BARILLA SPA

Group – 02
Nishant Yadav – 18PGP135
Rahul Roshan – 18PGP143
Sarthak Navalakha – 18PGP169
Sarvasuddi Akhila – 18PGP170
Sharath R - 18PGP175
Shubham Raj - 18PGP184
• ABOUT THE COMPANY:

 FOUNDED IN 1875 BY PIETRO BARILLA IN PARMA, ITALY AS A SMALL SHOP THAT SOLD PASTA AND BREAD
PRODUCTS

 HIGH QUALITY PRODUCT AND INNOVATIVE MARKETING PROGRAMS ACTED AS DIFFERENTIATORS FROM
MULTIPLE COMPETITORS

 PLANT CONSTRUCTED IN PEDRIGNANO WAS THE LARGEST AND MOST TECHNOLOGICALLY ADVANCED PASTA
PLANT IN THE WORLD.

 BY 1990, BARILLA WAS THE LARGEST PASTA MANUFACTURER IN THE WORLD WITH 35% MARKET SHARE IN ITALY
AND 22% MARKET SHARE IN EUROPE

 OVER TIME, BARILLA HAD EVOLVED INTO A LARGE, VERTICALLY INTEGRATED CORPORATION ORGANIZED INTO
SEVEN DIVISIONS

 THE PLANT NETWORK WAS EXTENSIVELY LOCATED THROUGHOUT ITALY

 EXPORT MARKET FOR PASTA WAS LUCRATIVE WITH 20-25% GROWTH PER YEAR
DISTRIBUTION CHANNELS-

 PRODUCT LINE WAS DIVIDED INTO “DRIED” AND “FRESH” PRODUCT CATEGORIES

 PRODUCTS WERE SHIFTED FROM PLANTS TO TWO CDCS SITUATED IN NORTHERN AND SOUTHERN ITALY

 FRESH PRODUCTS FROM TWO CDCS WERE DISTRIBUTED BY INDEPENDENT AGENTS TO REGIONAL WAREHOUSES
 TWO THIRDS OF DRY PRODUCTS WERE DISTRIBUTED TO SUPER MARKETS THROUGH DISTRIBUTORS WHO WERE SUPPLIED
BY CDCS

 DISTRIBUTION CHANNEL HAD THREE TYPES OF RETAIL OUTLETS :

• SMALL INDEPENDENT GROCERS : SERVED BY BARILLA RUN DEPOTS (35% DRY PRODUCTS)

• SUPERMARKETS ( 65% DRY PRODUCTS)

 SUPERMARKET CHAINS : SERVED BY GD ( 70%)

 INDEPENDENT SUPERMARKETS : SERVED BY DO (30%)
• SALES AND MARKETING

 BARILLA USED HEAVY ADVERTISING FOR ITS PRODUCTS AND BRAND WAS POSITIONED AS
HIGH QUALITY BRAND

 EVOKED MODERN, SOPHISTICATED IMAGERY INSTEAD OF TRADITIONAL IMAGE

 TRADE PROMOTIONS WAS USED AS SALES STRATEGY AND VOLUME DISCOUNT WERE ALSO
OFFERED FOR TRUCKLOAD QUANTITY ORDERS

 SALES REPRESENTATIVES MOSTLY SERVED DO S WHILE GDS HAD VERY SMALL SALESFORCE
DIFFICULTIES THAT THE JITD PROGRAM WAS
CREATED TO SOLVE

• DEMAND-FLUCTUATIONS IMPOSED PROBLEMS ON MANUFACTURING AND

DISTRIBUTION SYSTEM
• ORDERS FROM BARILLA’S DRY PRODUCT VARIED FROM WEEK TO WEEK
• AT THEIR CURRENT INVENTORY LEVELS, SERVICE LEVELS OF DISTRIBUTORS
TO RETAILERS WERE UNACCEPTABLE
• MOST RETAILERS DIDN’T HAVE THE SHELF SPACE TO CARRY INCREASING
NUMBER OF SKUS
BENEFITS

