Barilla SpA (A) Case Analysis,

a Supply Chain Perspective

Syndicate 4
Ishak Firdauzi R. (29114333)
Marthin Lukas P. (29114341)
Brian Lee
(29114350)
Teja Pramesya A. (29114389)

Introduction - Background
Barilla was founded in 1875 by Pietro Barilla.
In 1968 Pietro and Gianni Barilla construct a
1.25 million square meter pasta plant in
Pedrignano.
In 1971 the company was sold to W. R.
Grace Inc, an american company, and was
reacquired in 1979 by Pietro Barilla.
In 1990 Barilla was the largest pasta
manufacturer in the world making 35% of
the pasta in Italy and 22% in Europe.

Industry Background (1)

Consumption per capita of pasta in Italy
was 18 kilos/year.
In the late 1980s Italian pasta market was
flat with growth less than 1% per year.
In 1990 the market was estimated 3.5
trillion lire with growth only on Semolina
pasta and fresh pasta.
Export market rose to 20-25% per year in
the early 1990s

Industry Background (2)

Owned and operated several plants
in Italy that includes large flour mills,
pasta plants, and specialty products
Maintained state-of-the-art Research
and Development facilities and main
production plan in Pedrignano

Manufacturing Process (1)

Main materials flour, water, and other optional are eggs and
spinach meal.
The Materials were mixed to form dough then rolled into
a long continuous sheet by pairs of rollers set at
increasingly close tolerances.
The dough sheet was forced through a bronze extruding
die screen; which make a distinctive shape.
The pasta then be cutted into a specific length. The cut
pieces then were hung over dowels (or placed onto
trays) and moved slowly through a long tunnel kiln that
snaked across the factory.
The temperature and humidity in the kiln were specified
for each size and shape of pasta and tightly controlled to
ensure high quality.
The drying process took four-hour long, the pasta then
weighed and packaged.

Manufacturing Process (2)

Plants were varied based on special spesification of the
past
The products were composed with or withour eggs and
sold as fresh or dry pasta.
Non-egg pasta was made with flour ground from grano
duro (high protein hard duru wheat) the highest
quality flour.
Egg based pasta and bakery products, used flour ground
form grano tenero (tender wheat), such as farina.
Short pasta product such as macaroni and fusilli and
Long products such as spaghetti or capellini were also
made seperately.

Channels of Distribution

Barila Distribution Pattern

Both GDs and DOs
purchased from CDC
maintained inventory
in their own
warehouses (2 weeks
supply dry product in
their inventory) full
filled order from
supermarket (1-2 days
delivery time)
Grand Distributors or
GDs distributed
through the chains own
distribution
organization
Organized Distributors
or DOs centralized
buying organization
for a large number of
independent
supermarket

Barilla separate
distribution systems
for its fresh and dry
products due to their
differences in
perishability and retail
service management

Dry Product (Long

shelf lives 18-24 month
and Medium shelf lives
10-12 weeks) Held
one month in CDC
distributor
supermarket
Fresh Product (Pasta
21-day shelf lives,
Fresh Bread one-day
shelf life) moved
quickly through the
distribution system
(3 days held in CDC)
independent agents

Sales and
Marketing
Advertisi
ng

Advertisi
Promoti ng

Promoti
on

Promoti
on

Heavy advertised
Sales
positioning as highest
Representa
tives
quality, most
sophisticated like jewels
and luxury avoided
images of traditional
italian folklore
Engaged with famous
Sales &
athletes and celebrities
Marketing
from many country
strengthening loyal
Strategy
relationships with italian
Sales
families to get images
as
Representa
Where there is Barilla,
tives
There is a home
Set up in store promotions
Took note of competitive information
Ordering strategies with store
management

Promotion based
strategy
Divided 1 year to 12
canvass
period,corresponding a
promotional program
with different product in
each program
At anytime, buyers
could buy as many as
possible
Incentives were given
to those achieving
sales target
Offering volume discount
Paid for transport if
buyer buy truckload
quantities

Sales Representatives
90% of Barilla Sales reps working time are spent
at the store level
Sales reps job tasks are: merchandising Barilla
product and setting up in-store promotions.
Sales reps activities are weekly meeting with
distributors, assisting the weekly order placing by
the distributor, setting up promotions and
discounts
Sales reps also have responsibility to resolve any
problems with previous delivery such as returns,
deletions and any other possible disputes.
They are also discussing the projection of new
products and prices.

Distribution
Majority of GDs and DOs of Barilla are constantly
checking their inventory levels and placed orders
once per week.
The arrival time of Barilla products delivery is
around day eight till day fourteen after the
placing order.
The average lead time of Barilla products was ten
calendar days. Here is the example below:

Impetus for the JITD

Program
During 1980s, Barilla experienced
the uncertainty of fluctuating
demand.

Impetus for the JITD

Program
As they operate in food industry, Barilla
found it difficult to hold the sufficient
finished goods inventories to meet
distributors order requirement because it
was considerably expensive when weekly
demand has fluctuated and has been
difficult to predict.
The customers were changing. Their
demands were fluctuating, yet the space
in retail outlet remained the same

Impetus for the JITD

Program
Then, Brando Vitali, Barillas Directors of
Logistics, envisioned an idea to change the
way of product delivery by having day-to-day
logistics service.
The method would be processed as follows:
Everyday, distributors would provide Barilla
the data on what Barilla products it had
shipped out of its warehouse to retailers
during the previous day, as well as the current
stock level for each Barilla SKU (Stock Keeping
Unit).

Impetus for the JITD

Program
There are some risks on implementing JITD
method.
The sales level will flatten if this JITD method is
implemented
The adjustment for shipment might be
insufficient due to quick change of selling
pattern
JITD method can offer the customer additional
service at no extra cost and will improve
Barillas visibility with the trade and make
distributors more dependent to Barilla.