Barilla Case Study

In: Business and Management

Submitted By odelyahayon
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Barilla SpA Case Study

Operations Management
Prabir K. Bagchi, Ph.D.
April 11th, 2012


Jason Grossman_____________________________________
Odelya Hayon_______________________________________
Evan Kline__________________________________________
Stephen Nason_______________________________________
Victoria Portale______________________________________
Current Problems Barilla SpA is the world leader in producing and selling a multitude of different pastas and baked goods, however, after reviewing Barilla’s case study, we took note of all of the underlying factors that are preventing the company from maximizing their productivity and ultimately, maximizing their profitability. Barilla faces a number of issues that are limiting the company’s ability to maximize profit, reduce costs, and ensure adequate available inventory levels. Barilla's main issues include extreme demand fluctuations, extensive lead times, an insufficient channel of communication between several distribution partners, high inventory carrying costs, and their current discount/promotion programs. The coupon and discount system that Barilla advertises to their distributors is a major factor contributing to their detrimental demand fluctuations. Barilla offered volume discounts including paid transportation to distributors, 2-3% price-breaks for full-truck orders, and even greater discounts (around 4%) in some instances where a given buyer placed purchases of three or more full-truck orders at once. As a result of the discounts, over-ordering occurs and forecasting becomes extremely difficult. As the 1980s progressed, orders for Barilla's dry products swung "wildly from week to week" and consequently strained Barilla's manufacturing and logistics operations. For example, when demand for a particular type of pasta unexpectedly increased, Barilla was unable to meet the…...

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