Barilla Case Study
Barilla Case StudyGLOBAL LOGISTICS MANAGEMENT
BARILLA SpA, Case Study
Jose David Padilla 1028909
Cindy Sutanto 1025458
Karina Anchecta 1025454
1. What factors, internal and external, contribute to the Barilla supply chain carrying large quantities of inventory? Be specific about how these factors increase inventory in the Barilla supply chain.
Internally, their manufacturing process causes long lead time and slow responsiveness to quick changes in demands, especially cause by the constant sale promotions. The Barilla manufacturing’s weakness is shown on how they built the plants based on the type and even size of pasta. Also, there are too many SKU’s available, many which are just different presentations of the same product. Their distribution system has at least one unnecessary level, and instead of pooling their demand it adds more variance to it affecting whatever possible forecast they could have.
The external factor that causes large quantities of inventory is the highly unpredictable demand they face. It seems that the sales team doesn’t have an organized schedule of when each promotion will begin or at least they don’t communicate it to the production plants. The company has many promotional activities throughout the year and the customers buy in advance to benefit from lower prices. This causes increased variation in orders and since there is no minimum order quantity customers are allowed to order whatever they “feel” they need. The constantly changing promotional activities limit the demand visibility within the supply chain and any significant fluctuation in demand results in stock-out. Customers believe that the company can’t respond fast enough to their demands and therefore increase the safety stock level in order to avoid potential stock-out.
2. Diagnose the underlying causes of the difficulties that JITD program was created to solve. What are the benefits and drawbacks of this program?