Barilla Pasta Company - Logistics Analysis

Barilla SpA Case

Abstract

This case presented supply chain logistics details for the world’s largest pasta producer, Barilla SpA. Barilla was founded in 1875 in Parma, Italy and was led through a significant growth period up to 1968 when the company built a massive pasta plant that cost more than the company could afford. The company was sold, but then re-acquired by Barilla in 1979. The 1980s brought Barilla incredible growth, and by the 1990s the company became the largest pasta manufacturer in the world. Barilla owned and operated an extensive network of plants located throughout Italy, and followed a carefully chosen production sequence that minimized incremental changes in pasta production methods. Barilla divided its product line into tow categories of “Fresh” products and “Dry” products, separated by shelf life duration. Dry products were offered in 800 different packaged stockkeeping units (SKUs), and pasta in 470 different SKUs. Barilla maintained separate distribution systems for its fresh and dry products, and Brando Vitali’s just-in-time-delivery (JITD) proposal focused on dry products sold through distributors. Barilla products were offered in small independent shops, supermarket chains, and independent supermarkets. A supermarket chain used a “Grand Distributor” to acquire Barilla products, while products destined for independent supermarkets were channeled through different, organized distributors. These distributors filled supermarket orders from their warehouse inventory, which typically held a two-week supply of Barilla dry products. Distribution lead times for orders took an average of 10 days to fulfill. Barilla sales and marketing representatives were encouraged to use trade promotions to push its products into the grocery distribution network. Orders for Barilla dry products often swung wildly from week to week, straining manufacturing and logistics operations. Additionally, manufacturers were continuously introducing new...