supply
Barilla Case Study
1. What are the reasons for the increase in variability in Barilla’s supply chain?
The supply chain of Barilla is highly variable because of a number of reasons. One of the major reasons is the fact that the distribution network for the firm is complicated because of the involvement of middlemen who make the supply chain longer and complex. In order to have adequate supplies, the firm depends on forecasting models, which are improper, rather than depending on the distributors who will provide accurate information from restock and refill strategy. Each of their product line has large SKUs, which lead to increase in labor costs and production costs thus further leading to increased variability in supply. In order to beat the many competitors, the firm uses frequent promotions increasing demand but at low prices further increasing labor and production costs. Barilla has two separate supply chain because it has to separate products namely dry and fresh products and thus the two products must be treated differently. The fresh product is from two central distribution centers that channel it to 70 regional warehouses while the most of the dry products are channeled to supermarkets.
2. How can Barilla cope with the increase in variability?
The problem of increased variability can be solved by solving the problem brought about by the distribution system. Through the replenishment strategy, there is an agreement between the supplier and the firm. Through this, the firm will be able to share with the suppliers the data about inventory and frequency and thus be able to meet their demands. If the products are delivered under the agreement between the firm and the suppliers, JIT (Just in Time) distribution system will be followed and therefore customer satisfaction will be increased.
3. What is the impact of transferring demand information across the supply chain? By transferring demand information across the supply chain, it will mean
1. What are the reasons for the increase in variability in Barilla’s supply chain?
The supply chain of Barilla is highly variable because of a number of reasons. One of the major reasons is the fact that the distribution network for the firm is complicated because of the involvement of middlemen who make the supply chain longer and complex. In order to have adequate supplies, the firm depends on forecasting models, which are improper, rather than depending on the distributors who will provide accurate information from restock and refill strategy. Each of their product line has large SKUs, which lead to increase in labor costs and production costs thus further leading to increased variability in supply. In order to beat the many competitors, the firm uses frequent promotions increasing demand but at low prices further increasing labor and production costs. Barilla has two separate supply chain because it has to separate products namely dry and fresh products and thus the two products must be treated differently. The fresh product is from two central distribution centers that channel it to 70 regional warehouses while the most of the dry products are channeled to supermarkets.
2. How can Barilla cope with the increase in variability?
The problem of increased variability can be solved by solving the problem brought about by the distribution system. Through the replenishment strategy, there is an agreement between the supplier and the firm. Through this, the firm will be able to share with the suppliers the data about inventory and frequency and thus be able to meet their demands. If the products are delivered under the agreement between the firm and the suppliers, JIT (Just in Time) distribution system will be followed and therefore customer satisfaction will be increased.
3. What is the impact of transferring demand information across the supply chain? By transferring demand information across the supply chain, it will mean