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Case Analysis Report "Barilla SpA (A)" - Supply Chain Management

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Introduction

Case Analysis Report "Barilla SpA (A)" As a part of the course on Supply Chain Management Post-Graduate Program in Management (2003-2005) Submitted to Prof. B. S. Sahay Submitted by Group No. 4 Management Development Institute Gurgaon Date: 21.09.04 Background of the case � Founded in 1875 by Pietro Barilla in Parma, Italy � Products: Pasta and bakery products � Sold to W.R. Grace in 1971 � Bought back by Barillas in 1979 � 21% annual growth during 1980's � By 1990, sales reached 2,390 billions lire Current Scenario � Barilla SpA is the world's largest pasta manufacturer � The company sells to a wide range of Italian retailers, primarily through third party distributors � During the late 1980s, Barilla suffered increasing operational inefficiencies and cost penalties that resulted from large week-to-week variations in its distributors' order patterns Barilla - Products � Fresh Products - fresh pasta and bread � Dry Products - dry pasta, cookies, biscuits, ... - 75% of total sales - A total of 800 packaged SKU - Pasta - in 470 different packaged SKU Distribution Channel for Dry Products Avg. Inventory No. of SKUs Order Frequency Lead Time Avg. Stock-out CDC 4 weeks 800 N.A. N.A. Distributor 2 weeks 130 1 week 1.5 weeks 6.5% of sales Large retailer (Supermarkets) ...read more.

Middle

� "If space is freed up in our distributors' warehouses, the distributors would then push our competitors' product more than ours." � "It seems that the distribution organization is not yet ready to handle such a sophisticated relationship." � "We run the risk of not being able to adjust our shipments sufficiently quickly to changes in selling patterns or increased promotions." � "We increase the risk of having our customers' stock out of our product if we have disruption in our supply process." � "We wouldn't be able to run trade promotions with JITD." � "It is not clear that costs would even be reduced." Question 2b) How to deal with these barriers? Resolving of Conflict: � Demonstrate that JITD benefits the distributors (lowering inventory, improving their service levels and increasing their returns on assets); Run experiment at one or more of Barilla's 18 depots � Promoting its as a Selling Tool as an aid to sales department � Maggiali needs to look at JITD not as a logistics program, but as a company-wide effort; Get top management closely involved � Showcasing successful implementation of such kind of program in other companies � Information dissemination regarding JITD across the organization as well as distributors in terms of : * cost benefit * inventory reduction benefit for barilla as well as distributors * facilitation of better ...read more.

Conclusion

kind of free schemes with products * Convince them about the inventory reduction, cost benefit, increase in retail service level that JITD proposes to bring about * Inform them about the benefit of Strategic Partnership that participation in JITD will entail for all the channel partners which will reduce the supply chain cost that can be appropriately distributed among the channel members. The Bullwhip effect can be completely eliminated by following JITD and so the logistics costs are much lower Alternatively 1. The retailers can be made to participate along with the distributors in passing up the actual demand data periodically i.e. having the retailer pass this information up the supply chain through Electronic Data Interchange (EDI) and Computer Assisted Ordering (CAO). The Centralised Information system will reduce the uncertainty due to bullwhip effect. EDI will also lead to reduction in Lead Time in. * Order Processing * Paper Work * Stock Picking * Transportation Delays and would enable retailers * to better serve customers by offering tools for locating desired items * to react and adapt to supply problems more rapidly 2. It can also reduce the bullwhip effect by following EDLP strategy and not going in for schemes that it currently offers in a major way. It would reduce shifts in demands caused by promotions. Barilla SpA (A) - a case analysis 7 ...read more.

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