Barila Spa Essay

Background

Barilla Spa, an Italian based company is the world’s largest pasta manufacturer. Barilla has a 35% market

share in Italy and a 22% market share in Europe. In addition to the family of pastas (75%), it also

manufactures bread, cookies, biscuits etc (35%).

Barilla is highly vertically integrated which operates flour mills as well as distribution warehousing

services. Barilla’s product line is classified into fresh and dry categories based on their composition and

shelf lives. Shelf life for dry products varies from 18-24months (long shelf lives) to 10-12 weeks

(Medium shelf lives). In contrast, fresh products have shelf lives varying from 21 days (fresh pasta) to 1

day (fresh bread).

Barilla maintains a complex distribution system comprising of distribution centers, retail outlets and

agents in order to manage the distribution of various types of products. Typically, distribution centers

hold only 3 days inventory of fresh products and a month worth inventory for dry products. Demand

fluctuations imposed burden on company’s manufacturing and distribution system resulting in longer lead

times and out of stock or over stock situations. Order based production was making it hard for the

company to optimize its supply chain. Giorgio Maggiali, Barilla’s director of logistics, decided to

implement JITD (Just-in-Time Distribution) approach in order to overcome these obstacles. This model

was resisted by the organization both internally (sales and marketing) and externally (customers,

distributors and retailers).

Analysis

In an effective supply chain the number of nodes should be less but in Barilla case the number of nodes is

high which makes the system more complicated. The Products produced by Barilla are initially being

transported from the plants to the Barilla Central Distribution Centers and then to the GD’s (Large

Distributors) or DO’s (Organized Distributors). The independent supermarkets and chained supermarkets

gets the products for sale from the GD’s or DO’s and 10% of the total products are delivered to small

shops.