Barilla Spa Case Brief

Case Brief: Barilla SpA

1. Problem Statement

Barilla SpA’s key problem to focus on is its inefficiencies in inventory management caused by large fluctuations in demand. A change has to be made to the company’s manufacturing and distribution system in order to relieve this burden. The Just-in-Time Distribution (JITD) program may be a good solution for Barilla; however, it faces much opposition.

2. Situation Analysis

In order for Barilla SpA to account for the large fluctuation in demand, it must find a way to convince distributors and the end-customer to provide data about Barilla products throughout the distribution channel. Barilla will also have to address its sales teams concerns.

Because of the way Barilla operates now, they are forced to hold a large amount of inventory and then struggle to fulfill the demand swings. And even though the DOs hold a couple weeks of inventory, they experience a high number of stockouts, usually five to eight percent (exhibit 1) within a given week. Currently DOs and retailers do not share their data with Barilla, which is makes it difficult to plan and predict inventory. By putting a system in place that allows for Barilla to see distributor and retailers data of its product, Barilla would be able send vendors only inventory that is needed. Holding inventory and stockouts costs retailers, vendors, and Barilla a lot of money.

Like with all major changes, there is opposition. Distributors do not want to share their inventory data with Barilla, because they fear that Barilla is trying to take over their job. Barilla needs to make it clear that they are not trying to replace the distributors and help them to understand that by working together they can all save money and increase margins. Collecting inventory data, analyzing the patterns, and using it to build forecasts would be beneficial to all sides and decrease the inventory holding and stockout problems.

Barilla is not only facing opposition from its customers, but also from its own sales team. Barilla’s current forecast model is heavily sales driven and so the sales team has an incredible amount of input into inventory management. Barilla’s model needs to become more qualitative than quantitative. The sales team would still be able to hold trade promotions; however, they would have to be automated versus random. The sales team should view the change in inventory management as a way to sell distributors on the fact that they can decrease stockouts and inventory holding.

Timing is important in order to sustain a competitive advantage in the marketplace. The JITD program will make it possible for Barilla to keep up with changes in demand from its customers, and thus, provide them with excellent customer service.

3. Recommendation

This brief offers the following recommendations to be considered which aim to solve Barilla SpA’s inefficiencies in inventory management of its supply chain. The analysis of the situation provides insights into developments in the correction of these inefficiencies. While deciding to implement the JITD program is a good start to improving the inventory management system, based on the analysis these recommendations will further promote ways in which to implement the new program.

The first recommendation is to establish a strategy and plan for the sharing of information in order to fix the flow of information related to timing and inventory that affect the entire supply chain. The flow of information should not be one sided. Barilla should make the information visible to its distributors as well to assess the accuracy. This visibility can resolve the fear of the distributors that Barilla is trying to do their job and allow them to monitor the status of inventory as well. A problem with the visibility of information is that it could give distributors more input into Barilla’s inventory management and allow them demand certain pricing. Information