Barilla Case Report

Executive Summary:

Barilla SpA is the world’s largest pasta producer. In 1990 Barilla was the largest manufacturer in the world with 35% of the market share in Italy and 22% throughout Europe. The company evolved into a vertically integrated corporation with flour mills, pasta plants, and bakery product factories located throughout Italy. Barilla is organized into seven divisions: three pasta divisions (Barilla, Voiello, and Braibanti), the Bakery Products Division (manufacturing medium to long shelf-life bakery products), the Fresh Bread Division (manufacturing very short shelf-life bakery products), the Catering Division (distributing cakes and frozen croissants to bars and pastry shops), and the International Division. The product line was divided into “dry” and “fresh” product categories which represented 75% and 25% of Barilla’s sales, respectively. The dry products had either a “long” shelf life of 18-24 months or “medium” shelf life of 10-12 months. The fresh products had a shelf life of 21 days with fresh bread included in the fresh products and having only one day shelf life. Barilla products are distributed through small independent grocers, supermarket chains, and independent supermarkets.

During the late 1980’s, Barilla suffered increasing operational inefficiencies and cost penalties that resulted from large week-to-week variations in its distributors’ order patterns. To address these fluctuations Giorgio Maggiali wants to implement the Just-in-Time Distribution or JTID program with Barilla’s distributors. This approach will be beneficial for the distributors as well as Barilla. It will help build better relationship with the distributors, increase the supply chain visibility, improve fill rates to retail stores, help reduce inventory holding cost, and a value-added service that is provided to Barilla’s customers at no extra cost.

Identification of Issues:

1. Demand and Inventory Fluctuations: Barilla has suffered from increasing...