Business Case Study Sample: Barilla S. p. A. Case

SCM 450W Cover Page GRADE__________ /100
Spring 2014
Individual Assignment #3
Barilla S. p. A. Case Typed Individual Assignment

Name ___________________________ Email ________ Date______________

Honor Code: YOUR NAME ___________ A member of the Smeal College of Business Community, aspire to the best ethical standards and will hold each other accountable to them. We shall not take part in any action that is improper or that creates the looks of impropriety in our academic lives and we plan to hold to the standard inside our careers. YOUR SIGNATURE!

INTRODUCTION

The Barillas S. p. A. is amongst the world’s largest manufacturer of Italian spaghetti. It sells mostly to its Italian retail shops by way of a network of third-party distributors. Towards the late 1980s, the company faced numerous inefficiencies in its chain of operation. This, in turn, led to penalties in the costing of its product and a consequent fluctuation in the ordering patterns of the company’s product. There have been reasons behind the changes popular for Barilla’s products. They included discounts in terms of the quantity to be distributed, reduced amount of promotional activity done by the company, product proliferation, poor communication to say but several.

Consequently, Giorgio Maggiali the director of logistics suggested a method of distribution that he thought would counter this problem. That he suggested the utilization of the just in the full time distribution system. In this method of distribution, the mandate to distribute the company’s product would shift from the third party distributor to the company it self. Second, rather than filling orders that the distributor had the company would supervise the flow of its product throughout the supply process and determine when and things to ship its product. I think, the just in time distribution was not the best method to implement at that time. The reason being it caused fluctuations sought after for the item from the distributors.

A number of the distributors thought that the business was self-serving and would only use their warehouses to maximize their very own benefits. The logistics manager also had a need to include the decision making the procedure a team effort you need to include the company top brass. This may have developed trust and enabled the distributors to start to see the logistics manager’s point of view.

The distribution chain that was in place in the case of Barilla S. p. A. could possibly be classified in to various techniques. I will discuss some of them below.

1. Advertising.

The organization advertised its products extensively throughout Italy and other world. Its product was seen as a high-end product, not only a commodity that's for the center and lower class of the economy.

2. Trade promotions.

The organization was very nearly entirely reliant on trade promotions and trade fares. Since it distributes its product through third-hand distributors, the organization took advantageous asset of the trade promotions to place its product in the more lucrative grocery distribution network.

3. Canvass periods.

The organization came up with periods in which the third-hand distributors could buy the products and services for current and future use. These periods composed of four to five weeks in which most of the distributors affiliated to the organization would buy as much product as they deemed necessary to maintain their supply shops between canvass periods.

4. Incentives.

The organization offered sales incentives to the distributors who reached certain sales targets set by the organization in the canvass periods.

5. Volume discounts.

The organization offered volume discounts to the distributors who bought products of a certain amount. This in addition to the incentives given by the business motivated the distributors to get the products from the company in large quantities so as to enjoy these benefits.

6. Ordering procedure.

The distributors who ordered product a week beforehand got a head start of approximately ten days where they had the benefit of hitting a sales mark within a canvass period and revel in the benefits that came with it.

Regarding the Barilla spa company, the following reasons lead to its fluctuations popular.

- There was poor communication involving the logistics manager and the company’s managers. This, consequently, led to poor communication involving the company and the various factions of supply in the distribution network.

2. The trade promotions that the company completed caused the distributors to hold back for such scenes where they could maximize their profits. Consequently, in the periods without the trade promotions, the demand of the products went significantly less than could have been wanted.

3. Volume discounts. During the periods that the organization offered trade discounts, there clearly was high demand from the distributors. These offers ensured that the distributors got the most benefits from trading in the company’s product. The lack of discounts created less demand for the product, thus the fluctuations.

4. Transportation discounts. The company offered transportation discounts to 70% of the distributor shops that the organization did not own. This was only when these distributors ordered a particular volume of the company’s product. Distributors that did not order a certain amount of the merchandise did not get these discounts and subsequently, demanded more in order to obtain the discounts or less if indeed they did not have sufficient consumers ergo the fluctuations in demand of the product…