Strategic Partnership Case: Barilla Spa Operation

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Strategic Partnership Case: Barilla SpA
OPERATNS 476

Distribution and Supply Chain Management 2007

Jeannette Song

Session 1B
1

Learning Objectives
• A supply chain example:
•Supply chain composition:
•products, players, facilities •technology •value added activities

•Supply chain dynamics:
•Product life-cycle, demand pattern •production/distribution leadtimes •replenishment cycles

• Bullwhip effect: causes • Incentive conflicts and resolutions •Strategic partnership and implementation

•Quick review of base-stock model
2

1

The Barilla Supply Chain

Plant

CDCs

Grande Distribuzione

Chain supermarkets

Customers

Distribuzione organizzata

Independent supermarkets

Customers

Physical Flow of Goods
Barilla Run depots Signora Maria Shops Customers

- Need to study physical flow of goods– i.e. distribution processes - Need to study information flows– i.e. flow of orders - Need to study coordination of various stages / parties 1 Based

on Simchi-Levi et al (2002), Designing and managing the Supply Chain: Concepts, Strategies and Case Studies

3

The Physical Production-Distribution Process
Plant CDCs Grande Distribuzione Chain supermarkets Customers

Distribuzione organizzata

Independent supermarkets

Customers

Physical Flow of Goods
Barilla Run depots Signora Maria Shops Customers

- 6 Pasta Plants, 25 across product categories– size of pasta shells determined production allocation to plants -Fully automated, 120 meter long production lines, continuous flow manufacturing -Cyclical production (i.e. produce one product type for a while, and then changeover to another product type 1 Based

on Simchi-Levi et al (2002), Designing and managing the Supply Chain: Concepts, Strategies and Case Studies

4

2

The Physical Production-Distribution Process
Plant CDCs Grande Distribuzione Chain supermarkets Customers

Distribuzione organizzata

Independent supermarkets

Customers

Physical Flow of Goods
Barilla Run depots Signora Maria Shops Customers

- Barilla dry products – 800 SKUs -Pasta 470 packaged SKUs -CDC’s held a month’s worth of dry goods, 3 days worth of fresh products inventory -Cortese DO stocked 100 Barilla SKUs and overall carried 5000 SKUs

1 Based

on Simchi-Levi et al (2002), Designing and managing the Supply Chain: Concepts, Strategies and Case Studies

5

The Physical Production-Distribution Process
Plant CDCs Grande Distribuzione Chain supermarkets Customers

Distribuzione organizzata

Independent supermarkets

Customers

Physical Flow of Goods
Barilla Run depots Signora Maria Shops Customers

- GDs and DOs acted independently; purchased, and maintained their own inventory -Distributor’s warehouse held 2 weeks worth of supply -Supermarkets typically placed orders with DOs daily; deliveries took place in 24-48 hours

1 Based

on Simchi-Levi et al (2002), Designing and managing the Supply Chain: Concepts, Strategies and Case Studies

6

3

The Physical Production-Distribution Process
Plant CDCs Grande Distribuzione Chain supermarkets Customers

Distribuzione organizzata

Independent supermarkets

Customers

Physical Flow of Goods
Barilla Run depots Signora Maria Shops Customers

- GDs and DOs acted independently; purchased, and maintained their own inventory -Distributor’s warehouse held 2 weeks worth of supply -Supermarkets typically placed orders with DOs daily; deliveries took place in 24-48 hours -DOs and GDs placed weekly orders; lead time for replenishment was 8-14 days 1 Based

on Simchi-Levi et al (2002), Designing and managing the Supply Chain: Concepts, Strategies and Case Studies

7

Information Flows in Barilla’s Supply Chain
Plant CDCs Grande Distribuzione Chain supermarkets Customers

Distribuzione organizzata

Independent supermarkets

Customers

Physical Flow of Goods
Barilla Run depots Signora Maria Shops Customers

- Trade Promotions & Incentives–...
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