Barilla Case: Causes of Fluctuation Essay

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1. What are the causes of fluctuation? (20 points) Fluctuation of Raw Materials Pasta is produced with various types of raw material, including wheat and egg. If the supply of raw materials has high level of fluctuation, (which may be caused by weather condition or cost of raising chicken) then the production and supply of pasta will be influenced.

Diverse Product Category Barilla’s products are divided into Fresh products and Dry products. The demand for these two distinct kinds of products is quite different, and the order, shipment and delivery methods for them are also various.

Diverse Distribution Methods Three different types of retail outlets – small independent grocers, supermarket chains, and …show more content…
First of all, I could skip the forecasting and order placing process which could save the company a significant amount of cost and time. Barilla will do the forecasting for me and they will deliver the right amount of product to me at the right time.

Secondly, I can lower the inventory level and the cost of holding inventory. Barilla will deliver the right amount of products at the right time. As per the order we receive, the stock we keep should be in a level which can fulfill all the orders. Stockout will be minimized. At the same time, our client will be happy to see we can fulfill their orders on time. It can improve our service level as well.

Thirdly, Barilla can get the shipment data not only from us, but also from other distributors. It has more information to forecast the demand. The forecast will be more accurate as well. It is better for us to follow them and receive products according to their schedule.

Fourthly, Sales data is a very sensitive data, and by providing my sales data to Barilla, it means that they can use my figure to do all kinds of comparison between my competitors, and even more, if they have a plan to start their own distribution network, then I will be foolish to provide the data to Barilla now

Finally, while Barilla is one of the biggest supplier to me, there are still lot of other suppliers in the market, and there are different promotions in the year. The
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