Barilla

Executive Summary

Barilla is the largest manufacturer of pasta in Europe. With quantity of the customers that Barilla has and the quantity of different SKUs that Barilla manufactures, fluctuations in demand are putting too much strain on the manufacturing and distribution of Barillas products.

In order for Barilla to continue to grow and remain profitable it must change its current supply chain. Barilla has to implement a Just in Time Distribution (JITD) system.

The JITD system will require a capital expense to upgrade the current information system that Barilla uses.

Implementing the system will first involve enrolling all Barilla employees then one by one enrolling and working closely with the distributors.

Once the new system has been implemented and is being fully utilized Barilla will see increases in profit, factories that are operating on schedules to their maximum output, distribution costs that are reduced and distributors that are happier with Barilla’s service.

Immediate Issue

The immediate issue is that large fluctuations in demand are causing strain on Barilla’s entire supply chain. The demand fluctuations cause problems for Barilla’s manufacturing and distribution which in turn negatively impact Barilla’s customers. At the core of this issue lies real problem and that is a lack of two way communication between Barilla and its customers.

Reasons for Demand Fluctuations

There are many reasons for the demand fluctuations and almost all of them are caused by the way in which Barilla does business.

Sales promotions are offered to distributors which in turn offer the discounted price to the stores that they sell to. There are no minimum or maximum order amounts for these promotions. If there is a particularly good product at a heavy discount, a distributor can order inventory that would far exceed the length of the promotion.

On top of the promotions, discounts are given to distributors to further increase their...