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Diagnose the underlying causes of the difficulties that the

JITD program was created to solve. What are the benefits and
drawbacks of this program?
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The motive behind proposal of Just-in-Time Distribution (JITD) program is to

handle the fluctuation in demand from Barillas network of distributors.
Bullwhip Effect (demand variability), makes it hard for Barilla to meet the
actual demand of the end consumers.
This program would be used to predict actual demand so that Barilla could
attempt to produce the same amount of products to meet customers
demands.
There are number of factors which explain such large fluctuations
happening:
Distributors role- They place orders to Barilla based on retailers orders
and the space which is available to stock inventory. There might be a case
that sometimes distributors run out of products or may overstock their
inventory due to the lack of anticipation or real demand. Also, Barilla and
its distributors suffer a major cost in distribution channels caused by poor
inventory management or lack of forecasting. This unawareness of the real
demand causes distributors to overstock their inventory and that raises
the cost of distribution. The distributors and retailers do not have any
proper forecasting system in place to give them a glimpse of what the real
demand is.
Barillas own internal functions- The fluctuations in demand are also
caused by such functions. Firstly, the sheer amount of SKUs lead to a
much more complex system than just trying to gauge how much single
type of pasta is sold. And being able to anticipate the demand for all of
Barillas 800 different dry good SKUs is absolutely impossible without a
forecasting system which is robust enough.
Long Lead time- Further complication comes by the long lead times that
it takes for Barilla to fulfil an order from the distributor, which was usually
between 8-14 days from when the order is received. Because of the
nature of the tunnel kiln in the pasta-making process, it is impossible for
Barilla to change the order of pasta production to fill an order of sold out
pasta quickly.
Barillas sales structure- The sales structure is also to blame for the
large fluctuations in demand, due to their heavy use of discounts and
promotions which warps the demand curve.

Benefits
JITD would be an efficient forecasting tool that could predict the real demand of
the end-consumer. Daily sales data would be required so Barilla could utilize the
data to anticipate future demand and perform production schedule accordingly.

Lead-time minimization as manufacturing would be only one step behind

the end customers demand and Barilla would be able to steadily make the
pasta necessary to fulfil orders, no more, and no less.
JITD will also help reduce the costs associated with distribution channels.
Distributors will not stock their inventory with Barilla products that exceed
the real demand.
It may also help improve Barillas relationship with its set of partners, as
Barilla wont exert pressure on distributors to hold more finished products
than necessary.
The implementation will eventually improve the planning procedures for
Barilla and enable the company to provide best service to its customers at
low costs.

Drawbacks

Program will not be implemented without costs to Barilla; it would be

responsible to provide its distributers with the technology needed to report
daily sales.
Also, some retailers may find it difficult to report daily sales because their
stores are not equipped with point-of-sale technology that captures sales
data.
Distributors might need to hire new employees in an order to be able to
prepare sales reports.
And implementing JITD means that Barilla would do the work for its
distributors. This might cause a conflict with some partners as few
distributors would not accept others to intervene with their internal
processes.