BARILLA SpA Case Study

Presented by – Bishwa Prakash Pati u408014 Brahma Prakash Pati u408015

Ranjeeta Pattnaik u408039 Dambaru kar u408053

COMAPNY BACKROUND

- Founded by Pietro Barilla in 1875- Opened shop in Parma, Italy- Subsequently run by son Ricardo, passed to

his own sons Pietro & Gianni- 1990 - Largest Pasta maker in world- During 1960 constructed .25 million

sq.m.Pasta plant in Pedrignano

Background cont.........

- 1971 - company sold to W.R. Grace,Inc. USA- 1979 – Grace sold the company back to Pietro- 1980 – annual growth rate of 21%- Growth achieved through expansion of existing business & acquisition of new business- Brands – BARILLA, VOIELLO & BRAIBANTI- 1990 – 7 Divisions – 3 Pasta division, Bakery Product division, Fresh bread division,Catering division & International division

INDUSTRY BACKGROUND

- Origin of pasta unknown- Per capita Pasta consumption in Italy averaged

18 kilos per year- 1980 – market grew by less than 1 %- 1990 – Semolina & Fresh Pasta only growth

segments- export market was experiencing record

growth

PRODUCTS

- Fresh Products –Fresh Pasta shelf life of 21 days,fresh bread shelf life 1 day

- DRY Products – Medium shelf life of 10 to 12 weeks or Long shelf life of 18 to 24 months

CHANNELS OF DISTRIBUTION

SALES & MARKETINGS

- Advertising- Trade Promotions- Sales representatives

JITD Program

- 1980 – Barilla witnessed Fluctuating demand- Extreme demad variability strained Barilla

manufacturing and logistic operatons- 1987 – Brando Vitali then Barilla director of

logistics felt “ both manufacturers & retailers were suffering fron thinning margins”

- Early 1988 he thought of JITD Program

JITD cont....

- Rather than send product to the distributor as per their internal Planning

- He suggested they should send only what is needed at the stores

- To consider distributor shipment data for forecasting

- He suggested sending product only as it is needed rather than building huge inventory at both areas

JITD cont....

- He suggested they reduce distribution & inventory cost to ultimately reduce manufacturing costs

- Resistance from within the company Sales & marketing Personnel

Remarks of Sales & marketing

- Our sales level would flatten- We run risk of not being able to adjust our

shipment sufficiently quickly to meet demand- objection from distribution channels- we would not be able to run Trade promotions

with JITD- It is not clear what cost would be reduced

Vitali Counter to concerns

- JITD should be considered selling tool- We offer coustomers extra service at no extra

cost- Program will improve Barilla Visibility- It would improve relations with Distributors- Distributor data would improve our Planning

process

Change

- 1988 – Giorgio Maggiali appointed as director of logistics as Vitali promoted

- Maggiali appointed Vincenzo to help develop JITD Program

- Implementation was difficult as manager of one distribution said “ managing my stock is my Job”

Two Important Issues

- Extreme variations in distributors order patterns have caused severe operational inefficiencies and cost penalties for Barilla

- In JITD program Barilla's own Logistics organisation will specify delivery quantity to distributor whereas normal process is reverse.

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