Essay on Barilla Spa - 10

761 Words Mar 3rd, 2008 4 Pages
Barilla SpA is an Italian pasta manufacturer comprised of 7 divisions: 3 pasta, bakery, bread, catering, and international. By 1990, Barilla had become the largest pasta manufacturer in the world.
The company ships its pasta to one of two central distribution centers (CDC) where it is bought by individual supermarket distributors called "grande distribuzione" (GD for larger supermarkets) and "distribuzione organizzata" (DO for smaller, independent supermarkets). During the late 1980s, the distributors often put Barilla in a bind with fluctuating demand patterns. As director of logistics, Giorgio Maggiali was acutely aware of the growing burden from demand fluctuations. He was contemplating the implementation of a Just-in-Time
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A second impact relates to the manufacturing limitations of the pasta. Each type of pasta had different temperature and humidity requirements. The lack of demand information coupled with the different specifications left it difficult to respond quickly to changes in demand. Finally, the lack of information changed the effect of Barilla's incentives to distributors. The distributors were offered volume discounts for making a full truck-load or multiple truck-load order. The lack of forecasting meant Barilla was offering a reward for the distributors' inability to predict demand. If Giorgio were to implement JITD to curb the demand fluctuations he would face several issues. Internally, Barilla's own sales and marketing organizations saw the concept as infeasible, dangerous, or both. The sales representatives feared their roles would diminish. They were also worried that Barilla was not ready to handle the sophisticated nature of demand forecasting. Finally, going to JITD would remove some incentives that could cause resistance from distributors and supermarkets.
Externally, the distributors are unwilling to give up their authority to place orders. The distributors believe managing stock is their responsibility, not Barilla's. They also feared they will become dependent on Barilla and are unwilling to give Barilla the proper information to make demand forecasts. However, one distributor agreed to sell Barilla

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