The company has a very complex distribution network including independent third party distributors and due to such a multi-level network, it has been experiencing large amounts of variability in demand which are resulting in operational inefficiency and increased manufacturing, inventory and distribution costs.
The new JITD system required the distributors to share their sales data with Barilla, who would then forecast and deliver appropriate amounts of products to the distributors at the right time in order to effectively meet demand. This was a drastic change from the current traditional supply-chain setup where the distributors were not sharing any data and could place orders as and when needed. The new proposal came under severe criticism from not only the distributors but also Barilla's own Sales and Marketing department for an array of reasons.
Main reasons for fluctuating demand
Use of promotions in the form of price, transportation, and volume discounts was the main strategy to sell more products to the distributors.
Compensation system in place at Barilla for Sales reps, made them to push more products into the pipeline during promotional periods and not able to sell...