Barilla SpA (A)
Barilla SpA was the world’s largest pasta producer, and a vertically integrated corporation with flour mills, pasta plants and bakery-products factories located throughout Italy. It offered about 800 different packaged SKU’s of dry products, and the pasta was made in 200 different shapes and sizes. Barilla’s products were sold to wide range of Italian retailers through Large Distributors (GD’s) and Organized Distributors (DO’s). Both GD’s and DO’s purchased products from the Barilla CDCs. Maintained inventory in their own warehouses, and then filled supermarkets’ orders out of their warehouses inventory. During the late 1980’s, Barilla suffered from increasing operational inefficiencies and cost penalties that resulted from large week-to-week variations in its distributors’ demand. For the distributors, even though with high inventory levels, the fill rate to retailers was low. To improve the situation, Barilla’s former director of logistics Brando Vitali proposed an innovative idea of Just-In-Time Distribution (JITD), and the new director or logistics Giorgio Maggiali tried to get the JITD implemented for two years but little progress was made. The JITD program met with significant resistance within Barilla, also it’s not supported by the distributors.
What is Just-In-Time Distribution? The idea of JITD was that rather than simply filling orders specified by the distributor, Barilla would monitor the flow of its products through the distributor’s warehouse, and then decide what to ship to the distributor and when to ship it. This means the decision-making authority for determining shipments from Barilla to a distributor would transfer from the distributor to Barilla. The JITD program was an additional service offered by Barilla to its distributors at no extra cost, the program would improve Barilla’s visibility with the trade, and make the distributors more dependent on Barilla, which would hence improve...
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