Barilla SpA, as one of Italy’s refined pasta supplier, they have come a long way in developing a renowned brand for its pasta and produce. Their supply chain and manufacturing process is heavily vertical integrated. However, recently, they are facing a number of difficult challenges and obstacles in order to meet the demand needs from its customer. There are a number of constraints in the operation process that has limited the amount of information- forecast data being flow through from the end-user consumer throughout the supply chain network and I believe that there is also a disconnection between the sales and the logistic operation. The proposed JITD ...view middle of the document...
This is due to the poor forecasting and planning that they have in place. The promotional process that Barilla has in place causes the stock outs and inventory fluctuations. For example, during promotion week, the distributors can order what they want and how much they want and this is an uncontrolled environment. They have the opportunity to address this issue with the newly proposed JITD system but there is also a disconnection from the plant, logistic and the sales team which adds to the problem. This immediate issue is just the tip of the iceberg and the issues that are in place are cause by the systemic issue listed below.
During promotional week, a distributor would be able to order as much as they desired on any products during promotional week. This will cause stock outs and inventory fluctuations within the DCs, which eventually will cause the manufacturing plant to scramble around to slot in to increase production into their production schedule.
Disconnect communication between DCs, sales and Supply Chain
As a team, they should consider company’s profit and growth as the main goal. There seems to be a disconnection between the three, sale team only look at their sales data, their incentive and commission, distributor understand that they will need to push stock to their customer to make them happy and be profitable and when they are out of stock and place an order it takes at least 8 -14 business days for items to arrive.
Distribution process and order process
The current ordering process takes too long to process. Distributors, including the GDs and DOs checked their inventory stock before making an order to replenish. If they were to order the stock, it will take 8-14 days for the orders to arrive at the distributors. The supply chain map can be seen under Exhibit 1.
Environmental & Root Cause Analysis
Barilla has established as a diverse market and sells product through 3 brands. They have position themselves among other 2000 competitors. The following are some of the key competitive advantages that they have incurred.
❖ Barilla is heavily vertical integrated; they have four flour mills throughout Italy. The Pedrignano plant is one state of the art facility to manufacture pasta, it is one of the largest and most technological advance facilities, and it has 11 lines to produce 9000 quintals of pasta each day. Though different pasta require different equipment to make, Barilla’s pasta plants were specialized by the type of pasta produced in each plant to allow a more efficient run.
❖ Barilla is able to sell pasta in package sealed cardboard form as compare to the traditional plastic bag form which indicate that they have put effort and the importance to supply high quality...