EXECUTIVE SUMMARY:
In 1990, Barilla SpA was the largest pasta manufacturer in the world. It was making 35% of all pasta sold in Italy and 22% of all pasta sold in Europe. Barilla enjoyed a strong brand image in Italy. They differentiated themselves by positioning the brand as the highest quality, most sophisticated pasta product available. They had a massive facility, the largest and most technologically advanced pasta plant in the world.
In 1987, the company realized that manufacturers and retailers were suffering from thinning margins and needed to find a way to take costs out of the distribution channel with out compromising service.
The idea of implementing a Just-in-Time Distribution (JITD) model was brought up in order to reduce their own inventory levels and all the others distribution channels involved. By that moment, inventories were necessary as they were trying to satisfy distributors/retailers’ demand which was very fluctuating and they could not anticipate it causing problems in their manufacturing process.
This idea had opposition from both, internally from Market and Sales department and externally from their Distributors. Internally because they felt they had less responsibility and flattened their sales levels, therefore their incentives; externally, the Distributors felt they were loosing their power over their own warehouses because the model implicated a Vendor Managed Inventory (VMI) by Barilla.
The JITD would lower Barilla’s and Distributors’ costs when improving their manufacturing process (quantities and schedules) and reducing their inventory levels without compromising services.
The implementation of this idea needed the “top management” totally involved as a project in order to have all the departments participating in changing to a Corporate Culture around all the benefits that the implementation of this JITD model will bring.