Barilla SpA Case Analysis

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BARILLA SpA CASE ANAYLSIS XUELAI (ANDY) HU Contents Executive Summary 2 Issue Identification 3 Environmental and Root Cause Analysis 4 Alternatives or Options 6 Recommendations and Implementation 6 Monitor and Control 8 Executive Summary Barilla SpA, a large vertical integrated corporation that makes pasta and bread products is experiencing rising costs due to extreme variability in demand from its distributors. In order to improve company’s sale margins, Giorgio Magialli, the Director of Logistics at Barilla suggests to implement a Just-In-Time Distribution (JITD) system. The JITD system is a continuous replenishment distribution strategy, which the responsibility for determining inventory quantities shifts…show more content…
Barilla has experienced difficulties in collecting needed information. These outside distributors, especially the supermarket chains such as Marconi, have sophisticated experience in managing their inventories. They simply do not believe Barilla can do a better job than themselves on controlling the inventory level. 2. Forecast techniques: In order to react correctly and immediately to the fluctuation demand from distributors, Barilla not only needs to obtain sale information from its distributors but also use good forecast techniques to analyze the data. Additional safety inventory level can then be eliminated to reduce costs. 3. Manufacturing process: At Barilla, raw ingredients were transformed to packaged pasta on fully automated 120-meter-long production lines. This highly automated manufacturing system was not designed to accommodate large fluctuations in demand. In addition, the manufacturing sequences of pasta production made it very difficult to produce particular types of pasta that has been sold out due to unexpectedly high demand. 4. SKUs: Dry products were offered in about 800 different packaged SKUs. Pasta was made in 200 different shapes and sizes and was sold in over 470 different packaged SKUs. The most popular pasta products were offered in a variety of packaging options (a 5-kg package, a 2-kg package, and a 1-kg package). Such variety of

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