Barilla’s Manufacturing and Distribution Operation

Barilla Spa
Student's Name
Institution/Affiliation
Course
Professor
Date.
Barilla Spa
Question 1
Pietro Barilla founded the Italian culinary business Barilla Spa in Parma, Italy, in 1875. It presently holds 25 facilities across Italy and is acknowledged as the largest manufacturer in the world. Each facility focuses on a certain product category, such as pasta, flour milling, and other goods the firm excels at, such as bread, cakes, and croissants. Additionally, the manufacturing organization has two distribution centers that handle product delivery.
After the items are created, they are divided into two categories, fresh and dry, and then supplied to the central distribution facilities. The dry goods are sent to the central distribution centers or the Barilla-run depots, whereas the fresh goods are only kept for three days (Hammond, 2008). Small independent shops receive dry goods from the depots, and two different types of distributors. The Grande Ditribizione, which is in charge of supplying supermarket chains, and the Distribuzione organization, which is made up of numerous other distributors—receive dry goods from the central distribution centers.
The Barilla Spa's head of logistics, Giorgio Maggaili, is having difficulty implementing a new manufacturing idea known as just-in-time distribution (JITD). This plan was initially proposed by the former director, Brando Vitali. Maggiali, however, strongly backs this notion. Variations in client demand cause the entire system to run negatively according to the company's present setup. As a result, there is an excess inventory throughout the supply chain, resulting in higher costs. A bullwhip effect is a frequent name for this outcome. To address the difficulties raised, Magiali must decide whether to move forward with the JITD approach and how to apply it to Barilla Spa effectively.
Question 2
A
The data represented are not realistic. The ability to accurately forecast sales was hampered by sales representatives pushing products to distributors during promotions because they were compensated based on the amount of product they sold. Additionally, the distributors' complete control over their orders encouraged gaming behaviour—using a periodic-review inventory system or manually counting inventories results in erroneous projections. Every Tuesday, stores check the list for a particular product; if inventory is low, an order is placed, according to the case (Hammond, 2008). It makes determining the ideal inventory level difficult and causes stock replenishment and forecasting mistakes.
B
Numerous variables influence the weekly demand at the Cortese North East Distribution Center. First of all, seasonality might cause variations in client demand. For instance, around Easter, extra lasagna is sold. This variation is largely predicted. Second, the demand from the distributors varies depending on various variables, including promotions, shipping costs, bulk discounts, and lengthy lead periods (10 days). The wide range of items, pack sizes, design options, and the absence of minimum and maximum order quantities. The distributors lack any processes or instruments for forecasting. They will order goods weeks in advance using a volume discount, a transportation discount, or a special canvas time, then order less or nothing in the subsequent weeks to exhaust their inventory.
Another possible cause of the volatility is poor communication between distributors, retailers, marketing, sales, and production, in addition to the absence of a forecasting mechanism. The supply chain is quite intricate. Distributors use a variety of different tactics and cater to a variety of different client types, such as supermarkets vs tiny independent businesses. Between the manufacturing process and the ultimate customer, there are some organized or big distributors with their warehouses and brokers. There is currently no method to track the actual sell-out in wholesalers, retailers, and outlets with inventory due to the irregular nature of this demand. The bullwhip effect, which amplifies demand variation further down the supply chain (and away from the end consumer), is caused by fluctuating demand. The best illustration of this may be found in Exhibit 12 when an extraordinarily low order volume follows four to six spikes in order volume.
C
Barilla is forced to manufacture too much or too few completed items due to the influence of the fluctuations (Hammond, 2008). These findings show that Barilla either has supply shortages, is hoarding surplus inventory, or is holding both. Due to completion and inventory holding expenses, the expenditures are tied to a direct revenue loss, respectively. The production and logistics activities are under strain as a result of volatility.
The impact of such variation may force distributors to build extra capacity to store Barilla's pricey surplus output or to invest in any form of advertising. Stockouts are expensive because they result ...