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Barilla SpA, an Italian manufacturer that sells to its retailers largely through third-party distributors,

experienced widely fluctuating demand patterns from its distributors during the late 1980s. This case describes a proposal to address the problem by implementing a continuous replenishment program, under which the responsibility for determining shipment quantities to the distributors would shift from the distributors to Barilla. Describes support and resistance within Barilla's different functional areas and within the distributors Barilla approached with the proposal.

Here we focus on how a company can use coordination mechanisms both to reduce channel costs (in this case, inventory and transportation costs incurred by Barilla as well as inventory costs incurred by the distributors) and to improve service levels (defined in this case as the percent of retailers' orders filled from distributors' inventory).

Q2. Evaluate the fit between components of Barilla's supply chain strategy and their competitive strategy.

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