Barilla Spa (a) Case Study
Barilla’s pasta supply chain suffers from classic bullwhip-effect problems: High inventory levels maintained at each level of the supply chain; frequent stockouts at the distribution level; demand variability exaggeration up the chain, and aggravated by constant sales promotions, Full Truck Load(FTL) and other volume incentives; and a lack of information on which to forecast demand. In addition, the increasing variability of Barilla’s dry pasta product (about 800 SKUs) intensifies all the problems mentioned-above.
The growing pain caused by bullwhip–effect in Barilla’s dry pasta supply chain can not be ignored. High inventory levels in Barilla’s Central Distribution Centers (CDCs) and in its distributors’ distribution centers represent increasing financial burdens on both Barilla and its distribution partners. The tight heat and humidity specifications in the pasta dry process makes it difficult for Barilla to quickly respond to the huge fluctuation and uncertainty of demand form distributors. As a result, Barilla’s customer order fill rate is suffering and so does its manufacturing and distribution operation cost. Despite the excess stocks held in the distributors’ warehouses, stockout happens all the time and the order fill rate of the distributors are suffering as well. Further down the chain, end-consumers’ needs will not be fully satisfied if the dysfunction of Barilla’s dry pasta supply chain continues.
Barilla’s customers are divided into three primary segments: small retail shops, large independent supermarkets, and large supermarket chains. Distribution to small retail shops is done by Barilla-Run Depots. Distribution to supermarkets goes through intermediate distribution centers, either owned by the chain, or operated by a third party representing multiple independent supermarkets.
The retailers send their orders to their distributor on a daily basis. The distributor, however, place their orders to Barilla once a week. Even though all of the
The growing pain caused by bullwhip–effect in Barilla’s dry pasta supply chain can not be ignored. High inventory levels in Barilla’s Central Distribution Centers (CDCs) and in its distributors’ distribution centers represent increasing financial burdens on both Barilla and its distribution partners. The tight heat and humidity specifications in the pasta dry process makes it difficult for Barilla to quickly respond to the huge fluctuation and uncertainty of demand form distributors. As a result, Barilla’s customer order fill rate is suffering and so does its manufacturing and distribution operation cost. Despite the excess stocks held in the distributors’ warehouses, stockout happens all the time and the order fill rate of the distributors are suffering as well. Further down the chain, end-consumers’ needs will not be fully satisfied if the dysfunction of Barilla’s dry pasta supply chain continues.
Barilla’s customers are divided into three primary segments: small retail shops, large independent supermarkets, and large supermarket chains. Distribution to small retail shops is done by Barilla-Run Depots. Distribution to supermarkets goes through intermediate distribution centers, either owned by the chain, or operated by a third party representing multiple independent supermarkets.
The retailers send their orders to their distributor on a daily basis. The distributor, however, place their orders to Barilla once a week. Even though all of the