Facilitated by Team 7 Manuel Atanacio Melissa Debach Cosmo Kapoor Wayne Leonard Molly Neznanski

1. Barilla: Just In Time Distribution, Just in Time Facilitated by Team 7 Manuel Atanacio Melissa Debach Cosmo Kapoor Wayne Leonard Molly Neznanski Allen Sajedi

2. Problems at Barilla: Illustrated

3. High stock out rates Long lead times Inappropriate Incentives Bulk orders Purchasing not sales Problems at Barilla: Business

4. Multiple Pasta Varieties Cumbersome Machinery Inaccurate Forecasting Fluctuating Demand Problems at Barilla: Production

5. Key Issues Manufacturing & Production Process - Equipment limitations - Production delays - Costly, time consuming and inefficient Forecasting - Low volume production - Seasonal demand - Low margins - High real estate costs - Requires quick turns, minimal inventory

6. Maintain status quo Production changes to drying process 3) Implement JITD with existing network 4) Obtain new network of distributors - implement JITD Alternatives

7. 1) Maintain Status Quo - stock out levels remain high - demand forecasting inaccurate - long lead times - costly & inefficient Alternatives cont’d 2) Production Changes - alter drying process - variety agility - costly & slow to implement • maintain automation • maintenance friendly

8. 3) Implement JITD: Existing Network - focus on education - relationship improvement - quick implementation - established network Alternatives 4) Implement JITD: New Network - “blank slate” - trust & commitment - costly - slow distributor acquisition

9. Recommendation: Alternatives 3 & 4 Existing Network+ New Network - existing relationship - “blank slate” - system education - ground up - build trust - system leaders = Success - greater knowledge of customers - more targeted promotions - reduced stock out rates - lead time and cost reduction

10. Executive commitments Barilla Sales and Marketing Discussions - JITD as a sales tool - Distributor recruitment - Relationship management Action Plan: Phase 1

11. Action Plan:Phase 2 • Sales and Marketing: • Educate Existing Distributors: • 1) Cultivate relationships • 2) Benefits of JITD • 3) Reducing the Bullwhip Effect • 4) Triple-A Supply Chain • 5) CPFR Model • Recruit New Distributors • 1) Embrace JITD methods • 2) System leaders • 3) Triple-A Supply Chain • 5) CPFR Model

12. Commitment to: Triple-A Supply Chain - Agility of Information Sharing - Adapt to address customer needs - Alignment of common interests/values - risk mitigation - cost reduction - optimized customer satisfaction Key Success Factor 1

13. Collaborative Planning, Forecasting and Replenishment Process Model -Establish Partnership Parameters - timing goals - performance metrics - procedures - Joint Business Plan (Policies/Guidelines) - strategic decisions - information sharing - Create joint forecast model - exceptions - forecasting rules - order quantities Key Success Factor 2Common Parameters - Requires collaboration - Information sharing - Joint forecasting - Common performance metrics - Address customer needs - Proactive decision making

14. Restructure Incentives Action Plan: Phase 3 Current Incentive Volume Discount Promotional Pricing Negative Behaviors Frequent Stock Outs Unpredictable Demand New Incentive Accurate Orders Sell out Bonus Milk-run Delivery Uniform Wholesale Pricing Buy back clauses Positive Behaviors Information Sharing Varied Shipments Frequent Ordering Order by forecasts Order by forecasts

15. Eliminate the Bullwhip Effect: - Greater information sharing - Price stabilization - Gaming elimination - Echelon inventory Action Plan: Phase 4

16. - Commitments - Education - Incentive alignment - Relationship building - Implementation of JITD Conclusion

17. Questions?