Barilla Spa

Case Study #1 - Barilla SPA

Introduction

Barilla SpA, located in Italy, is the world’s largest producer of pasta. Barilla also manufactures a variety of other products such as bread, cookies, biscuits, and breadsticks through its multi-echelon supply chain distribution network that includes Grand Distributors (GD), Organized Distributors (DO), and Barilla’s own deports (BD). Barilla has been experiencing large amounts of variability in demand resulting in operational inefficiency and increased manufacturing, inventory, and distribution costs.

This case study will identify the reasons for the fluctuations in demand and explain how Barilla can have success in influencing its distributors and sales personnel to work together and implement the Just-In-Time Distribution (JIT) program that will not only result in better performance in terms of time and money but also promote trust and good relations among all the partners in the supply chain.

Fluctuation Factors

Barilla’s main problem is the fluctuating demand. Once this is brought under control, many other problems will be solved. The underlying factors of the fluctuating demand include Barilla’s sales strategy relying heavily on the use of promotions in the form of price, transportation and volume discounts; sales representatives being rewarded based on the amount of product sold to distributors, which led to sales representatives trying to push product to the distributors during promotions, decreasing the ability to accurately forecast sales; the distributors having full control over their orders leading to gaming behaviors; and the lack of a computer forecasting system at the distributor level.

Demand Fluctuations

The fluctuating demand had many adverse effects for Barilla which includes increased production costs as the demand variation increases because pasta production is a very delicate process and the drying of different types of pasta required precise levels of temperature...