Barilla Spa Case - the Value of Information

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BARILLA SpA Case
The Value of Information

COMAPNY BACKROUND
‐ Founded by Pietro Barilla in 1875 ‐ O Opened shop i Parma, Italy d h in l ‐ Subsequently run by son Ricardo, passed to his own sons Pietro & Gianni ‐ 1990 ‐ Largest Pasta maker in world g ‐ During 1960 constructed .25 million sq.m.Pasta sq m Pasta plant in Pedrignano

Background cont.........
‐ 1971 ‐ company sold to W.R. Grace,Inc. USA p y , ‐ 1979 – Grace sold the company back to Pietro ‐ 1980 – annual growth rate of 21% ‐ Growth achieved through expansion of existing business & acquisition of new business ‐ Brands – BARILLA, VOIELLO & BRAIBANTI ‐ 1990 – 7 Divisions – 3 Pasta division, Bakery Product di i i P d division, F h b d di i i C Fresh bread division,Catering i division & International division

INDUSTRY BACKGROUND
‐ Origin of pasta unknown ‐ Per capita Pasta consumption in Italy averaged 18 kilos per year ‐ 1980 – market grew by less than 1 % ‐ 1990 – Semolina & Fresh Pasta only growth segments ‐ export market was experiencing record g growth

PRODUCTS
‐ Fresh Products –Fresh Pasta shelf life of 21 days,fresh days fresh bread shelf life 1 day ‐ DRY Products – Medium shelf life of 10 to 12 weeks or Long shelf lif of 18 to 24 months k L h lf life f h

CHANNELS OF DISTRIBUTION

SALES & MARKETINGS
‐ Advertising ‐ Trade Promotions d i ‐ Sales representatives

JITD Program
‐ 1980 – Barilla witnessed Fluctuating demand ‐ Extreme demad variability strained Barilla manufacturing and logistic operatons ‐ 1987 – Brando Vitali then Barilla director of logistics felt both l i i f l “ b h manufacturers & retailers f il were suffering fron thinning margins” ‐ Early 1988 he thought of JITD Program

JITD cont....
‐ Rather than send product to the distributor as per their internal Planning ‐ He suggested they should send only what is needed at the stores ‐ To consider distributor shipment data for forecasting ‐ He suggested sending product only as it is needed rather than...
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