BARILLA SPA (A)

MARKETING 2 - ASSIGNMENT
DATE OF SUBMISSION: 09-12-2018

Submitted by:
Group 9, Section F, IIM Indore

Members:
Ankit Kumar Gupta (2015IPM012)
Anwesha Aparimita Guru (2018PGP066)
Gaurav Kumar (2018PGP133)
Navin Kumar V K (2018PGP234)
Shubham (2018PGP358)
Vinay Kumar H R (2018PGP425)
Yugank Singhal (2015IPM120)
Case Overview:
The case is about Barilla Spa, world’s largest pasta manufacturing company’s distribution practices.
Barilla’s offering can be classified into dry and fresh products, based on the shelf life of the products. A
changes in distribution system was made by Vitali, ex-logistics head two years ago, from traditional
order system to Just in Time Distribution (JITD). This was done as a response to erratic demand,
frequent stock-outs and high cost of holding inventory. JITD has invited concerns from different
stakeholders and we propose the following actions for the same:

Stakeholders Conflicts/Concerns Action Plan References

1. Sales & Sales department work Sales department can focus Page 9, in 1st
Marketing would become redundant. on getting new distributors remark after 2nd
Personnel on board and other functions paragraph
like analyzing competitors
and their strategies on their
visit to the distributors.

Risk of not being able to Shipments would be in turn Page 9, in 2nd

adjust shipments quickly. better with JITD because remark after 2nd
Barilla CDC’s would know paragraph
the forecasted demand.

Risk of giving competitors Distributors would continue Page 9, in 4th

more of distributor’s shelf to get other incentives and remark after 2nd
space. enough stock to meet the paragraph
demand, it is just going to
reduce overstocking.
This would reduce the
holding cost of distributors
and make space for new
SKUs launched by Barilla.
 We wouldn’t be able to run
trade promotions with JITD.
Trade promotions can be Page 9, in 6th
linked to how much quantity remark after 2nd
distributor can sell to its paragraph
buyers. This also ensures
that distributors & sales
people do not get trade
discounts for over stocking
(buying in excess of
needed).

We can’t change due to lack In JITD our manufacturing Page 9, in 7th

of our manufacturing process would have more remark after 2nd
flexibility. time to adjust to demand, paragraph
rather than responding to
erratic demands of
distributors.

2. Distributors “Managing stock is my job. I Provision of shared Page 10, in 1st

don’t need you to see my incentives to the distributors remark in the
warehouse or my figures.” that can make them co- 1st paragraph
operate in sharing their
Distributors felt like Barilla sales data.
was trying to encroach upon
their functions as
distributors.

“I could improve my After the implementation of Page 10, in 2nd

inventory and service levels
myself if you deliver my
orders more quickly.”
“What makes you think that
you can manage my
inventory better than I can?”
JITD, stock out rates and and 4th remark
inventory levels can be in the 1st
reduced. It would provide paragraph
distributors more scope to
focus on collaborating with
a larger number of retailers
for increasing their sales.

Distributors were Adoption of JITD on

unconvinced about the experiment basis can be
effectiveness of the system. done and distributors can
be convinced based on the
results.
 “We would be giving Barilla Option 1: This issue can be Page 10, in 3rd
the power to push product resolved by improving trust remark in the
into our warehouses just so between Barilla and the 1st paragraph
Barilla can reduce its costs.” distributors by conducting
experimental runs and
Distributors perceived a asking the distributors’
probable transfer of power feedback on the same. This
entirely to Barilla. can make them feel more
involved and get over their
perception of them losing
their power.

Option 2: Also we can

share a part of the benefits
of reduced cost to Barilla
for some initial years.

3. Distributors’ Risk Of Having Distributors In-house Pilot Projects Page 10, Para 2
buyers stock out would convince them to let and Page 9, in
distributors try JITD 5th remark after
2nd paragraph

“It is not clear that costs Give Incentives if Page 10, Para 2
would even be reduced” distributors opt for JITD. and Page 9, in
Distributor’s buyers would be Using this, distributors would 7th remark after
skeptical about reduction in be able to pass cost benefit 2nd paragraph
cost to buyers. Hence, reduction
in pressures from
distributors

4. Giorgio Maggiali, “He didn’t understand that we
Director of Logistics just can’t respond to wildly
changing orders without more
notice than that.”
Distributors at times couldn’t
comprehend that meeting
fluctuating market demands
could put a strain on company
resources.
Key personnel from GDs and Page 10, remark
DOs should be invited to the 4 of paragraph 1
Pedrignano Plant and given
a proper tour along with a
brief on how long and
complex the planning
process is before actual
production even begins at
the plant.
 “Marconi finally agreed to sell Not only GDs and DOs but Page 10, remark
us the data we wanted.” smaller retailers and 8 of paragraph 2
supermarkets need to be
Distributors were not only
made aware of the benefits
reluctant to the new proposed
plan, they tried to disrupt it of switching to JITD. To do
due to their customers’ this, they need to be given
pressure. incentives along with
knowledge transfer.

Recommendation:

In alignment with the above action plan, we recommend the following-

 To convince the internal team of sales persons- Communicate the responsibilities of sales persons clearly
of what is expected of them. Focus on convincing more distributors to stock the product, get competitor’s
information regarding competitor’s pricing and helping in new product launches. Make sure that sales
department does not narrow down their approach and works with the bigger picture in mind.

 To build the necessary trust with the distributors-

o Start with pilot/experimental projects, can start with lower number of SKUs under JITD.
o Make distributors a part of the process, show them how the data is handled and how this process is
an improvement over the existing one.
o Share a part of the gain to Barilla with the distributors for some initial time period.
o Develop a contingency plan, if this JITD system goes down how does Barilla plan to collect data then
o Give the distributors an option to go back to the previous system if they do not find JITD making
economic sense. This would convince distributors as they have nothing to lose.
o Incur any incremental cost required at distributor’s place to implement JITD. Barilla can have its own
employees collecting data at distributors end.