2. • Revolutionized Pasta Industry
– Strong brand name
– High quality product
– Innovative Marketing program
• Complex distribution network – 2 CDCs
• Large number of products causes additional
complexity in the supply chain
– Varying shelf life affects distribution
– More complex manufacturing processes
– Fresh – from 1 – 21 days
• 2 CDC Independent agents 70 regional
warehouses in Italy Supermarkets
– Dry – from 10 weeks – 24 months
• 2 CDC Distributors supermarkets Remaining dry products
18 small Barilla owned warehouses
3. • High variable ordering patterns from downstream distributors
• Opposition from distributors as well as internal sales staff to
implement a Just-In-Time-Distribution (JITD) policy
• Bullwhip effect in the supply chain: increases cost and
decreases fill rates
• Focused on the fulfillment of distributor orders, not customer
demand
4. • Highly variable ordering patterns from Barilla’s downstream
distributors
• Fluctuations are not a result of market characteristics but
rather caused by an inefficient supply chain
• They have caused inefficient reactionary decision making in
manufacturing operations
• Inefficient supply chain could be problematic for expansion in
Europe
5. • Sales Force believes JITD will hinder in sales promotions
- Current pricing strategy results in stock outs and higher costs
- The sales force are incentivized to push large quantity
purchases during promotion periods: this leads to order
spikes
• Distrobutors were reluctant to provide detailed sales data to
Barilla
6. • Variability at the end of the supply chain is amplified as you
travel up the supply chain
• The manufacturer receives the most dramatic effect
• Without visibility into demand, forecasting is very inaccurate
• Reason for Bullwhip Effect at Barilla:
– Ordering Spikes
– Order Batching
7. • Current business model focuses on orders placed by the
distributor to the manufacturer
• Not able to get sales data from some retailers due to lack of
sophisticated technology at the store level
• Focus should be on distributor shipments and current
inventory
8. • Barilla needs to restart the JITD program beginning with
internal staff
– WIIFM
• Program will assist them in meeting their sales targets.
– How
• Everyday low pricing strategy
• New Promotion Policies
• New sales incentive program
9. • Continue JITD program with distributors
– WIIFM
• Increased service levels with less effort
• Lower required safety stock
– How
• Discounts to distributors willing to implement two-way
Electronic Data Interchange (EDI)
• Implementation of the Vendor Management Inventory
(VMI)
