My decision is for Barilla SpA is to implement the JITD system. This will replace the old system of the GD and DO placing orders to Barilla sales people, and put the responsibility back on Barilla to accurately forecast demand. One of the major problems in Barilla’s supply chain is the huge fluctuations in demand, and the JITD system will allow them to smooth out the peaks and valleys in the current supply chain. Barilla will face push back from their own sales force, as well as their distributors, but as long as Barilla can gain the trust of their distributors and sales force, they can make the transformation a success. The JITD will be most successful with larger customers, so they should start out by getting the largest ones to sign up first.
Statement of Issue
The main problem with Barilla’s supply chain is their inability to accommodate the fluctuations in demand. There is seasonal demand for certain products, as well as promotions that may influence demand, but those are the only factors that Barilla has to make their decisions with. They receive an order from the DO and GD seven to eleven days before they need to be delivered. Because it’s so complicated to change production at the facilities, from one type of pasta to the other, it’s not always easy to meet the fluctuating demand. This leads to stock outs levels in the area of five to nine percent. Barilla needs to find a way to lower stock out levels, while keeping inventory levels low.
For this case, success will be defined as the ability of Barilla to smooth out the volume of their deliveries, so that they aren’t sending a given number of trucks one week, and triple as many the next week. In order to do this, they will need better forecasting. A second criterion would be the reduction of stock outs at the delivery centers. Barilla would like to send inventory on a JITD system to the DC, but they need to ensure stock outs don’t increase because of it. A...