The JITD program was supposed to tackle the uneven distribution workload Barilla encountered with its distributors. In order to achieve this, better demand forecast was needed with the support of the distributors.
Benefits of the program are below.
- Barilla’s own logistics organization would be allowed to specify the appropriate delivery quantities that would more effectively meet the end consumer’s needs
- It would also allow Barilla to distribute the workload on manufacturing and logistics systems more evenly
Drawbacks of the program are below.
- Higher investment costs such as training
- Since JITD is a new concept, and has not tried out before, there is a risk that serious errors may occur during the implementation process, and this would ruin all previous efforts
The value chain consists of five major components, and it can be represented as SIPOC, where S is Supplier, I Input, P Production, O Output and C Customer.
Between C and P, there are also the distributors, wholesalers and retailers.
It is almost impossible to develop an accurate sales forecast because the market is constantly changing. Factors affecting the market situation are also changing. Without an accurate sales forecast, it is difficult to achieve JIT. This is basically a paradox. No enterprise is able to develop an accurate sales forecast, and without an accurate sales forecast, it is not possible to achieve JIT. Is there really no way out? How about Dell? Dell basically builds computers on a BTO (build-to-order) basis, and this makes JIT possible. But how many enterprises can really deliver products on a BTO basis? What are the requirements to produce on a BTO basis? Barilla definitely was not one of them.
Communication here is the critical success factor. The supplier, in this case, Barilla, has to collect information from the distributor, and the distributor has to be able to collect information from the wholesaler, and then the wholesaler has to do the same from the retailer. It is basically a communication network, or the communication system. If the chain breaks down, then basically the communication system is not going to work. Data integrity is also important. Even if the communication system works out smooth, but if the data quality is poor, it is also not going to work.
Standardization is then one of the ways to tackle inconsistency and also to improve transparency.
Resistance to accept changes is also another major obstacle in the implementation of any new concepts. It is human nature not to take risk. If the existing system works perfectly well, why should the new system be in place? And if the old system does not work, why not fix the old system instead of coming up with a new system? What benefits and values can the new system bring to the enterprise? And how can the enterprise be sure that the new system can deliver the benefits and values as promised, given the new system has not even been put into use?
Trust is therefore another hindrance to the implementation of any new ideas. The concept has to be communicated clearly within the organization, and it is necessary to make sure that each affected party understands why the new concept is being introduced, and how each individual is going to benefit from the introduction of the concept. There should be a reason for any idea to exist. Why does an individual need it? Without trust, nothing can be achieved. It is also important to make sure that everyone should feel a sense of ownership of the concept. Although imagination is more important than knowledge according to Albert Einstein, conversation without communication ruins good imagination.
In Barilla’s case, it is obvious that the above problems all existed during the implementation of JITD.
If I were Giorgio Maggiali, I would try to manage touchpoint experience, a concept that I developed some years ago.
After all, in order to deliver results, it is not only about strategy and planning, but it is also about execution, and it has to be done by people.
People are always the root problem, and this explains why people management is so important.
Touchpoint is all communication from start to completion. Experience is a subjective feeling that once expectation is met the experience is positive.
In order to make sure that the JITD program can be implemented successfully, I’d run the program first by pilot. I’d explain clearly about the problems that both Barilla and the distributors might be facing, and then select the distributor who has faith in the concept, and then roll out the pilot program with the chosen distributor. In order to ensure its success, I may also introduce some incentive program, where the incentive would only be given if the expected results are delivered. When the pilot is done with success, I’d share the results with all other distributors. Meeting would be held on a regular basis to keep every distributor informed of the progress.
Internally, I’d also hold meetings on a regular basis. But before the regular meetings, I’d gain support from all department heads. I’d make sure that every one in the organization has a sense of ownership of the idea. The success of the JITD program is not mine but ours!
Individual hero does not work anymore in today’s business environment but teammates.
