Barilla Spa Case Study

Barilla SpA

Case response

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SCMA, Module 1-Session 5

Written Case Study 1

Instructor:

Professor Simon Twain

Student:

John Smith

May, 11th 2017

Barilla SpA

Case Response

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EXECUTIVE SUMMARY

Barilla was founded in 1875 in Parma, Italy and by 1990, the 3rd generation of Barilla family was the world’s largest pasta manufacturer in the world, with 35% of all pasta sold in Italy and 22% of all pasta sold in Europe. In Italy, Barilla offered pasta products under three brands, with sales almost evenly distributed between northern and southern Italy.

Barilla was organized into seven divisions, covering pasta (three divisions), bakery products, fresh bread, catering and an international division.

Market conditions created the need to reduce costs of the distribution channel without compromising quality. Confronted with demand fluctuations, a just-in-time distribution system was conceived. The system received much opposition and seemed to create more problems than it solved.

Based on the decision criteria, the immediate recommendation is to review, revisit, improve and repair the JiTD program and make it mandatory for the entire distribution channel.

The implementation planning time is short to medium.  

Barilla SpA

Case Response

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TABLE OF CONTENTS

1. Executive summary……………………………………………………..…......…2
2. Issue Identification………………………………………………………..........4-5
3. Root Cause Analysis………………………………………………….…...…...6-9
4. Alternatives and Options…………………………………………..…...…….10-14
5. Recommendations……………..………………………………………….….15-16
6. Implementation……………………………………………………………….17-18
7. Monitor and Control…………………………………………………….…….…19
8. Exhibits……………………………………………………………………….20-22

ISSUE IDENTIFICATION

Tactical issues – short term:

1. Price fluctuations – creates bullwhip effect.
2. Order limits – currently no min/max.
3. Compensation structure for sales – in disagreement with the JiTD program.

Strategic issues – medium/long term:

1. Poor communication internally (logistics vs sales&marketing) and externally (Barilla vs customers/distributors).
2. Data gathering – inefficient and inaccurate protocol.
3. Long lead times – technology does not allow to reduce manufacturing times but distribution cycle time has room for improvement.
4. High level of fluctuations in demand – bullwhip effect.

ENVIRONMENTAL ANALYSIS

The Italian pasta market is relatively flat, with an annual growing of less than 1% per year. In contrast, export market experiences record growth, with exports to other European countries expected to rise between 20 to 25% per year.

In this market, Barilla enjoys a world leader position of largest pasta manufacturer in the world, making 35% of all pasta sold in Italy and 22% of all pasta sold in Europe.