In: Business and Management

Submitted By zorzilv
Words 884
Pages 4
Leah Zorzi
Barilla Case
March 31, 2015

A major problem for Barilla is the fluctuation of demand. For one I noticed many different fluctuations in exhibit 12 with demand from Cortese Northeast DC. This can be caused by many different factors such as seasonal demand. (More lasagna noodles are sold around Easter). A fluctuation in demand depending on seasonality is a predictable. Other factors that affect this is a long lead time (10 days), volume and transportation discounts, large variety of packaging and types of products. Also, there are no minimum or maximum quantity orders. The distributors lack forecasting tools and systems. They take full advantage of promotional transportations discounts, stocking up when this occurs and living off the high volume they purchased when the promotions are not going on. Besides the lack of a forecasting system there is a lack in communication between all segments such as manufacturing, distribution, marketing, and retailers.
The complexity of the supply chain also causes Barilla issues. There are a variety of different strategies based upon the different customers Barilla has. For example they sell their products to large grocery stores, as well as small mom and pop places. This ranges the strategies. The demand is unpredictable (also there is no system for predicting demand). A bullwhip effect happens because of the unpredictable demand. The bullwhip effect is seen in exhibit 12 when there are large rises in inventory orders that are followed by low inventory levels.
The problems with demand fluctuation causes Barilla’s production to be flawed. It causes a shortage or a fluctuation in production. Barillia is either having stock outs or holding onto access inventory. This adds to the company’s cost as a whole because they may need to create extra capacity space for the excess inventory. Stock outs are also costly…...

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