Case Study Barrila

MGP 282 | Supply Chain Management | Barilla Case Venkata Gudladona and Kanupriya Verma

Q1. What are the reasons for the in rease in varia ility in Barilla’s supply hain? Supply Chain for Barilla consisted of several levels. It consists of: Manufacturer  CDC  Distributors  Retailers. Barilla took 1-2 weeks to fulfill the order request placed by distributors. Barilla had to 2 different product lines (1 Day Perishable and 4-6 month perishable product lines (Dry)). Distributors maintained 2 weeks of safety stock. Barilla also served its customers through 2 different distribution organizations, namely, DO and GD. Distributors ordered replenishments just by looking at the current inventory. There was no scientific/objective way of determining the demand before the reordering was done. Since the demand was not forecasted, Barilla was not able to anticipate the actual demand to set up its production scheduling. Independent forecasting by members in the supply chain gave rise to the bullwhip effect and hence increased volatility in orders as these propagate through the supply chain. Even though customer demand did not vary much, inventory and back-order levels fluctuated very much across the supply chain. Information about the demand was available but was not shared to the next levels. Absence of information sharing increased demand fluctuations and created more dead weight loss in the supply chain. Causes for demand fluctuations: 1. Unavailable demand forecast 2. Longer lead times 3. No information sharing 4. Price promotions 5. No minimum or maximum size of the orders Q2. How can the firm cope with the increase in variability? In order to cope up with increase in variability, 1. Reduce the price promotions as a method to push the product. An option can be everyday low pricing. Price promotions caused fluctuating demand.

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MGP 282 | Supply Chain Management | Barilla Case Venkata Gudladona and Kanupriya Verma

2. Centralizing the demand information can...