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Barilla Spa

Group - 1

Types of Pasta

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Durum wheat flour pasta: Traditional pasta made with durum wheat (grano duro)

Special pasta: Pasta made out of flours that contain other permitted ingredients such as vegetables, greens, malt & various fillings

Egg pasta: The egg pasta is a smooth mixture of flour and eggs (grano tenero)

Wholemeal pasta: prepared with wheat bran and fibre to guarantee a higher fibre content

Fresh pasta: Fresh Hot Pasta e.g. ravioli. The fresh pastas reign the world of Italian cuisine!

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Pasta Shapes

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@ centrepoint

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Barilla Spa

World’s largest Pasta manufacturer 35% market share in Italy 22% market share in Europe Products offered in 100,000 retail outlets in Italy

75% sales through “dry” products & 25% through “fresh products”

Separate distribution systems for dry & fresh products due to differences in perishability

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Advertising & Promotion

Heavily advertised. Celebrity endorsements

Trade Promotions – promotional discounts ranged from 1.4% to 10%

Sales reps helped merchandise Barilla product and set up in-store promotions

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Distribution

A typical distributor warehouse held a 2-week supply of Barilla dry products in inventory

Distributors typically carried 7000 - 1000 SKUs

Many supermarkets places orders with distributors daily. Orders were serviced in 24 to 48 hours after receipt of order

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Distribution

•Most distributors (GDs and DOs) checked their inventory levels and placed order once per week.

•Lead time – 8 to 14 days. Average 10 days.•Varying distributor’s sales volume ▫Small distributor: 1 truckload / week.▫Large distributor: 5 truckloads / week.

•Only a few used forecasting systems or sophisticated analytical tools for determining order quantity

Diagnosis

Large variety of pasta- 200 total. Large variety of packaging- 470

total. Long setup time.

Long lead time- 10 days avg.

Extreme demand variability.

Large inventory at CDC, GD & DO

= Inventory costs.

Diagnosis - Problems

5.5% average stock outs

= Loss of income.

Resistance to JITD system: Sales & Marketing Barilla

personnel. Distributors & Retailers.

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Distribution NetworkBarilla Dry

Product Factories

Barilla CDC’s

Grande Distribuzio

ne

Distribuzione

Organizzata

Barilla Run Depots

Signora Maria Shops

Chain Supermark

ets

Independent

Supermarkets

65% 35%

90%

10%

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Current Scenario – Bullwhip Effect

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Proposed Solution - JITD

The idea – Rather than send products to the

distributors according to their planning process, Barilla would look at all the distributors’ shipment data and send what was needed at the stores.

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Decision by Barilla Mgmt JITD must be implemented to

improve order fulfillment. Production has to be based on

demand prediction and not on orders.

Information on demand should be collected and used.

recruit support of all parties.

ROI

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Decision by Barilla Mgmt

“Sell” the idea to a single distributor.

Build a prediction module based on past shipment data from distributors.

Simulate the use of the JITD on the passed year.

Run a ”pilot”. Calculate the savings to all parties.

( Show that it is a WIN-WIN situation) Expand JITD system with other

distributors.

Bullwhip Effect smoothing with JITD

Orders From Cortese DC To CDC 1989

0

10

20

30

40

50

60

70

80

90

100

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49

Weeks

To

ne

Average – 30 ToneStandard deviation – 22tone

Analysis

AnalysisOrders at Cortese DC

0

10

20

30

40

50

60

70

80

90

100

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46

Weeks

To

ne

Predicted Orderswith Move AverageOrders

Moving average 6 weeksAverage – 31 ToneStandard deviation – 3 tone

37 Tone = Only one trailer per week

Average – 30 ToneStandard deviation – 22 tone

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All the best for your exams!!

For your cooperation !

Thank you