barilla spa case study
TRANSCRIPT
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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