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Case Study: Barilla SPA 1. What Are The Reasons For The Increase in Variability in Barilla's Supply Chain?

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Barilla SpA (Barilla Società per Azioni, or Barilla Inc.) is a food manufacturing company based in Italy. Founded in 1877, the firm has expanded globally. Even with its worldwide operations, the company remains privately held and a family business under the ownership of the three Barilla brothers, Guido, Luca, and Paolo. The company now manages 20 brands, with such product lines as pasta, sauces and cereals, as well as breads and cakes. Barilla SpA continues to post profits, with its 2013 revenues estimated at €3.5 billion.

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Case Study: Barilla SPA 1. What Are The Reasons For The Increase in Variability in Barilla's Supply Chain?

Uploaded by

Abdulhayee
90 views2 pages
Barilla SpA (Barilla Società per Azioni, or Barilla Inc.) is a food manufacturing company based in Italy. Founded in 1877, the firm has expanded globally. Even with its worldwide operations, the company remains privately held and a family business under the ownership of the three Barilla brothers, Guido, Luca, and Paolo. The company now manages 20 brands, with such product lines as pasta, sauces and cereals, as well as breads and cakes. Barilla SpA continues to post profits, with its 2013 revenues estimated at €3.5 billion.

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Barilla SpA (Barilla Società per Azioni, or Barilla Inc.) is a food manufacturing company based in Italy. Founded in 1877, the firm has expanded globally. Even with its worldwide operations, the company remains privately held and a family business under the ownership of the three Barilla brothers, Guido, Luca, and Paolo. The company now manages 20 brands, with such product lines as pasta, sauces and cereals, as well as breads and cakes. Barilla SpA continues to post profits, with its 2013 revenues estimated at €3.5 billion.

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© All Rights Reserved
Download as DOCX, PDF, TXT or read online from Scribd
Download as docx, pdf, or txt
90 views2 pages

Case Study: Barilla SPA 1. What Are The Reasons For The Increase in Variability in Barilla's Supply Chain?

Uploaded by

Abdulhayee
Barilla SpA (Barilla Società per Azioni, or Barilla Inc.) is a food manufacturing company based in Italy. Founded in 1877, the firm has expanded globally. Even with its worldwide operations, the company remains privately held and a family business under the ownership of the three Barilla brothers, Guido, Luca, and Paolo. The company now manages 20 brands, with such product lines as pasta, sauces and cereals, as well as breads and cakes. Barilla SpA continues to post profits, with its 2013 revenues estimated at €3.5 billion.

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Case study : Barilla SPA

1. What are the reasons for the increase in


variability in Barillas 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 the firm 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 that
information is shared between the suppliers and Barilla. This will lead to positive effects
since the replenishment strategy will be combined with the JIT strategy and thus be able

to support the fluctuations of demand, reduce the inventory kept in the warehouses and
reduce stock-out rates. This will mean that want is produced balances with what is
demanded implying that demand and supply balances.

4. Can the VMI strategy solve the operational


problems faced by barilla? Why?
VMI strategy will help in solving the operational problems faced by Barilla since the
biggest challenge for this firm is the fluctuation in demand. This strategy will ensure that
the suppliers are responsible over the supply decisions since they will have to
determine the inventory levels and the delivery frequency. This will ensure that the
agreed upon stock levels are maintained for the suppliers will supply according to the
required levels. VMI will also help the firm in tracking performance data for instance outof-stock data and thus be able to order for it in time. With VMI, the firm will be able to
reduce costs of distribution as well as manufacturing and inventory costs. It will further
help the firm to decrease the risk, which may arise from out of stock situation in case
demand fluctuates and thus increase customer services and sales.

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