Barilla Spa

Barilla Spa, the world’s largest pasta manufacturer is facing a distribution problem of extreme demand fluctuation. This problem causing the company to suffer inefficiency in their logistic and manufacturing system, this increase their inventory and distribution cost. In fact, Barilla had to cope with the Bullwhip effect in its own distribution channel. We can really notice this problem if we consider the exhibit 12: between week 12 and week 13 there is a huge ordering difference from Cortese Northest DC to Pedrignano CDC. Moreover, we can see on exhibit 13 that the distributor Cortese has to face with many stock outs: almost 9% on week 30.

To overcome this problem, Brando Vitali, Barilla’s director of logistics, proposed a new program in 1988 called JITD “Just in Time Distribution”. Vitali underlined that the distributors and warehouses had inventory problem because of the demand swing of the downstream retailers. Those fluctuations are hitting main Barilla’s plants, as they cannot plan sustainable forecast, which cause another manufacturing cost. JITD program aims to minimize the inventory or backlog of distributor warehouse by sharing the data of all the distributors in the supply chain and providing only what is needed in the stores. Doing this way, Barilla’s plants could be able to make its replenishment decision based on its own precise forecasts and production planning. It would improve the Barilla’s operations and production efficiency because they could deliver the product at a specific time and effectively fulfill the market demand.

However, Vitali encounter opposition and disagreement regarding this plan from Barilla’s marketing department. They highlight the risk of competitor’s opportunity to take down the company if Barilla’s supply is limited to the ongoing stock number of the warehouse, as they won’t fill the shelves anymore. They also wouldn’t be able to make promotions with JITD. He also had a hard effort convincing Barilla’s downstream...