Barilla Case Study
What are the reasons for the increase in variability in Barilla’s supply chain?
The supply chain of Barilla is highly variable because of a number of reasons. One of the major reasons is the fact that the distribution network for the firm is complicated because of the involvement of middlemen who make the supply chain longer and complex. In order to have adequate supplies, the firm depends on forecasting models, which are improper, rather than depending on the distributors who will provide accurate information from restock and refill strategy.
Each of their product line has large SKUs, which lead to increase in labor costs and production costs thus further leading to increased variability in supply. In order to beat the many competitors, the firm uses frequent promotions increasing demand but at low prices further increasing labor and production costs. Barilla has two separate supply chain because it has to separate products namely dry and fresh products and thus the two products must be treated differently. The fresh product is from two central distribution centers that channel it to 70 regional warehouses while the most of the dry products are channeled to supermarkets.