• MEET THE CUSTOMER’S NEED MORE EFFECTIVELY AND DISTRIBUTION OF WORKLOAD WILL
EVEN
• ADDITIONAL SERVICE TO CUSTOMERS WITHOUT ANY ADDITIONAL COST
• IMPROVE THEIR VISIBILITY WITH THE TRADE
• MORE CONTROL IN BARILLA’S HANDS IN TERMS OF DISTRIBUTION
• WITH THE DATA COLLECTED, PLANNING PROCEDURES COULD BE IMPROVED
• REDUCTION IN VOLATILE DEMAND PATTERNS
• DECREASED INVENTORIES AND IMPROVED FILL RATE
DISADVANTAGES

• NEEDS MORE EFFORT

• MAY NOT BE ACCURATE TO DETERMINE THE ACTUAL CONSUMPTION PATTERN
• RELUCTANCE FROM DISTRIBUTORS AND SALES & MARKETING TEAM
• OPPORTUNITY COST ASSOCIATED WITH UNEXPECTED DEMAND
• JITD RELIES HEAVILY ON IT INFRASTRUCTURE
• COMPETITORS MIGHT CAPITALIZE ON THIS OPPORTUNITY TO PUSH THEIR
PRODUCT.
 WHAT CONFLICTS OR BARRIERS INTERNAL TO BARILLA DOES THE
JITD PROGRAM CREATE? WHAT CAUSES THESE CONFLICTS? AS
GIORGIO MAGGIALI, HOW WOULD YOU DEAL WITH THESE?

 SALES AND MARKETING DEPARTMENT WERE RESISTANT TO JITD CITING FOLLOWING REASONS:
 REPLENISHMENT VIA JITD NOT FLEXIBLE ENOUGH FOR QUICK REACTION TO PROMOTIONAL SCHEMES
 LACK OF FAMILIARITY OF DISTRIBUTION NETWORK WITH JITD
 FREE SHELF SPACE IN WAREHOUSES DUE TO JITD WOULD BE CAPTURED BY COMPETITORS
 ANY DISTURBANCE IN SUPPLY CHAIN WOULD POSE A HIGHER RISK OF STOCKOUT IN JIT
 NO EFFECTIVE REDUCTION IN INVENTORY HOLDING COST
• FURTHER PROBLEMS WERE:
 IMPROVEMENT OF FORECASTING SYSTEM
 LACK OF PROPER DECISION RULES
CAUSES OF THE INTERNAL CONFLICT:

 SALES AND MARKETING STAFF FEARED THE LOSS OF THEIR RESPONSIBILITY AND SIGNIFICANCE
DUE TO JITD

 POSSIBILITY OF DECREASE IN THE NO. OF TRADE PROMOTIONS DUE TO JITD

FOLLOWING STEPS CAN BE TAKEN –

 REDUCTION IN SALES TARGET AND ASSURANCE TO SALES PERSONNEL ABOUT NO IMPACT ON THEIR
EMPLOYABILITY DUE TO JITD

 IMPART APPROPRIATE KNOWLEDGE AND TRAINING TO SALES STAFF ABOUT JITD AND REDUCTION
IN WORKLOAD

 SALES TEAM CAN WORK WITH DO S TO GET THEM ON BOARD FOR TRIAL RUN OF JITD
 AS ONE OF THE BARILLA’S CUSTOMERS, WHAT
WOULD YOUR RESPONSE TO JITD BE? WHY?

