Executive Summary Barilla‚ the leading pasta manufacturer in Italy‚ faces increasing problems related to demand fluctuation. Their distributors also suffer from high inventory holding costs and low service levels on the other hand. This report explains‚ why the company and their distributors are troubled with this situation and how Barilla intends to solve it. The problem Barilla experiences is called the “Bullwhip Effect”‚ i.e. that demand variability increases when moving up the supply chain
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Harvard Business School 9-694-046 Rev.JuneU‚ 1994 Barilla SpA (A) Giorgio Maggiali was becoming increasingly frustrated. As director of Logistics for the world’s largest pasta producer‚ Barilla SpA1‚ he was acutely aware of the growing burden that demand fluctuations imposed on the cornpany’s manufacturing and distribution system. Since his appointment in 1988 as Director of Logistics‚ he had been trying to make headway on an innovative idea proposed by Brando Vitali‚ who had served as Barilla’s
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Case Analysis 3 Barilla SpA MGT 371 Section 2 – Team 6 What is the impact of fluctuating demand on operations? 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
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the perspective of Barilla and an independent distributor. What kind of products might such a program is best suited for? The pasta supply chain suffered high inventory levels at each segment of the supply chain; stock-outs at the distributor’s level and the customer’s demand variability magnified the problem. Availability of demand information at store levels is hard to get. A JITD system utilizes a vendor-controlled inventory scheme to combat a distribution problem of Barilla SpA. It eliminates
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Barilla Case 1a. Diagnose the underlying causes of the difficulties that the JITD program was created to solve. What are the benefits of this program? There is a large variability in demand. (GD’s and DO’s order once a week‚ in varying quantities‚ causing a bullwhip effect). This is strange‚ as the total market is relatively flat and nearly completely saturated. Because pasta is so common in Italy‚ people usually stick with their choice of brand‚ which is why demand should be stable for Barilla’s
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Barilla –Supply Chain Inventory Management Barilla TABLE OF CONTENTS EXECUTIVE SUMMARY 3 ISSUES IDENTIFICATION 3 ENVIRONMENTAL AND ROOT CAUSE ANALYSIS 3 ALTERNATIVES AND/OR OPTIONS 3 RECOMMENDATION AND IMPLEMENTATION: 3-4 Executive Summary: In an attempt to control inventory swings‚ reduce costs‚ and improve sales we have introduced the JITD initiative. This initiative has been a failure
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Barilla SpA (A) Case Study Analysis 2 Diagnose the underlying causes of the difficulties that the JITD program was created to solve. What are the benefits and drawback of this program? Brando Vitali‚ Barilla’s director of logistics‚ proposed the idea of Just-In-Time Distribution (JITD) in the 1980’s as an alternative to Barilla’s traditional practice of delivering products to their distributors (Hammond‚ 1). Instead of distributing Barilla’s products based on the orders the distributors
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domestically over 2000 pasta manufacturers in Italy. Declining margins. * Pasta market is extremely price sensitive. * Barilla is the market leader in Italy and is the industry’s largest manufacturer. * Supply chain represents approximately 55-58 calendar DOH of dry goods (30 in the CDC‚ 14 at the Distributor‚ 11-14 at the Supermarket or Independent Shops) Competitive Strategy * Barilla is the largest pasta manufacturer in the world (35% of market in Italy and 22% of market in Europe) * Also 29% of
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Executive Summary My decision is to implement Just in time distribution (JITD) to Barilla Distributors to reduce distribution costs‚ inventory levels and manufacturing costs. This would enable Barilla to improve relationships with their distributors and provide them with more objective data so that they can improve their own planning procedures. Barilla Operations will have more control on what is being shipped out so that shipments can be planned to optimize full loads. Manufacturing costs can
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of this report is to analyze the four components of the marketing mix of the Barilla brand “The Italian Food Company Since 1877”. Pietro Barilla founded the parent company more than 125 years ago. Since it’s founding‚ the privately held company has been run by four generations of the Barilla family‚ including up to the present day in Perma‚ Italy. The parent company has 27 factories‚ 15 of which are in Italy. Barilla sells it’s products in about 100 countries‚ running 25 plants and marketing operations
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