BARILLA SpA (A)
SUPPLY CHAIN MANAGEMENT – MODULE ONE
Table of Content
Table of Content
Environmental And Root Cause Analysis
Monitor and Control
Barilla SpA,(A) is the largest producer of pasta in the world, making 35% of all pasta sold in Italy and 22% of all pasta sold in Europe. The product line of Barilla is divided into the dry product category (representing 75% of Barilla’s sales), and fresh product category (representing 25% of Barilla’s sales). Their supply chain and manufacturing process is heavily vertical integrated. Fluctuating demand became a major problem for the corporation in the 1980s, with order for the dry product swinging wildly from week to week (refer to Exhibit 12), straining the corporation’s manufacturing and logistics operations. Worse still, increased costs in the distribution channel brought about the critical problem of thinning margins in profit for both Barilla, and the retailers. To address the aforementioned problems, the Just-In-Time Distribution (JITD) program was conceived to address order-fulfillment and meet the demand needs customers. It is envisaged that the proposed JITD system will not only increase the inventory flow between plants and distribution centre, but shall also meet demand needs. However, the implementation of the JITD has not been successful so far. There have been major resistance to the program roll-out, with concerns raised by both internal staff, and external distributor and retailers. It is pertinent that Barilla address the concerns of both distributors and the concerns/fear of internal sales representatives, list out the benefit that the JITD program would deliver as an overall. Moreover, Barilla shall need to better forecast their sales and in times when there are promotions, their sales representative should work closely with their customers and communicate that information ahead of time to the supply chain logistic team such that proper allocation of resources and materials can be addressed. My recommendation is to hire two Supply Chain Analysts, to act as a liaison between the sales and the DCs, where one deals with the Northern DCs and the other tackles the Southern DCs. They will gather information and forecast data for analysis and input into the system. By using these data, the plant will have sufficient amount of data in order to schedule their production line longer and reduce the amount of changeover, thus increase the overall efficiency and delivery process.
Currently, Barilla is faced with the problem of demand fluctuations from their distributors and buyers. This is due to the poor forecasting and planning that they have in place. The promotional process that Barilla has in place causes stock outs and inventory fluctuations. For example, during promotion week, the distributors can order what they want and how much they want and this is an uncontrolled environment. They have the opportunity to address this issue with the newly proposed JITD system but there is also a disconnection from the plant, logistic and the sales team which adds to the problem. This immediate issue is just the tip of the iceberg and the issues that are in place are caused by the systemic issue listed below. Systematic Issue
During promotional week, a distributor would be able to order as much as they desired on any products during promotional week. This will cause stock outs and inventory fluctuations within the DCs, which eventually will cause the manufacturing plant to scramble around to slot in to increase production into their production schedule. Disconnect In Communication Between DCs, Sales And Supply Chain As a team, they should...
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