American Tool Works

INSE 6290 - Quality in Supply Chain Design

Assignment - 2

Submitted by,

Miracle Ebenezer J J (27728689)

Course Instructor

Dr. Chun Wang

1. a) What are the reasons for increase in the variability in Barilla’s supply chain?

Supply Chain for Barilla consisted of several levels.

It consists of: Manufacturer-> CDC-> Distributors->Retailers.

Barilla took 1-2 weeks to fulfill the order request placed by distributors. Barilla had to 2 different product lines (Fresh" products, including fresh pasta products, which had 21-day shelf lives, and fresh bread, which had a one-day shelf life Dry products represented about 75 percent of Barilla's sales and had either "long" shelf lives of 18 to 24 months (e.g., pasta and dried toasts) or "medium" shelf lives of 10 to 12 weeks (e.g., cookies)). Distributors maintained 2 weeks of safety stock. Barilla also served its customers through 2 different distribution organizations, namely, distribuzione organizzata ("organized distributors"),DO and grande distribuzione ("grand distributor") GD. Distributors ordered replenishments just by looking at the current inventory. There was no scientific/objective way of determining the demand before the reordering was done. Since the demand was not estimated, Barilla was not able to expect the actual demand to set up its production planning. Independent forecast by members in supply chain gave rise to the bullwhip impact and thus expanded unpredictability supply chain. Even though customer demand did not vary much, inventory and back-order levels fluctuated very much across the supply chain. Information about the demand was available but was not shared to the next levels. Absence of information sharing increased demand fluctuations and created more dead weight loss in the supply chain.

Causes for demand fluctuations

1. Unavailable demand forecast

2. Longer lead times

3. No information sharing

4. Price promotions

5. No minimum or maximum size of the orders

B)...