Introduction
The JITD initiative at Barilla drew a lot of internal and external objections which finally led to it implementation being unsuccessful. The question was raised about the feasibility of JITD in that environment. Analysis of Barilla’s case reveals the various sources of objections as well as the reaction of different sections of the supply chain. Compared with the traditional approach, JITD was a commendable approach taking into consideration the uncertainties and demand variability in the supply chain. But the catch laid in the tactic of convincing the stake-holders. Earlier they were the responsive supply chain following the “pull” principle; JITD would make it an efficient i.e. “push” supply chain. Also the boundary of the “pull-push” was of concern.
Problems
• Demand Variability: The demand fluctuation is very large as evident from Exhibit 12. Barilla is constrained to often change its production so as to satisfy the demand variability, because of the huge setup times involved in changing the production patterns. Hence either they left with high inventory at CDCs or low customer fill rate, both being unfavorable. High inventory increased the inventory holding cost while low customer fill rate lead to stock-out at the retails. Thus, situations arose where there was inventory of the product which was not in demand, while stock-out of those which were high in demand. Thus causing Barilla loses from both the ends.
• Unreliable forecasting or prediction was leading to loses of similar nature as mentioned above. Moreover forecasting was difficult because of the input data being the end-customer.
• High Inventory at Distributors and also Stockouts (Exhibit 13) : which meant the old products stagnating in the shelves and occupying space while new product keep entering, but the entry restrained by the constrained shelf space. Thus indirectly, introducing new products was only possible at the expense of old products which were...