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Barilla Spa Case Study Questions

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1. What are the reasons for the increase in variability in Barilla’s supply chain?

One of the main reasons for variability is that Barilla’s director of logistics, Giorgio Maggiali, is implementing the idea of Just-In-Time Distribution (JITD), which was the brainchild of Maggiali’s predecessor Brando Vitali. Although Maggiali supports JITD, members of Barilla’s own sales and marketing organization do not support the new idea and therefore not cooperating. JITD once implemented was meant to have Barilla produce not on orders from distributors, but according to their own prediction of demand. Barilla’s forecasting methods were poor because when demands fluctuated it affected their supply chain. This was also brought on by the complex distribution system that caused an effect called the bullwhip. The company has three distribution networks; their own depots, grand distributors owned by large supermarkets chains and some organized distributors. Lack of information sharing across the supply chain, especially on the retailer’s part was the main drawback of the Barilla Company.
The 10-day lead time too brought about complications. Due to poor predictions on demand, the company experienced inventory problems of stock outs and backorders on a very short period forcing them to maintain a high level of inventory. The company also offered discounts to the retailers that ordered full truck. The retailers utilized the discount advantage and ordered more, which lead to an increase in inventory problems.

2. How can Barilla cope with the increase in variability?
The current director of logistics, Giorgio Magialli needs to implement the JITD system to the fullest extent and Barilla’s sales and marketing organization should welcome the idea and support it fully. To cope with the variability, the company should centralize its supply chain therefore resulting in better margins...

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