Barilla Spa Case Study
Barilla SpACase response[pic 1]SCMA, Module 1-Session 5Written Case Study 1Instructor:Professor Simon TwainStudent:John SmithMay, 11th 2017Barilla SpACase Response[pic 2]EXECUTIVE SUMMARYBarilla 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 SpACase Response[pic 3]TABLE OF CONTENTSExecutive summary……………………………………………………..………2Issue Identification……………………………………………………………….4-5Root Cause Analysis………………………………………………….…………6-9Alternatives and Options…………………………………………..………….10-14Recommendations……………..………………………………………….….15-16Implementation……………………………………………………………….17-18Monitor and Control…………………………………………………….…….…19Exhibits……………………………………………………………………….20-22ISSUE IDENTIFICATIONTactical issues – short term:Price fluctuations – creates bullwhip effect.Order limits – currently no min/max.Compensation structure for sales – in disagreement with the JiTD program.Strategic issues – medium/long term:Poor communication internally (logistics vs sales&marketing) and externally (Barilla vs customers/distributors).Data gathering – inefficient and inaccurate protocol. Long lead times – technology does not allow to reduce manufacturing times but distribution cycle time has room for improvement.High level of fluctuations in demand – bullwhip effect.ENVIRONMENTAL ANALYSISThe 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.