Barilla Case Study
Background
In 1875, Barilla was founded in Parma, Italy by Pietro Barilla. In the 1940’s the company was passed on two his two sons who led the company through a really strong period of growth. During this time the company transformed into a vertically integrated corporation and chose to distinguish itself through robust branding. Expansion of the company drove the Barilla brothers into debt, where they were decided to sell the company to an American firm. However, years later the Barilla brothers were able to buy back their family company.
Fast-forwarding to the times presented in the case, the late 1980’s to early 1990’s, Barilla owned a very complex network. Their products went from the plants to their Central Distribution Centers (CDC’s) or their private depots. From the Depots it went to small shops and then to the end customers. From the CDC’s it went to mass distributors then to supermarkets, both independent and chains, and finally to the end customers.
In a network like this, ideally forecasting should be a core competency to prevent the horrifying bullwhip effect. However, forecasting was not a core competency for Barilla and during the time Giorgio Maggiali served as director of logistics the company face very large demand fluctuations that effected the manufacturing and distribution system.
The reasons Barilla faced such irregular demand is due to the strategy used by the sales and marketing teams. They liked to use promotional selling and they often offered discounts for those who ordered in full truck loads. In addition to this, Barilla is really big with branding so there were some products that had multiple packaging types which may have led to a significant increase in SKUs.
Just-in-time Distribution (JITD)
JITD was an idea proposed by the former director of logistics, Brando Vitali, in order to combat the large swings in demand. This idea proposes that Barilla determine the appropriate delivery quantities for their distributors
In 1875, Barilla was founded in Parma, Italy by Pietro Barilla. In the 1940’s the company was passed on two his two sons who led the company through a really strong period of growth. During this time the company transformed into a vertically integrated corporation and chose to distinguish itself through robust branding. Expansion of the company drove the Barilla brothers into debt, where they were decided to sell the company to an American firm. However, years later the Barilla brothers were able to buy back their family company.
Fast-forwarding to the times presented in the case, the late 1980’s to early 1990’s, Barilla owned a very complex network. Their products went from the plants to their Central Distribution Centers (CDC’s) or their private depots. From the Depots it went to small shops and then to the end customers. From the CDC’s it went to mass distributors then to supermarkets, both independent and chains, and finally to the end customers.
In a network like this, ideally forecasting should be a core competency to prevent the horrifying bullwhip effect. However, forecasting was not a core competency for Barilla and during the time Giorgio Maggiali served as director of logistics the company face very large demand fluctuations that effected the manufacturing and distribution system.
The reasons Barilla faced such irregular demand is due to the strategy used by the sales and marketing teams. They liked to use promotional selling and they often offered discounts for those who ordered in full truck loads. In addition to this, Barilla is really big with branding so there were some products that had multiple packaging types which may have led to a significant increase in SKUs.
Just-in-time Distribution (JITD)
JITD was an idea proposed by the former director of logistics, Brando Vitali, in order to combat the large swings in demand. This idea proposes that Barilla determine the appropriate delivery quantities for their distributors