What is the JITD program? Evaluate it from the perspective of Barilla and an independent distributor. What kind of products might such a program is best suited for? The pasta supply chain suffered high inventory levels at each segment of the supply chain; stock-outs at the distributor’s level and the customer’s demand variability magnified the problem. Availability of demand information at store levels is hard to get. A JITD system utilizes a vendor-controlled inventory scheme to combat a distribution problem of Barilla SpA.It eliminates some promotions to reduce demand variability, deliver more frequently with mixed order in full truck load.
It asks for demand forecast information, as vendor managed inventory information. For distributors, a JITD program would help to reduce inventory held since central warehouses only deliver the quantities required by the end-users through more frequent checks of the distributors’ inventory, increasing service levels. The increase in flexibility and reaction speed leads to lower inventory improving the fulfill rates.It also improved customer relations: reduced inventory costs, higher service levels, improved fill-rate and decreased distribution costs would all lead to improved customer relations.
It increased shelf space for distributors: the improved delivery schedules will lead to a decreased inventory. This is an opportunity for sales rep to sell the distributors on taking on more of Barilla’s products to improve the selection they currently offer.For Barilla, JITD improved fill rate and decreased distribution cost: since the inventory data and delivery patterns would be controlled by Barilla, it would be easier for their central factory and CDCs to schedule production and deliveries. It improved discount policy for Barilla: instead of giving discounts for large order volume buyers, Barilla would discount for stable long-term orders. By doing so, Barilla would have many reliable long-term orders.The representatives can participate in the program as a communication bridge between the company and the distributors helping to implement the JITD program.
I think Barilla should use JITD on the delivery of dry pasta to small retail shops. The government supports the small shops more than the larger supermarkets. Small shops have better growth rates and now Barilla does not have a significant market share there. In the long run, we recommend Barilla move to a single distribution system for both fresh and dry pasta to increase the cost effectiveness of joint replenishment.