Supply Chain Manegement [Problem and Solution for Barilla Spa]

Issue 1: Demand fluctuation

Causes of Problems in Barilla Spa are:

Excessive promotional activities

Lack of sophisticated demand forecasting

Distributor Inventory

Transportation discounts

Volume discounts

Promotional activities

No minimum or maximum order quantities

Product proliferation

Long lead time

Poor customer service rates

Sales compensation system

The root causes of major problems are due to fluctuation in demand or lack of accurate demand forecasting. The causes of Fluctuation are:

Poor Communication

Promotions

Volume Discounts

Lead Times

Number of SKUs

Sales Compensation

Stock outs

No volume Constraints

Cost of Fluctuation

Production Inefficient

Finished Goods Inventory

Distribution Inefficiency

Workers

Equipment

Trucks

The methods employed to curb fluctuating demand by Barilla Spa are:

Maintaining excessive inventory to meet distributers demand

Maintaining high levels of inventory at the distributers warehouses.

The impacts of fluctuating demand on the company are:

Over burning operations and logistics

Poor and late product delivery

Increased inventory carrying cost

Bullwhip effect

Issue 2: Just in time distribution

Barilla Spa has over 800 types of products and specialized plants for different types, large number of products and no sophisticated demand forecasting has led to fluctuations in demand. The company is not able to meet with the requirements of the distributers and the service level of the company was dropping fast, to curb demand fluctuations and increase efficiency of the supply chain Just in time distribution was planned to be introduced. JIT treats end customer data as input, with accurate and close to real time data reduces fluctuation and increases demand accuracy. Distributers will provide POS data and according to that the company will maintain inventory and deliver products based on estimated demand

Expected benefits for manufacturer

Barilla...