However, their traditional business practices are becoming increasingly inefficient and costly. The company will then forecast the demand of all of its distributors and aggregate that demand. What are the underlying drivers of the fluctuations in Exhibit 12? Barilla will be able to reduce inventory levels at their locations because demand will be stabilized and as a result carrying costs will be reduced. If so, what causes of the bullwhip effect are present? Operating within a environment of large scale demand variations which have grossly… Words 1489 - Pages 6 help understand the Barilla Case in your packet. Input from the store level is not considered as the main factor in ordering. Stock outs are happening between the distributors and the stores; the lead time to fill the product gap is too long.
Publication Date: May 17, 1994 Barilla SpA, an Italian manufacturer that sells to its retailers largely through third-party distributors, experienced widely fluctuating demand patterns from its distributors during the late 1980s. Barilla brand pasta is sold in numerous restaurants worldwide, such as those belonging to the chain. Environmental and Root Case Analysis For instance, we have to begin by stating the reasons for the extreme demand fluctuation Barilla has been going through for decades now. Poor communication between retailers, distributors, sales, marketing and manufacturing may be oneother driver for the fluctuations, as well as a lack of a forecasting system. The only way to fix Barilla's problem is a new manufacturing process. The Court did not rule in favor of either party.
Giorgio Maggiali Director of Logistics Barilla SpA A December 4, 2012 Part Two: Immediate Issue Barilla SpA is experiencing difficulty in the manufacturing and logistics sectors of their operation because of an extreme variability in demand of their pasta products. What are the benefits and drawbacks of this program? The causes of these conflicts are the lack ofsufficient flexibility in production, and the reward structure for sales representatives. Its plant in Greece near is the third largest in Europe. In order to succeed the distribution system, Barilla is known to practice the replenishment strategy, which describes an agreement between Barilla and their supplier to share the data about frequency and inventory levels to match Barilla demands About. Apart from that, the promotional activities of Barilla and the changing prices of its products also caused the bullwhip effects along the supply chain. By making a way out from these problems the Just in time distribution approach can be implemented successfully. In the interview I simply wished to underline the central role the woman plays within the family.
They have high inventory carrying and manufacturing costs due to operational inefficiencies. What are the benefits and drawback of this program? Barilla has been facing huge variability in demand which is straining the manufacturing and distribution network of the company. It manufactures pasta and sells to various retailers largely through third party distributors. Sales of other product lines that Barilla produces will decline and some customers will change to other suppliers for their variety of product. I n 1971, Barilla again acquired the company as W.
Given the high variability in customer demand for something as unpredictable as pasta consumption in Italy, this choice of production process is completely unreasonable. How can the supply chain meet conflicting goals of different partners and facilities? Since margins are reducing, cost reduction on the operations side would be beneficial to thecompany as a whole. There are no set minimum or maximum levels for types of pasta or for size of distributor. This would reduce the uncertainty regarding the variations in demand of the product. From the case description there seem to be two aspects that are important to distributors: 1. How can Barilla cope with the increase in variability? Support for the changeover has to be top down as the current problem is not just a logistics issue but is a supply chain issue. If so, which customer would you target next? The company enjoyed a 35% market share of the entire pasta industry in Italy and 22% market share in the entire continent of Europe.
Barilla has a very complex distribution network including independent third party distributors and…. It won't address the underlying manufacturing mismatch that Barilla has created. It produces pasta in over 120 shapes and sizes. Barilla's Italian production facilities are located at Parma, , , , , , Rubbiano, , and. What are the benefits and drawbacks of this program? They offer both dry and fresh pasta as well as a variety of other products including cookies, cakes and breads. Introduction Barilla was founded in 1875 in Parma, Italy by Pietro Barilla. In order to condense the Bullwhip effect being experienced by Barilla, their supply chain would have to be centralized.
To support increasing demand, a huge investment in manufacturing plant drove the company into debt. Whatis the impact of such fluctuation? Barilla SpA is suffering from a problem of their own making - their distribution system is overly complex. Such un-necessary demands or variations are known as Bullwhip effect, which makes quiet difficult for the Barilla SpA to predict and meet the genuine demands from end consumers. What are the benefits of this program? 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. But all the concerns Mr. The top management will be concerned about the added responsibility of predicting demand on Barilla without any guarantee of cost reduction.
Founded in 1875 by Pietro Barilla 21% annual growth rate during the 1980's Worlds largest pasta manufacturer as of 1990 35% market share in Italy 22% market share in Europe Strong Brand Image In depth marketing Campaign Introduction: Key Issues Promotions Communication Issues Stock outs High level of Inventory to help stabilize demand fluctuation Improper demand forecasting Bullwhip effect. Most distributors do not rely on forecasting systems to place their orders; they simply count stock on a cycle and place orders to refill to the previous level. These distributors expressed concerns about becoming too tight to Barilla and fearful of losing control by giving Barilla the power to push products into their warehouse just so they Barilla can reduce its costs. Solution 2 Before implementing the just in time distribution approach Barilla will face some problems that may play a role of hurdle. There are a number of alternatives possible: 1.
There needs to be a collaboration between barilla and the distributors so they can share the sales data with barilla who would then forecast and deliver appropriate amounts of products to the distributor at right time at the right place, Thereby distributors can lower the inventory and improve the services and decrease the distribution cost. Therefore, apparently there is another way to improvethe supply chain. The supply chain is very complex. It will also provide an opportunity for new sales promotion types and levels. That complexity is causing them to be unable to respond to their widely varying customer demand. Barilla Group has several production plants all over the world: in Italy, Greece, France, Germany, Norway, Russia, Sweden, Turkey, the United States in and , and Mexico. Barilla has a very complex distribution network consisting of Grand Distributors owned by large Supermarket chains , Organized Distributors independent third party distributors in addition to its own depots.