifting of Power to
Barilla
Distributors
feeling
unhappy

Sales team felt that their

responsibilities would be diminished
if such a program were put in place
Promotions may be hampered
Fear of losing space Competitive
Advantage

Dilemma??
Vitali idea of Just-in-Time Distribution (JITD), was modeled after the popular Just-InTime manufacturing concept. Vitali proposed that instead of traditional approach of
delivering product to Barillas distributors on the basis of whatever orders those
distributors placed with the company, Barillas own logistics organization would
instead specify the appropriate delivery quantitiesthose that would more
effectively meet end-consumers needs yet would also more evenly distribute the
workload on Barillas manufacturing and logistics systems.
For two years Maggiali had tried to implement the idea, but now little progress had
been made. It seemed that Barilla had failed to convince two major collaborators:
1. External customers, who were simply unwilling to give up their authority to
place orders as they pleased;
2. Internal resistance from Barillas own sales and marketing organizations,
which saw the concept as infeasible or dangerous, or both.

Perhaps discarding the idea was simply unworkable. If not, how could he increase
the chances that the idea would be accepted?