A brief presentation based on bo

1. Barilla Spa Case Study
Ardimas | Riri | Phoumen | Pornprom
Internet Business & Management
Course Offered by : Prof. J.J Rho
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2. Contents
• Background
• Problem analysis & solving
• Conclusion
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3. BACKGROUND
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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
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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
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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
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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 loyal
Combination of Advertising & relationship with Italian
Promotions families
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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
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9. BARILLA’S SUPPLY CHAIN
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10. 10

11. DISTRIBUTION
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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
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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
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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
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15. INFORMATION & SC PERFORMANCE
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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
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17. PROBLEM ANALYSIS & SOLVING
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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
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19. Distribution Problem
High Inventory Level
And
Stock-out
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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
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21. JITD & IMPLEMENTATION
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22. Solution
New IDEA
– Don’t wait for the order for distributors
– Send what the distributors will need
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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
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24. Just In Time Distribution (JITD)
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25. Just In Time Distribution (JITD)
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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
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27. CONCLUSION
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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. Conclusion
Importance 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
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30. Barilla Spa Case Study
Ardimas | Riri | Phoumen | Pornprom
Internet Business & Management
Course Offered by : Prof. J.J Rho
30