Homework 2 Barilla Case Reading 1.Is there any evidence that Barilla faces the bullwhip effect? If so‚ what causes of the bullwhip effect are present? Yes‚ there are some evidences that Barilla is facing the bullwhip effect. The following causes are presented as below. 1) Demanding forecast. Since safety stock‚ as well as the base-stock level‚ strongly depends on these estimates‚ the user is forced to change order quantities‚ thus increasing variability. Lead-time. It is easy to see
Premium Supply chain management Inventory Sales
Barilla Case Study There are some issues currently faced by Barilla. One is that demand fluctuates extremely because distributors order weekly and it is hard to predict the demand on a weekly basis. Another is that there is a significant pressure to manufacture because lead-time and perishability of product vary so much. It’s very hard to speed up the process because each type of pasta requires specific heat and humidity level to dry them properly. In addition‚ Barilla has to make both dry
Premium Inventory Sales Forecasting
What is Bullwhip effect? Bullwhip Effect can in short be described as the variability in orders in a supply chain system moving up from consumers to core manufacturers. It is also known as the whiplash or whipsaw effect. The causes of this Bullwhip effect have been identified as:- Demand forecast In any company order is placed with the suppliers based on the demand graph. The order is placed to fulfill the current demand and also keeping in mind any unpredictable sale‚ which is the safety stock
Premium Supply chain management Supply chain Supply and demand
Trade-Offs and the Bullwhip Effect A trade-off refers to any situation that entails losing an aspect or quality of an item in return for achieving another aspect. In the corporate context‚ the term is majorly used in cases where there is the need to get rid of some things in return for other better things (Khayum‚ 2003). There are a number of trade-offs that impact the operations of business organizations. Inventory Transportation Costs Inventory transportation costs refer to the costs of delivering
Premium Customer Customer service Transport
Upon analysis of Barilla’s proposed implementation of the Just-In-Time Distribution (JITD) model‚ it appears that the JITD proposal is attempting to minimize the bullwhip effect phenomenon on the pasta manufacturer’s supply chain. The bullwhip effect is seen as one moves upstream in the supply chain from the retailer to the distributor to Barilla’s central distribution centers (CDC) to Barilla’s plants – the farther one moves upstream‚ the greater the volatility in demand. This demand fluctuation
Premium Inventory Implementation Retailing
SUMMARY Barilla SpA‚ an Italian manufacturer and world’s largest pasta producer that sells to its retailers largely through third-party distributors‚ experienced widely fluctuating demand patterns from its distributors during the late 1980s and Barilla suffered increasing operational inefficiencies and cost penalties. Brando Vitali‚ Barilla’s ex-Director of Logistics‚ proposed a Just-In-Time Distribution (JITD) system to counter this demand variation. This system required the distributors to share
Premium Sales Marketing Logistics
BARILLA CASE STUDY Causes that led to the JITD idea: Fluctuating demands from the retailers and the burden it caused on the company’s manufacturing and distribution system. The problem with the fluctuating demand is during the period of high demand the manufacturer should have the capability to increase the supplies else the backlog will increase. On the other hand when the demand decreases it will be expensive to store the excess inventory. A problem at one point in the supply chain will be translated
Premium Sales Inventory Future
1. Bullwhip Effect ●What is Bullwhip effect? The bullwhip effect can be explained as an occurrence detected by the supply chain where orders sent to the manufacturer and supplier create larger variance then the sales to the end customer. These irregular orders in the lower part of the supply chain develop to be more distinct higher up in the supply chain. This variance can interrupt the smoothness of the supply chain process as each link in the supply chain will over or underestimate the product
Premium Output Management Input
BARILLA CASE STUDY REPORT 1. Introduction Barilla was founded in 1875 in Parma‚ Italy by Pietro Barilla. It used to be a small store that sold pasta and bakery products. In the 1960s‚ it differentiates itself from competitors by producing high quality product with noticeable packaging and marketing campaign. In the 1970s‚ due to the big investment for pasta plant‚ Barilla was in huge debt and was sold to WR Grace (a multi national firm). Followed in 1979‚ the Barilla brother had enough money
Premium Management Strategic management Project management
Barilla SpA * The spaghetti incident - Maastricht University School of Business and Economics International Executive Master of Finance and Control 20 April 2012 Course – Logistics Prof. Dr. Allard van Riel Pauline Henselmans Jetse van de Kamp Ze Zhu Thiago Barros de Oliveira Rene Lorrier Contents 1. Reasons for the increase in variability in demand in Barilla’s supply chain 3 1.1 Distributed inventories‚ local optimization 3 1.2 Lack of inventory information and
Premium Supply chain management Inventory Economic order quantity