Barilla Case: Causes of Fluctuation

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1. What are the causes of fluctuation? (20 points) Fluctuation of Raw Materials Pasta is produced with various types of raw material, including wheat and egg. If the supply of raw materials has high level of fluctuation, (which may be caused by weather condition or cost of raising chicken) then the production and supply of pasta will be influenced. Diverse Product Category Barilla’s products are divided into Fresh products and Dry products. The demand for these two distinct kinds of products is quite different, and the order, shipment and delivery methods for them are also various. Diverse Distribution Methods Three different types of retail outlets – small independent grocers, supermarket chains, and…show more content…
Lower inventory level JITD can lower the inventory level of both Barilla and the distributors as both parties are using the same accurate forecast. Both parties do not require to store a large amount of safety stock. Lower costs JITD can lower the distribution cost, inventory cost and even the manufacturing costs. Distribution can be more efficient as the delivery is not based on the order from distributors. It is based on the forecast from Barilla. Barilla can better utilize and arrange the distribution team by planning a more efficient route and schedule to deliver the require product to each distributor on time. Barilla become more proactive in controlling the delivery schedule and so lower its distribution cost. Inventory cost can be lower as Barilla no longer needs to keep a large amount of stock in the distribution center. Especially for those fresh products, which will turn bad quickly and need a high cost to maintain. The manufacturing cost can be lower as the rearrangement of the production line to meet urgent order can be minimize or even eliminated. Improve operation efficiency With JITD, the number of urgent order will be decrease. Barilla can put more focus on managing the standard order with the normal manufacturing setup. Extra work on rearranging the production line will not be required frequently. The whole operation can be more efficient and standardize. 4. As one of Barilla 's customers,
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