Barilla Case

Nowadays , manufacturing and services firms face growing challenges to increase profit margins amidst increasingly fiercer competition . Under such circumstances , industry analysts and supply chain experts suggest manufacturers and service providers to promote more effective supply and demand planning , management , and execution as the means to unlocking significant gains in margins

By definition , Search CIO (2007 ) defines SCM as the management of information , materials , and finances along a chain of process from suppliers to manufacturers and then from manufacturers

to customers . The interests in the discussion of supply chain management occur since it relates to costs reduction in all aspects of business process especially regarding the inventory reduction that suggests manufacturer produce goods when needed

The situation highlights that supply chain management will enhance lead time (time-to-market ) of particular products , thus enabling all parties within an organization to manage their resources more effectively

Concerning the issue , this will describe supply chain management issue in Barilla spA , an Italian manufacturer that sells their products to its retailers mainly via third-party distributors . The competition in the market has caused unfavorable situation for Barilla during late 1980s when the company faced unpredictable demands from its distributors

What are the reasons for the increase in variability in Barilla 's supply chain

Barilla maintains separate supply chain because the company has two general products : fresh and dry products , which required special treatment . In this situation , fresh products is mainly purchased from the two central distribution centers (CDCs ) by independent agents who further channeled the products into 70 regional warehouses across Italy Meanwhile , about two third of dry products are sold at supermarkets Figure 1 explains the supply chain systems for Barilla

Figure 1 Barilla Distribution Systems How can Barilla cope with the increase in variability

In to succeed the distribution system , Barilla is known to practice the replenishment strategy , which describes an agreement between Barilla and their supplier to share the data about frequency and inventory levels to match Barilla demands (About .com , 2008

By delivering the products under the agreement with suppliers , Barilla is able to support their Just in time (JIT ) distribution system , which is considered to be the optimum strategy to accomplish the company 's mission of having increased customers satisfaction

What is the impact of transferring demand information across the supply chain

By sharing information between Barilla and their suppliers