Barilla Case Study
Barilla SpA * The spaghetti incident -
Maastricht University
School of Business and Economics
International Executive Master of Finance and Control
20 April 2012
Course – Logistics
Prof. Dr. Allard van Riel
Pauline Henselmans
Jetse van de Kamp
Ze Zhu
Thiago Barros de Oliveira
Rene Lorrier
Contents
1. Reasons for the increase in variability in demand in Barilla’s supply chain 3 1.1 Distributed inventories, local optimization 3 1.2 Lack of inventory information and sales forecast information 3 1.3 Promotions and quantity discounts 4 1.4 Lack of sophistication at the retailer and distributor level 4 1.5 Barilla’s large number of SKU’s 4 1.6 Barilla’s production process 4 2. Solutions 5 2.1 Promotions and quantity discounts 5 2.2 Lack of sophistication at the retailer and distributor level 5 2.3 Large number of SKU’s 5 2.4 Production process 5 3. Proposed Strategy for decreasing bullwhip effect 6 3.1 Step 1 - Involve top management to realize changes within the company 6 3.2 Step 2 – Run a pilot with JITD at a GD 7 3.3 Step 3 – Run a pilot with JITD at a DO 7 3.4 Step 4 – Implementing JITD across the supply chain, using best practices 7 3.5 Changes to the sales organization 8 3.6 Improvements at the retailers and distributor level 8 3.7 Upgrading Barilla’s production process 8 4. Final considerations 9 Reference List 10
1.
Reasons for the increase in variability in demand in Barilla’s supply chain
The root cause of the increasing variability in Barilla’s supply chain is the demand fluctuation. In fact, Barilla is suffering from what is known as the bullwhip effect: demand fluctuations increase as one moves up the supply chain from retailer to manufacturer (Boute and Lambrecht, 2009). The large impact of the bullwhip effect at Barilla has a number of causes, which will be explored in this section.
In the paragraphs that follow, the following main underlying causes
Maastricht University
School of Business and Economics
International Executive Master of Finance and Control
20 April 2012
Course – Logistics
Prof. Dr. Allard van Riel
Pauline Henselmans
Jetse van de Kamp
Ze Zhu
Thiago Barros de Oliveira
Rene Lorrier
Contents
1. Reasons for the increase in variability in demand in Barilla’s supply chain 3 1.1 Distributed inventories, local optimization 3 1.2 Lack of inventory information and sales forecast information 3 1.3 Promotions and quantity discounts 4 1.4 Lack of sophistication at the retailer and distributor level 4 1.5 Barilla’s large number of SKU’s 4 1.6 Barilla’s production process 4 2. Solutions 5 2.1 Promotions and quantity discounts 5 2.2 Lack of sophistication at the retailer and distributor level 5 2.3 Large number of SKU’s 5 2.4 Production process 5 3. Proposed Strategy for decreasing bullwhip effect 6 3.1 Step 1 - Involve top management to realize changes within the company 6 3.2 Step 2 – Run a pilot with JITD at a GD 7 3.3 Step 3 – Run a pilot with JITD at a DO 7 3.4 Step 4 – Implementing JITD across the supply chain, using best practices 7 3.5 Changes to the sales organization 8 3.6 Improvements at the retailers and distributor level 8 3.7 Upgrading Barilla’s production process 8 4. Final considerations 9 Reference List 10
1.
Reasons for the increase in variability in demand in Barilla’s supply chain
The root cause of the increasing variability in Barilla’s supply chain is the demand fluctuation. In fact, Barilla is suffering from what is known as the bullwhip effect: demand fluctuations increase as one moves up the supply chain from retailer to manufacturer (Boute and Lambrecht, 2009). The large impact of the bullwhip effect at Barilla has a number of causes, which will be explored in this section.
In the paragraphs that follow, the following main underlying causes