Executive SummaryMy decision is to continue the implementation of the Just-in-Time Distribution program (JITD), but the process will take longer than originally anticipated.
Because of the resistance within Barilla's own sales force and the different functional areas of the distributors', it is imperative to first, at least partially, address the issue of "trust" by gradually building personal relationships and making it clear that both rewards and risks are equally shared among all parties involved.
The current pricing strategy of high-low will be replaced for one of every-day low prices; and then, after simulation of the system off-line, a pilot program will be implemented on selected Barilla-run depots to demonstrate that it works.
Key AssumptionsHistorical orders from distributors do not reflect the real demand because in order to take advantage of the trade promotions, the orders are placed to take advantage of volume discounts.
Statement of IssuesThe main issue is the mistrust that creates problems such as the fear of relinquishing control when joint efforts and close cooperation are required to succeed in an alternative approach to order fulfillment.
A second issue is the fact that each participant -logistics, sales force, buyers, and distributors- has different goals and objectives making it rather difficult to agree on a common initiative.
Another issue is the resistance to change, having to move out of our comfort zone and the only benefits we perceive right now.
CriteriaA good decision in this situation is one that allows us to steadily build an environment of trust that will ensure cooperation and propel ripping benefits for all the partners.
AnalysisBarilla, an Italian vertically integrated pasta producer, is facing a bullwhip effect due to several combined factors:-distributors holding orders at some point as an attempt to reduce inventories, then order-batching to take advantage of...