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Barilla SPA (A) Case Solution

Solution Id Length Case Author Case Publisher
526 1155 Words (5 Pages) Janice H. Hammond Harvard Business School : 603S20
This solution includes: A Word File A Word File

The reason for the introduction of JITD was the fluctuation of the demand. This is just the tip of the iceberg, and there are many reasons for these fluctuations. One of the important reasons for the fluctuation in demand was forecasting problems on behalf of the distributors as the lacked technical skills to anticipate demand. Not only the distributors, but, Barilla itself lacks logistic superiority causing an increase in lead time. It supplies the products to distributors with an average lead time of 10 days after receiving the orders. This lead time is quite long for demand to fluctuate. Another possible cause of fluctuation is the large number of SKUs as, only their dry products were offered in more than 800 SKUs. More the SKUs are more is the complexity.

Following questions are answered in this case study solution:

  1. Diagnose the underlying cause of the difficulties that the JITD program was created to solve. What are the benefits and drawbacks of this program?

  2. What conflicts or barriers internal to Barilla does the JITD program create? What causes these conflicts? As Giorgio Magggiali, how would you deal with these?

  3. As one of Barilla’s customers, what would your response to JITD be? Why?

  4. In the Environment in which Barilla operated in 1990, do you believe JITD (or a similar kind of program) would be feasible? Effective? If so, which customers would you target next? How would you convince them that the JITD program was worth trying? If not, what alternatives would you suggest to combat some of the difficulties that Barilla’s operating system faces?

  5. Suggest a web/online strategy for the firm.

Barilla SPA A Case Analysis

The distribution channel is also complex and instead of direct distribution products are sent to warehouses and then the distributor purchase products from them, this further increase the turnover time. Promotion was heavily dependent on discounts, where the distributors purchase in bulk, covering current and future demands that adds onto fluctuations as distributors already are with enough stock to cover demand. Last, but, not the least, the push and pull strategies are not congruent to yield maximum results. As, the sales persons strongly push the product at the time of promotion, while become sluggish afterwards. Other than that, it will decrease the inventory turnover time as stakeholders will be dealing more of real time. It will enhance operational efficiency and reduce costs for stakeholders.

2. What conflicts or barriers internal to Barilla does the JITD program create? What causes these conflicts? As Giorgio Magggiali, how would you deal with these? 

Introduction of JITD created unrest among many of the stakeholders internally and externally. First of them to raise voice against this plan was sales and marketing departments. The sales representatives felt that their responsibilities will be diminished. There were concerns about the flattening of the sales. Few of these personnel raised concerns about the organization’s ability to handle such complex operations and distribution. In other words, this relates to lack of infrastructure. Some felt threats of freeing distributor’s warehouses, which will be occupied by competitors, causing distributors to push competitor’s product. Not only these, there was concern on trade probability of trade promotions getting a setback. This way Barilla will lose much of products that it sold to distributors on basis of promotions.

Few were of the view that the company can suffer because of disruption on the supply process. This further added on the concerns of not being able to adjust shipments quickly to change in the selling patterns and promotional campaigns. Despite of all the glimmering plans and future results of JITD, there were still doubts about the cost benefits, because, with the decrease in DO’s stocks, Barilla will have to increase inventory for products that are not flexible with the production schedules. As, Maggiali, I would set up a detail plan to convince the distributors and build trust, by involvement of top management and setting up a prototype or successful implementation as an example.

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