Barilla SpA is suffering from a problem of their own making - their distribution system is overly complex. That complexity is causing them to be unable to respond to their widely varying customer demand. Their customers, distributors, are forced to hold high inventories while simultaneously enduring stockouts on average of 7%, all because Barilla can't rationalize their own processes to handle variability in demand.
Barilla's manufacturing process is long and inflexible. Given the high variability in customer demand for something as unpredictable as pasta consumption in Italy, this choice of production process is completely unreasonable.
Maggiali's suggestion for "solving" this problem is the Just-in-Time Delivery system. This solution that allows Barilla to see end customer demand and then force their own inventory down onto their suppliers is a "band-aid" solution at best, and a way to increase their own profits at their customers' expense at worst. It won't address the underlying manufacturing mismatch that Barilla has created.
Barilla's internal sales force sees through Maggiali's attempt to increase his own fiefdom and understands the potential damage it would cause to Barilla's relationship with distributors and their competitive position. Their objections that distributors would stock more of their competitor's products are right on and must be clearly explained to Maggiali. Further, they are right to work with distributors to fight against the dangerous JITD program. Maggiali must be shown the light regarding the manufacturing process, or shown the door.
The only way to fix Barilla's problem is a new manufacturing process. They currently use a system that produces extremely large batch sizes on an inflexible schedule. This is wholly inappropriate as it does not allow the flexibility to respond to the high degree of variability in end customer demand (as shown in exhibit 13). Their manufacturing process should be restructured as a...
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