Barilla Case Study

Group 3 Bhaskar Jain, 105 Abhimanyu Maheshwari, 109 Prannoy Pillai, 114 Pranjal Saiwal, 115

Q1: What are the problems in their Supply Chain? Ans1: There are many problems that existed in their supply chain: Extreme demand fluctuations Week-to week variation in distributors re-order pattern Maintaining proper lead-time for perishable products High inventory carrying cost & manufacturing cost due to operational inefficiencies Inadequate product availability Distributors inability to carry large number of SKUs

Q2: What are the bull whip effects? Explain Bull whip effects in general and in particular in this case with measurements? Ans2: Bull whip effect is a trend of increased swings in demand for inventory from customer to producer through retailers and distributors. The middle-level suppliers increase their demand for inventory exponentially with the demand from the customer, i.e. the final customer places an order and order fluctuations build up upstream the supply chain.

There are many causes of bullwhip effect with respect to this case:-

Inaccurate demand forecast Long lead time Price fluctuation due to promotional activities Order batching Lag of information Irrational decision making

The main problems that are encountered because of bull-whip effect are: Demand Signaling Order batching Price fluctuation Shortage Gaming

Q3: What are the remedial measures they should adopt? Ans3: Some of the suggested steps that should be adopted and implemented are as follows:1. Implement effective JITD (Just in Time Delivery): It will help in reducing the problem of long lead time and order batching. 2. Information centralization: Will reduce Bull whip effect and will enhance inventory management system. 3. Pull Based Model 4. Cutting down of excessive fluctuations in the cost, thus decreased average inventory level and stock-out conditions.