Barilla Spa Case

* Where difficult customer behaviour may arise and where it would be considered a risk

There are various business external risks facing TCC affecting the supply and demand for products, target customers, supplier/retailer issues. There are also internal risk factors which affect…

product and starting a price war with competitors that would damage margins. In addition, a low priced

Changes within the supply chain can disrupt the normal flow of goods and services because each change hasn’t been fully scrutinized. A firm can plan and speculate that a change with have a certain effect on the supply chain, but until those processes have been measured it is impossible to know the true cause and effect of any disruption.

distributors would have to submit their Stock Keeping Unit (SKU) so that Barilla can control it.

High risk of huge inventory returns from the distributors if they are not able to sell in reasonable timeframe. This will increase huge sales return in B&L books in the following year.

Different retailing businesses have very different distribution methods based on the types of product that they sell, some arguably more effectively than others.

A third factor contributing to the Bullwhip Effect is the specific production process of pasta. Barilla cannot re-act to demand changes quickly enough, due to production restrictions as e.g. heat and humidity specifications. That means, if a product is out of stock it cannot be produced and delivered immediately.

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.

4. Product shipments to customers were jeopardized, and orders were at risk due to an inability to ship on time.

JITD might also help the relationship between Barilla and its distributors, since Barilla won’t need to use pressure on distributors to hold more finished products than necessary.

By taking a more collaborative approach, major improvement could be made. One way is by embracing the concept of “Collaborative Planning, Forecasting and Replenishment” (CPFR) which have been developed and successfully employed by leading food retailers. It foresees that data is shared and discussed actively between retailers and suppliers, e.g. by producing joint forecast on annual production volumes, also considering foreseeable flunctuations. With a better understanding of the mutual dependencies, the planning basisi could be improve and complexity reduced. On the short term planning basis, making aviable sales data collected in-store 9from the scanner-equipped cash registers) to suppliers in real time allows suppliers to produce more accuratelty to the actual demand, and thus reducing cost for buffers and excess inventory (Trebilcock 006). Of course, Aldi will have to receive a certain share of these benefits. Going one step further would be to add ”Category Management” to Aldi’s supplier collaboration approach to optimise assortment towards the end of customer needs.

The first risk of adopting the radical change approach include depending on a large-scale, global supply chain in which correspondence complications may compromise execution. Secondly, introducing a fundamentally different supply chain could cause unforeseen complications. Finally, an enormous delay in original delivery could compromise integrity as well as company dependence.

Even though direct competition has decreased, the tendency of retailers to get their products directly from manufacturers puts the company in a position of relooking its competitive edge as a distributor. The marketplace is shifting from an individuality to supply chain performance – the ability to meet end-customers needs through product availability and responsive and on-time delivery. Supply chain performance crosses both functional lines and company boundaries. Brunswick must change their way to fill customer orders faster and more efficiently than the competition.

The overarching problem is distributors base their actions off of retail demand on the one side and Barilla sales incentives on the other with no means to reconcile the two. GD’s and DO’s use a variety of inventory systems, but for the most part these systems are based on a simple periodic review. They take a weekly inventory of their stock and place orders accordingly. There are no forecasting systems in place to determine future retail demand on which to base orders. With a lead time of 10-14 days between order placement and delivery and a reactionary ordering system, high costs due to cycles of stockouts and bullwhip effects will continue.