Introduction
Along with significant growth in revenue Barilla was increasingly facing challenges with keeping up with fluctuating demand. The export market was growing significantly as much as 20-25% per year in the early 1990s. The strain was being felt at both ends of the supply chain. On the manufacturer’s end there was a strain on plants and equipment to react to changing demand since the plants were always running on a optimized predetermined sequence. At the same time on the other end of the supply chain retailers were facing increasing stock outs as well. In order to reduce costs in an ever decreasing margin business Barilla would have to develop a strategy that encompasses all the stakeholders in the supply chain.
Analysis
From a manufacturing perspective Barilla plants were organized by types of pasta. Each plant had production run sequences optimized for the manufacture of different kinds of pasta at that plant. The distribution channels for dry and fresh products were separate because of the storage and replenishment requirements being different. They had an efficient distribution channel to supply fresh products with over 70 regional warehouses that could move the products quick. The dry products were supplied from the CDCs to distributors who would then supply to the supermarkets and small shops. There is a significant amount of inventory build up at the CDCs already ( 1 month of dry products) and the distributors would hold about 2 weeks worth of inventory. The Large distributors (GD) were owned by Barilla’s and the Organized distributors (DO) were a centralized buying organization representing a number of independent supermarkets. The GDs supplied supermarket chains and the DOs supplied independent supermarkets. The distributors would order f ...