What are the strengths and weaknesses of Barilla’s approach to continuous replenishment? How might it be improved?
Strengths of Implementing JITD
* Barilla forecasted demand of the products better than the distributors by using more sophisticated techniques. Based on the history of shipments made by distributors, Barilla could forecast production requirements and shipping requirements thereby reducing its production costs and inventories held in Central distribution centers.
* Stock outs are greatly reduced greatly by implementing JITD. One of Barilla’s Organized Distributors, Cortese stock out range was reduced from 2% to less than 1%.
* By obtaining information from distributors, bullwhip effect is greatly reduced. Chase and Jacobs (2012) define bullwhip effect as, the phenomenon that happens in a supply chain where orders submitted to the vendor have greater variability than what is received by the consumers. The distributors also had an eye on Barilla’s inventory and placed orders for products whose level fell below a specified level, thereby fluctuating the demand.
* Centralization based on the data obtained from distributors help to schedule production for Barilla and reduces inventory, which benefits everyone. Therefore, cheaper production and distribution costs for Barilla. When Just in Time Delivery was implemented in Florence warehouse, lead time from the time of order to delivery reduced form 10 days to 3 days.
* It improves the relationship between Barilla and its customers by increased supply chain transparency and helps to build trust.
Weakness of JITD for Barilla
* Internal Business issues with sales force. Barilla’s sales force feared the risk of losing their job and another problem was that, they got incentives based on sales number which would not be possible in JITD.
* Information about JITD was not clear enough to represent the actual benefits of it. Some distributors who signed up for the JITD program were...