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Barilla Spagethi Case Study

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Barilla Spagethi Case Study

  1. 1. Barilla Spa Case StudyArdimas | Riri | Phoumen | Pornprom Internet Business & Management Course Offered by : Prof. J.J Rho 1
  2. 2. Contents • Background • Problem analysis & solving • Conclusion 2
  3. 3. BACKGROUND 3
  4. 4. Company Background• Founded in 1875, small shop + experimental area on pasta• Vertically integrated with Flour mills, pasta plants, bakery-product factories• Differentiated product : – high-quality product supported by innovative marketing programs – Creating strong brand name + brand image – Selling pasta in a sealed cardboard box 4
  5. 5. Industry Background• Average pasta consumption 18kgs per year per capita• Limited seasonality in pasta demand• Pasta market show flat trends – Semolina pasta & fresh pasta : the only growth segment – Export market was growing  Saw it as excellent opportunity 5
  6. 6. Technology Support• Large flour mills, pasta plants, fresh bread plants• Owned high-tech R&D facilities• Pilot production plant  developing , testing new products & product processes 6
  7. 7. Sales & Marketing Advertising Promotion Advertising • Heavily advertised Sales • Branding : Highest quality Represen , most sophisticated pasta tatives product, modern • Engaged with famous athletes, celebrities Sales & Marketing Strategy • Focus on developing & strengthening loyalCombination of Advertising & relationship with ItalianPromotions families 7
  8. 8. Sales & Marketing (contd)Trade Promotion Sales Representatives• Promotion based strategy • Set up in store promotions• Divided 1 year to 12 ‘canvass’ period,corresponding a • Took note of competitive promotional program with information different product in each program – At anytime, buyers could buy as • Ordering strategies with many as possible – Incentives were given to those store management achieving sales target• Offering volume discount – Paid for transport if buyer buy truckload quantities – Sales representative offer 1000 lire per carton discount, if they buy a minimum 3 truckloads 8
  9. 9. BARILLA’S SUPPLY CHAIN 9
  10. 10. 10
  11. 11. DISTRIBUTION 11
  12. 12. Distribution (1)3 Types of Retail outlets : •Small independent grocers , •supermarket chains, •independent supermarkets Distributors placed order Ordered products send 8 -14 days after 12
  13. 13. Distribution (2)• Nearly all distributors had computer-supported ordering system – But few had forecasting system / analytical tools to determine order quantities Resulted in fluctuating demand of product 13
  14. 14. Distribution(3)• Distributor has the pressure to add more inventory + added items that they currently don’t have.• Barilla thinks that distributors & retailers carries too much inventory – Some products is difficult to quickly produced – Holding sufficient finished products was expensive 14
  15. 15. INFORMATION & SC PERFORMANCE 15
  16. 16. Factors Related• More than 800 Types of Products• Absence of Forecasting Tools in Distributor’s Side• Specialized Plants for Each Types of Product  Long Production Time 16
  17. 17. PROBLEM ANALYSIS & SOLVING 17
  18. 18. Distribution Problem• Large Number of product – Dry: 800 different package of SKU – Pasta: 200 different sharp and size and 470 different package.• Different size and shape of product need different time• Promotion – Price and Transportation: discount• No forecasting system – Simple periodic review the inventory – Follow the replenishment ordering• Fluctuate product order• Distributor manage their own if inventory• Lack information from distributor and retailer• Manufacturer wait the order from distributor 18
  19. 19. Distribution Problem High Inventory Level And Stock-out 19
  20. 20. Distribution Problem• High Inventory Level: – Labor cost: administrative, tracking and tracing… – Cash flow: cash will hold in the inventory, not in business – Carry cost: product expire, insurance, inventory cost• Stock out – Lost customer – Lost sale opportunity 20
  21. 21. JITD & IMPLEMENTATION 21
  22. 22. Solution New IDEA– Don’t wait for the order for distributors– Send what the distributors will need 22
  23. 23. Just In Time Distribution (JITD) The Information regarding the supply of distributors provides us with objective data that would permit us to improve our own planning procedures - -Brando Vitalli-• JITD system - known as Vendor Managed Inventory (VMI) 1. Collect data from Distributors 2. Make a prediction system 3. Make decision rule base on information getting• Distributors reacted : – unwilling to give their authority to place orders, – Reluctant to provide detailed sales data – Benefit for only Barilla – Prefer to sell the information 23
  24. 24. Just In Time Distribution (JITD) 24
  25. 25. Just In Time Distribution (JITD) 25
  26. 26. Just In Time Distribution (JITD)• All Barilla’s JITD customers were linked electronically to headquarters• Sent Data : – Inventory level – Previous day sell-through Barilla made – Previous day stock-out the shipment – Advance order for any decision promotions 26
  27. 27. CONCLUSION 27
  28. 28. SCM at a glance • SCM is the management of a network of all business processes and activities involving procurement of raw materials, manufacturing and distribution management of Finished Goods. • SCM is also called the art of management of providing the Right Product, At the Right Time, Right Place and at the Right Cost to the Customer.Source: http://www.managementstudyguide.com/supply-chain-management-definition.htm 28
  29. 29. ConclusionImportance Benefits• Competitive Edge through • Boosts customer service Core Competencies – Better customer service – Reduced inventories along the – Better trust among the partners chain leading to win-win – Planning being done in • Improve bottom line consultation rather than in – Lower costs isolation – Efficient manufacturing• Value Advantage – Better information sharing among the partners 29
  30. 30. Barilla Spa Case StudyArdimas | Riri | Phoumen | Pornprom Internet Business & Management Course Offered by : Prof. J.J Rho 30

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