Barilla Spa(a) Case Study
Session 5: Supply Chain Inventory Management
Barilla Spa (A) Case Study
Table of Contents
Executive Summary 3 Issues Identification 4 Environmental and Root Cause Analysis 4 Fluctuating Demand: 4 Resistance to Changes: 5 Alternative and/or Options 5 Alternative #1 – Continue to promote the Just-in-time Distribution (JITD) initiative 5 Alternative #2 – Eliminate product focus sales strategies 5 Recommendations and Implementation 6 Monitor and Control 6
Executive Summary
Sales representatives at the Barilla SpA, world’s largest pasta producer, are seeing customers changing due to long re-order lead-time and frequent stock-outs. Even with a high inventory levels, Barilla is still not able to cope with the fluctuating demand. The fluctuation in demand is seen as the bullwhip effect that is caused by sales strategies that have been put into place that is very product focused. This causes excessive demand from week to week depending on the product that the promotion or incentive is been aimed towards. There is also a lack of data sharing and poor communication throughout the whole supply chain which does not bring visibility for production forecast.
With the Just-in-Time Distribution (JITD) that was brought in from the logistics manager, neither internally nor externally is supporting the new system. With the lack of understanding of the new system and the positive results it will bring, it will be hard to convince buy-ins from different angles. The initiative should be tested first from Barilla’s own facilities and prove out the methods and be able to visualize the improvements to the rest of its supply chain.
During the implementation and test phase, there should be dedicated teams which monitor the data and metrics coming from the new system. Daily meetings should be held to discuss issues and resolve them as quickly as possible. As inventory levels drop, issues with the distribution system will arise which provides a
Barilla Spa (A) Case Study
Table of Contents
Executive Summary 3 Issues Identification 4 Environmental and Root Cause Analysis 4 Fluctuating Demand: 4 Resistance to Changes: 5 Alternative and/or Options 5 Alternative #1 – Continue to promote the Just-in-time Distribution (JITD) initiative 5 Alternative #2 – Eliminate product focus sales strategies 5 Recommendations and Implementation 6 Monitor and Control 6
Executive Summary
Sales representatives at the Barilla SpA, world’s largest pasta producer, are seeing customers changing due to long re-order lead-time and frequent stock-outs. Even with a high inventory levels, Barilla is still not able to cope with the fluctuating demand. The fluctuation in demand is seen as the bullwhip effect that is caused by sales strategies that have been put into place that is very product focused. This causes excessive demand from week to week depending on the product that the promotion or incentive is been aimed towards. There is also a lack of data sharing and poor communication throughout the whole supply chain which does not bring visibility for production forecast.
With the Just-in-Time Distribution (JITD) that was brought in from the logistics manager, neither internally nor externally is supporting the new system. With the lack of understanding of the new system and the positive results it will bring, it will be hard to convince buy-ins from different angles. The initiative should be tested first from Barilla’s own facilities and prove out the methods and be able to visualize the improvements to the rest of its supply chain.
During the implementation and test phase, there should be dedicated teams which monitor the data and metrics coming from the new system. Daily meetings should be held to discuss issues and resolve them as quickly as possible. As inventory levels drop, issues with the distribution system will arise which provides a