Barilla Spa

Abstract

This paper examines the supply chain of the large Italian pasta company Barilla Spa. I will look at the increased variability of Barilla Spa’s supply chain and solutions to coping with this increase through the possible implementation of the just-in-time distribution (JITD) concept. I will analyze the use of vendor-managed inventory and the likelihood of this approach as a solution to Barilla’s operational problems. Barilla Spa’s complete supply chain will be examined for efficiency by studying the various components and determining if the JITD model would be helpful in eliminating inefficiencies for both Barilla and its distributors and increase profitability for all parties involved.

Barilla Spa Case Study

The reason for increase in variability in Barilla’s supply is caused by several inefficiencies in the composition of the supply chain, which in turn leads to the Bullwhip effect. Barilla Spa has a huge product line divided into two categories, fresh products and dry products with over 1,200 different SKU’s and is one of the largest pasta company’s in Italy with a huge distribution network. This network is made up of large distribution centers, organized distributors (GD’s and DO’s) and supermarkets. Barilla faced inefficiencies in forecasting due to a shortage of proper forecasting systems or analytical tools within the supply chain and a lack of shared customer data. Many retailers simply did a weekly inventory and placed orders for resupply as needed. Without the proper base stock levels at the retailer and the distributor’s lack of accurate demand data, each level of the supply chain has to forecast with less than accurate data that increases the inventory levels at the facilities and causes erratic fluctuations at the manufacturer. Another cause for variability in the supply chain is changes in lead-time. Longer lead-times give way to increased safety stock levels, base-stock levels and fluctuating order quantities....