Essay About Barilla’S Product Line And Market Share

Barila Spa Essay
Background
Barilla Spa, an Italian based company is the world’s largest pasta manufacturer. Barilla has a 35% market
share in Italy and a 22% market share in Europe. In addition to the family of pastas (75%), it also
manufactures bread, cookies, biscuits etc (35%).
Barilla is highly vertically integrated which operates flour mills as well as distribution warehousing
services. Barilla’s product line is classified into fresh and dry categories based on their composition and
shelf lives. Shelf life for dry products varies from 18-24months (long shelf lives) to 10-12 weeks
(Medium shelf lives). In contrast, fresh products have shelf lives varying from 21 days (fresh pasta) to 1
day (fresh bread).
Barilla maintains a complex distribution system comprising of distribution centers, retail outlets and
agents in order to manage the distribution of various types of products. Typically, distribution centers
hold only 3 days inventory of fresh products and a month worth inventory for dry products. Demand
fluctuations imposed burden on company’s manufacturing and distribution system resulting in longer lead
times and out of stock or over stock situations. Order based production was making it hard for the
company to optimize its supply chain. Giorgio Maggiali, Barilla’s director of logistics, decided to
implement JITD (Just-in-Time Distribution) approach in order to overcome these obstacles. This model
was resisted by the organization both internally (sales and marketing) and externally (customers,
distributors and retailers).
Analysis
In an effective supply chain the number of nodes should be less but in Barilla case the number of nodes is
high which makes the system more complicated. The Products produced by Barilla are initially being
transported from the plants to the Barilla Central Distribution Centers and then to the GD’s (Large
Distributors) or DO’s (Organized Distributors). The independent supermarkets and chained supermarkets
gets the products for sale from the GD’s or DO’s and 10% of the total products are delivered to small
shops.