Barilla Case Summary

Demand may be price inelastic - Demand is not very responsive to changes in price. This means revenue will fall.

The JIT approach to manufacturing involves timing the delivery of resources so that they arrive just when needed. Inventory optimization models help the firm determine how many of which items in which sizes should be delivered to each specific store during twice-weekly shipments, ensuring that each store is stocked with just what it needs. Trucks serve destinations that can be reached

Minimize risks due to uncertain demand. L.L. Bean would be able to manage ordering process and quantities based on actual demand and adjust more effectively.

Lowering the inventory would likely result in decreasing the currently unacceptable levels of customer service by removing that estimation buffer. Thus, without the reengineering of the production processes, the attempts to change the inventory levels may fail.

Additionally, forward buying activities from distributors due to frequent trade promotions and volume dis-counts enforce the effect of demand fluctuations. During promotions, distributors buy huge amounts of pasta at a lower price. This forward buying leads to lower demand in future periods and contributes to high peaks in or-der quantity and low levels of orders in the following periods. Connected to this problem is the incentive system of the sales force, which relies heavily on trade promotions in order to achieve quarterly targets. Another factor related to these aspects is batch ordering and

330-10-35-1 A departure from the cost basis of pricing the inventory is required when the utility of the goods is no longer as great as their cost. Where there is evidence that the utility of goods, in their disposal in the ordinary course of business, will be less than cost, whether due to physical deterioration, obsolescence, changes in price levels, or other causes, the difference shall be recognized as a loss of the current period. This is

Trader Joe 's sells gourmet foods to its customers with a low cost business model, which may seem very difficult to maintain, due to the rising costs in the international markets and the United States. However, with Trader Joe 's long term experience in operations and limited variety of products, this enables the company to reduce costs and transfer those savings to their customers. Furthermore, Trader Joe’s has a very efficient management process that allows keeping the product costs down to keep their customers satisfied. The management process is very significant for Trader Joe 's in which they have planned marvelously to carry certain products which is obtained at a discounted price from their suppliers. Additionally, Trader Joe’s keep costs down to a minimum by choosing non-prime store locations. For

Looking at the fluctuation in Exhibit 12, one could expect that poor coordination in the supply chain would increase costs. Provide a discussion for the cost of poor coordination in Barilla’s supply chain. Items to consider here include production changeovers or setups, inventory levels, facility utilization, transportation costs, quantity discounts and promotions, canvas periods etc.

One of the underlying causes of the difficulties that the JITD program was created to solve was the effects of inconsistent demand that came from Barilla’s distributors. The extreme demand variation strained Barillas manufacturing and logistics, and made very hard for Barilla to meet that demand. For example, as noted on the case “the specific sequence of pasta production necessitated by the tight heat and humidity specifications in the tunnel kiln made it difficult to quickly produce a particular pasta that had been sold out due

The supply and management of a company have various difficulties in trying to manipulate the logistics of supply and making analysis of the whole performance of the supplying team. These issues apparently result from low surge and have had great inconveniences to stock and management. The reasons for these intensive difficulties are a result of malfunctioning of one group or department and thus disrupting the paths of supply. Prior to lack of frequency in stock-outs, poor customer response and high prices on the products of the supplying enterprise have the greatest impact then due customers. This

As argued by Lubben (1988), JIT allows businesses to have better management since this ensures that there is no loss as there is sufficient number of clients requiring the equipment. This reduces her to deal with huge deliveries when the clients’ numbers are not increasing. (Lubben, 1988, p.4) also suggested the idea of JIT that “... major elements of manufacturing – capital, equipment and labour are made available only in the amount required and at the time required to do the job.” So it is a good practice by utilising JIT approach as it reduces wastes and ensure the correct amount of equipment is available (Lubben,

In vertical analysis, it is easier to see elements as a percentage of Revenue. Between 2011-12, the portion that cost of sales takes in revenue has increased however, there is a bigger deterioration in distribution cost. In 2011, 9.21% of revenue remains as profit but in 2012 this figure decreases to 8.14%. Despite reduction in costs is one of the strategies of Ted Baker(part 1.4), analysis illustrates that costs increase each year.

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.

Because of the way Barilla’s manufacturing process works, demand fluctuations have a significant impact on the company’s operations. Tight heat and humidity specifications in factory tunnel kilns require very specific sequences of pasta production, which means Barilla has limited flexibility in ramping up (or ramping down) the production of pastas experiencing unexpected demand levels. Furthermore, because of extremely high holding costs, it is simply not economically viable for Barilla to maintain substantial finished goods inventories to guarantee fulfilling distributors’ fluctuating order quantities.

respondents from the brewing industry reported to incur inventory cost of about 2 to 3 % of their