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Barilla Spa Case Essay

1295 words - 6 pages

Case Report

Barilla SpA


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Executive Summary

Barilla SpA is the largest pasta manufacturer in ...view middle of the document...

In effect, Barilla has taken on the vital task of matching the supply from the production and distribution network with the demand from the end customer, which enables Barilla to mitigate the bullwhip effect significantly.

Allocating products among customers based on past orders rather than based solely on their present orders will reduce hoarding behavior when there are shortages. Unrestricted ordering capability can be controlled by reducing the maximum order size and implementing capacity reservations. One option is to allow a customer to reserve a fixed quantity of each item for a given year and have the customer specify the quantity to be sent with each order, shortly before the item is needed. Barilla SpA has adopted this approach in its distribution strategy.

Erecting the structural framework is no doubt a relatively easier task for an organization that has a dominant position in the supply chain. For Barilla SpA to implement a just in- time distribution (JITD) system that provides visibility on the demands that customers made on Barilla’s distributors and retailers. With such a visibility, Barilla was able to specify where inventory should be held in the downstream distribution facilities.

Challenges of a Lean Supply Chain

A lean supply chain exemplifies the behavior of an ideal supply chain, a supply chain in which key processes are integrated among all the supply chain enterprises, and the final product or service is delivered to the end user rapidly, economically, and in a seamless manner. Since lean supply chains can better adapt to changing customer needs and deliver products quickly, the enterprises in the lean supply chain should expect a superior financial performance relative to their competitors.

Building and managing a lean supply chain poses a challenge owing to the highly interconnected nature of the activities in the supply chain. The present business environment is also significantly more challenging than the business environment of the production-centric era that prevailed for the greater part of the twentieth century. In the production-centric era, demand for goods and services often outstripped production capacity. The producers held the most clout in the supply chain, charged what the market would bear, and operated businesses to maximize the use of their own scarce capacity. Lack of global competition created, in effect, domestic cartels in many industries that dictated the price the consumer paid for the product. Organizations were able to run their businesses in relative isolation, formulating strategies that optimized their own operations with little regard for how these decisions affected other enterprises in their supply chain.

Practical Steps for barilla SpA

Barilla SpA is experiencing amplified levels of inefficiencies and rising costs due to variability in demand from its distributors....

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