Barilla Case Project
Executive Summary Barilla SpA is a world largest past manufacturer has experienced a phenomenal growth. The company had pasta share of 35% in Italy and 22% in Europe, plus 29% in Italian bakery product market(page 2 case) However, it began taken a tall on Barilla’s “manufacturing and distribution system” (page 1 Case). Without having proper data and control over the orders the company experienced wide fluctuations in demand. As a result Barilla experienced bullwhip effect where demand forecast was not centralized but instead done by separate stores and distribution centers.
Giorgio Maggiali took over Brando Vitali as a director of logistics. He followed his predecessor’s vision to create Just in Time Distribution system. However, after two years of trying, little progress was made. Maggiali had met resistance internally and externally. Internally sales and marketing departments were completely opposing new concept. Externally, distributors did not want to relinquish power over managing their own inventory.
Although “total pasta consumption was relatively consistent throughout the year”, Barilla experienced extreme fluctuations in orders from week to week. (page 2 and exhibit 13). Barilla had many distributors which used “internal planning process,” and was not consistent across the board. There lack of sophisticated forecasting system and no limit on order quantity contributed to fluctuating demand. In addition there were other factors such as too many promotional activities throughout the year. As a result this caused strain and pressure on manufacturing, lead time, perishability of the product, high operating costs due to inefficiencies, unacceptable cycle service level, and inability for distributors to carry many of Barilla’s SKU’s.
Director of Logistics was on the right track to implement JITD system. At first he needed to convince internal and external take holders that by implementing the new system and brining forecasting internally will
Giorgio Maggiali took over Brando Vitali as a director of logistics. He followed his predecessor’s vision to create Just in Time Distribution system. However, after two years of trying, little progress was made. Maggiali had met resistance internally and externally. Internally sales and marketing departments were completely opposing new concept. Externally, distributors did not want to relinquish power over managing their own inventory.
Although “total pasta consumption was relatively consistent throughout the year”, Barilla experienced extreme fluctuations in orders from week to week. (page 2 and exhibit 13). Barilla had many distributors which used “internal planning process,” and was not consistent across the board. There lack of sophisticated forecasting system and no limit on order quantity contributed to fluctuating demand. In addition there were other factors such as too many promotional activities throughout the year. As a result this caused strain and pressure on manufacturing, lead time, perishability of the product, high operating costs due to inefficiencies, unacceptable cycle service level, and inability for distributors to carry many of Barilla’s SKU’s.
Director of Logistics was on the right track to implement JITD system. At first he needed to convince internal and external take holders that by implementing the new system and brining forecasting internally will