Barilla Spa a Case Write Up

Barilla case write up

Q1.

The main problems Barilla faces are those surrounding fluctuations in demand, namely those widely variable fluctuations that arise from having a multiple level supply chain. The majority of Barilla’s customers do not buy directly from Barilla, but from middlemen distributors who place their orders based on the demand of Barilla’s end customers. In order to maintain their inventory levels, those distributors order an amount of product from Barilla pasta producers that encompass not only the end consumer’s basic needs, but also the amount needed for the distributor to maintain its own inventory levels. This causes a “bull whip” effect that essentially results in periods of very low and extremely high demand for Barilla’s manufacturers. JITD would help resolve the variable nature of Barilla’s production demand by allowing the company to better forecast its end consumer’s demand and base its production and shipping schedules on demand information derived straight from the end of the supply chain. The overall goal and result from implementing a JITD strategy would allow Barilla’s producers, distributors, and consumers alike to maintain leaner inventory levels, increase ever-diminishing profit margins, and establish a higher level of customer service and stability in each tier of the supply chain. Perceived problems with implementing a JITD strategy at Barilla arise mainly from conflicting interests internally, discussed further in question two. Barilla’s salespeople perceive it as a method that will reduce their sales, make promotions impossible, and increase the risk of stock outs throughout the value chain. With the right information, however, each of these potential concerns could be avoided to allow Barilla to appreciate drastic savings and establish a more stable, predictable environment for each part of the supply chain.

Q2.

Barilla was eager to implement a just-in-time distribution system as originally proposed by Brando Vitali....