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Barilla Spa Case Analysis

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Executive Summary

In this case study response I will be providing analysis and recommendation on how to increase the chances the Barilla’s management idea of JITD would be acceptable and provide the reasons why it should be considered worthwhile.

Issue Identification Barilla is a large vertical integrated corporation that makes pasta and bread products with flourmills, pasta plants, and bakery-product factories locate throughout Italy. It has used traditional distribution system, which distributors checked their inventory levels and placed orders with Barilla. However, due to extreme variability in demand from its distributors, the traditional distribution system has strained Barilla’s manufacturing and logistics operations by increasing either inventory carrying costs or stock out costs. The main issue in this case is how to effectively implement Just-in-Time Distribution (JITD) system, which Barilla analyses, forecasts and delivers products to the distributors by requiring the distributors to share their sales data with Barilla. This in turn will decrease Barilla’s distribution costs, inventory levels, and ultimately makes the entire operation more effective. The following lists some other issues Barilla facing when the company tries to implement JITD system: 1. Data sharing: distributors are not willing to lose their control over managing their own inventory by sharing data with Barilla SpA. 2. Forecast techniques: Barilla does not have enough experiences and sophisticated techniques to forecast demand from distributors and retailers. 3. Manufacturing process: Barilla has a long manufacturing process for its dry products, which makes the company more difficult to quickly react to the unexpected demand from the distributors. 4. SKUs: Barilla has an enormous amount of different packaged SKUs for its dry products, which makes the...

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