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What Are the Major Problems for Barilla? How Would You Solve Them?

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1. What are the major problems for Barilla? How would you solve them?
Barilla Spa is a pasta manufacturing company. The product line is divided into “dry” and “fresh” product categories. Barilla products are distributed through three types of retail outlets that include: Small independent grocers, supermarket chains and independent supermarkets.
The company is suffering from a supply chain problem. Some of the highlighted problems faced by the company include the following: * Poor forecast capabilities- There is absence of any proper forecasting system. Due to overly complex distribution system, determining order quantities was not easy. Orders swung wildly from week to week. * High Lead time- The average lead time was ten calendar days. Barilla product was shipped to the distributor eight days after the order was placed and ended fourteen days after the order was placed. Moreover the distributors’ sales volume varied all the time. Order batching has no minimum or maximum quantities and leads to problems of stock outs and backorders. * High Level of inventory- Miscalculation of ROP and safety stock. The standard deviation of 227 quintals in the weekly demand for Barilla dry products reflects the level of inventory that needs to be maintained. Thus there is increase in the inventory holding costs. * Bull whip effect- Due to the different levels in the entire distribution chain, the fluctuations in forecasting percolated through the entire process. This made demand swings a major issue for Barilla thus resulting in unmet expectations of the distributors and retailers. * More focus on DOs and not on GDs- Barilla sales representatives serving DOs spent an estimated 90% of their time working at the store level. In contrast, a very small sales force served the GDs. The sales force rarely visited the GD's warehouses and GDs usually sent their orders

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