Barilla Spa

One of the drivers of how many a company manufactures is the demand. This tells what the size of the inventory is so that variation can also be compensated. This will be more difficult if the company has a wildly fluctuating demand for the inventory level for this case cannot be constant because of the cost involved. Barilla SpA is having this problem.

Barilla SpA is a pasta manufacturer company in Italy. In the year 1990, Barilla SpA is the largest pasta producer in the world. The main products of the company are divided into two types, the fresh and the dry. Their finished product is transported to small independent shops and supermarkets.

As much other company has a problem, Barilla Spa has variability issues in the supply chain. They are having trouble in the fluctuating demand. Fluctuating demand makes it hard to specify the needed inventory level so that the demand is satisfied while the cost is minimized.

There are times in which it is hard to produce additional pasta on high demand seasons because of tight heat and humidity specification that is required by the process. Having high inventory for the demand fluctuation is costly because of the unpredictability.

I think that the idea Vitali proposed will help improve lessen the variability of the firm. Vitali’s idea is that the firm must use Just-In-Time Distribution (JITD) for the delivery of finished product to retailers.

With the installation of a JITD system, it doesn’t matter how many retailers order in the firm, it will not cause unwanted cost. If the retailers order, let us say about 100 units of pasta, the company will give them 100 units of pasta. In the next week, if the retailers order 5 units of pasta, the company will also give them 5 units of pasta, no more, no less. Costs like production cost and inventory cost will be decreased.

The company will only produce the amount that retailer orders for a certain period. This way, the company will not produce excess products that might not...