Barilla

Part 1: Executive Summary

Barilla SpA is one of the largest and most prestigious brand name pasta manufacturers in the world with little control over their own production system. Unpredictable fluctuations in demand have strained Barilla’s manufacturing and logistics operations causing them to overproduce and hold excess inventory to meet distributor requirements. Currently unable to match supply and demand, it is crucial that a decision be made immediately to alleviate the risks facing current supply chain management system, now and in the future. Implementing the JITD system will resolve this problem by allowing them to produce and ship product only as it is needed, rather than building large inventory levels in both warehouses. Utilizing demand from the end-user as input will create the flexibility they need to respond efficiently to execute orders.

To succeed with this new system, it is essential that Barilla has the involvement, support, and collaboration of top management. Creating credibility and the win-win concept to communicate to management and customers will make the transition more effective, gain their trust and create transparency throughout the supply chain.

Part 2: Issue Identification

Barilla’s supply chain management style relies heavily on the distributors internal planning processes. Operating in this manner proves nearly impossible to anticipate variability in demand, specifically in the order quantities, which spreads upstream in the supply chain. The lack of information from the beginning and mid supply chain leads to an imbalance where inventory levels are high even as stock-outs occur. These stock-outs then lead to larger product batches and in turn the erratic order patterns deteriorate lead time; leaving Barilla with a vicious cycle to eradicate. With volatile swings in demand week to week, resulting from irregular order patterns, Barilla has suffered increased operational inefficiencies and avoidable costs....