Old-fashioned distribution system Reluctant to share warehouse and

Shift in control over my inventory
and reluctant to change sales data/figures

Risk of stock out may arise as I won’t be getting any trade

I don’t trust their forecasting
won’t be holding any excess promotions, and this will have an
methods and I feel I’m doing in a
inventory which will result in overall impact in my profit
better way already
Opportunity cost generation

No to JITD due to lack of knowledge but would be open for a trial

 IN THE ENVIRONMENT IN WHICH BARILLA
OPERATED IN 1990, DO YOU BELIEVE JITD (OR A
SIMILAR KIND OF PROGRAM) WOULD BE
FEASIBLE? EFFECTIVE?
FEASIBLE & EFFECTIVE WITH THE FOLLOWING CHANGES :

 IMPROVE IT SYSTEMS – FOR DATA COLLECTION FROM DISTRIBUTORS AND FORECASTING

 ALLEVIATE THE FEARS AND CONCERNS OF THE SALES AND MARKETING TEAM
 EDUCATE THE DISTRIBUTORS ABOUT THE JITD, & ITS ADVANTAGES
 MANUFACTURING IMPROVEMENTS TO BRING ABOUT A QUICK SHIFT IN THE
PRODUCTION OF DIFFERENT VARIETIES OF PASTA AND OTHER PRODUCTS
 IMPROVE SUPPLIER RELATIONS WHICH COULD HAMPER THE JIT SYSTEM
 HEDGE THE RISKS WHICH COULD BE SUPPLIER RISKS, TRANSPORTATION RISKS, NATURAL
DISASTERS ETC WHICH COULD HAMPER THE SYSTEM
 IF SO, WHICH CUSTOMERS WOULD YOU
TARGET NEXT?

SMALL INDEPENDENT SHOPS SERVICED BY REGIONAL WAREHOUSES DIRECTLY.

• REDUCE INVENTORY HOLDING COSTS
• INCREASE SPACE UTILISATION AND KEEP MORE VARIETY OF PRODUCTS
• INCREASE PROFIT MARGINS
• EASY TO CONVINCE
NEXT CUSTOMERS TO BE TARGETED WOULD BE THE DOS WHO COULD SEE A GOOD
IMPROVEMENT IN THEIR MARGINS AND ALSO DON’T HAVE THE BARGAINING POWER
AS MUCH AS THE GDS WHICH SERVICED THE SUPERMARKET CHAINS
 HOW WOULD YOU CONVINCE THEM THAT JITD
PROGRAM WAS WORTH TRYING?

• EDUCATING THEM ABOUT WHAT JITD IS AND HOW IT HELPS THEM AND DOESN’T UNDERMINE THEIR
BARGAINING POWER, NOR WILL IT BE A TOOL FOR INVENTORY DUMPING IN CASE OF LOW DEMAND
SINCE THE DISTRIBUTORS STILL HAD THE POWER TO REJECT IF THEY FEEL THE DEMAND WAS LOW
• REDUCTION IN INVENTORY HOLDING COST LEADING TO PROPER SPACE UTILISATION AND CARRYING
OF DIFFERENT VARIETIES OF PRODUCTS LEADING TO MORE RETAILERS AND INDEPENDENT
SUPERMARKETS BUYING FROM THEM
• REDUCTION IN LEAD TIME SINCE BARILLA COULD START MANUFACTURING EVEN BEFORE THE
EXPECTED TIME OF ORDER (WHICH USED TO HAPPEN IN THE TRADITIONAL SYSTEM)
• IT IMPROVEMENTS TO THEIR SYSTEM TOO
• SHARING OF PROFITS WHICH IS OBTAINED BY THE ECONOMIES OF SCALE GOT FROM THE
MANUFACTURING SYSTEMS, REDUCTION IN INVENTORY LEVELS AT THE CENTRAL DISTRIBUTION
CENTRE AND REGIONAL WAREHOUSES
• SHARING OF PROFIT CAN BE THROUGH ADDITIONAL SERVICES LIKE FREE TRANSPORTATION, OR
REDUCTION IN PRICE OF THE PASTA SOLD TO THEM ETC , SO THAT THEY CAN ALSO INCREASE THEIR
PROFIT MARGINS WITH BETTER SPACE UTILISATION
THANK YOU