Barilla SpA Case Analysis
BARILLA SpA CASE ANAYLSIS
XUELAI (ANDY) HU
Contents
Executive Summary 2
Issue Identification 3
Environmental and Root Cause Analysis 4
Alternatives or Options 6
Recommendations and Implementation 6
Monitor and Control 8
Executive Summary
Barilla SpA, a large vertical integrated corporation that makes pasta and bread products is experiencing rising costs due to extreme variability in demand from its distributors. In order to improve company’s sale margins, Giorgio Magialli, the Director of Logistics at Barilla suggests to implement a Just-In-Time Distribution (JITD) system. The JITD system is a continuous replenishment distribution strategy, which the responsibility for determining inventory quantities shifts from the distributors to Barilla based upon its demand forecasts. This system is entirely different from the existing distribution system and is rejected by Barilla’s internal sales and marketing department and the external distributors.
In this case analysis, the main issues: whether JITD system is feasible for Barilla and how it can be implemented effectively is discussed. Some other issues such as difficult to obtain sales data from distributors, inefficient forecasting techniques, highly complex manufacturing processes, large selections of SKUs, and long lead time to full fill the orders that have made the distributor’s order pattern volatile and have made JITD system difficult to apply are also discussed in the case.
After identifying the issues and analyzing their root causes, alternatives, recommendations and implementations are provided in this case. By following the recommendations and implementations that have been provided, all existing issues can be resolved. As a conclusion, JITD system, a centralized supply chain with Barilla controlling the orders will result in better profits for all parties. JITD system should be implemented.
Issue Identification
The main issue in this case is how to effectively implement JITD
XUELAI (ANDY) HU
Contents
Executive Summary 2
Issue Identification 3
Environmental and Root Cause Analysis 4
Alternatives or Options 6
Recommendations and Implementation 6
Monitor and Control 8
Executive Summary
Barilla SpA, a large vertical integrated corporation that makes pasta and bread products is experiencing rising costs due to extreme variability in demand from its distributors. In order to improve company’s sale margins, Giorgio Magialli, the Director of Logistics at Barilla suggests to implement a Just-In-Time Distribution (JITD) system. The JITD system is a continuous replenishment distribution strategy, which the responsibility for determining inventory quantities shifts from the distributors to Barilla based upon its demand forecasts. This system is entirely different from the existing distribution system and is rejected by Barilla’s internal sales and marketing department and the external distributors.
In this case analysis, the main issues: whether JITD system is feasible for Barilla and how it can be implemented effectively is discussed. Some other issues such as difficult to obtain sales data from distributors, inefficient forecasting techniques, highly complex manufacturing processes, large selections of SKUs, and long lead time to full fill the orders that have made the distributor’s order pattern volatile and have made JITD system difficult to apply are also discussed in the case.
After identifying the issues and analyzing their root causes, alternatives, recommendations and implementations are provided in this case. By following the recommendations and implementations that have been provided, all existing issues can be resolved. As a conclusion, JITD system, a centralized supply chain with Barilla controlling the orders will result in better profits for all parties. JITD system should be implemented.
Issue Identification
The main issue in this case is how to effectively implement JITD