Barilla Final1
Barilla Final1
Barilla Final1
Like fish and chips in the UK, hamburgers in America and sausages in Germany, pasta is the food
most associated with Italy. Tuck into a plate of pasta in its native country and it’s highly likely that it
will have been made by Barilla, a company that has grown to become the country’s favourite producer
over the past 100 years. The business has been kept in the family since the beginning, and now the
fourth generation of Barillas looks after the company. It all started in 1877, when a man named Pietro
Barilla opened bread and pasta shop in Parma.
In 1910, Barilla opened its first factory. Eighty workers produced eight tons of pasta and two tons of
bread every day thanks to an innovative ‘continuous baking’ oven, meaning the company could begin
to supply the entire city and surrounding area with its products. The Barilla name was trademarked
and started to become associated with good pasta.
The 1990s saw Barilla international expanding, taking the world by storm and spreading awareness
of the Barilla name. Now it has 28 production sites, 14 in Italy and 14 abroad, which each year
produce over 1,800,000 tons of food products, which they export to more than 100 countries. The
headquarter is still in Parma, Italy.
In 2004, they founded Academia Barilla, a project devoted to safeguarding and promoting regional
Italian food culture as a unique World Heritage, and today the company continues to promote
sustainability and spreads awareness of food waste wherever possible. It has certainly come a long
way from the small shop in Parma, but the family values of passion, integrity (and, of course, making
delicious pasta) are still there today, making Barilla one of the most trusted food producers in the
world.*citazione
Barilla group controls Barilla (multinational pasta maker), Mulino Bianco, Pavesi, Voiello, Alixir
and Academia Barilla (Italy), Wasabröd (Sweden), Misko (Greece), Filiz (Turkey), Yemina and
Vesta (Mexico) trademarks.
The group produces many kinds of pasta and is the world's leading pasta maker with 40-45% of the
Italian market and 25% of the US market. It produces pasta in over 120 shapes and sizes. Barilla brand
pasta is sold in numerous restaurants worldwide. It is also the leading seller of bakery products in
Italy. Barilla offers almost 180 bakery products coming different consumption moment from
breakfast to snack. *citazione Through its acquisition of the Swedish company Wasa, it is the world's
leading producer of flatbread (a Scandinavian staple), selling 60,000 tons annually. The company
markets pasta in the U.S. as being Italian ("An Italian Favorite" marketing) in flavour, but most of
the product in the United States is made in Iowa or New York and not Italy. The wheat used is mainly
local.
The actual revenue is over 3 billion euro every year.
PRODUCTION
Barilla produces
26 OFFICES:
- 1 ITALY
- 14 EUROPE
- 11 REST OF THE WORLD
30 PRODUCTIVE SITES BARILLA IN THE WORLD:
- 14 ITALY
- 10 EUROPE
- 6 REST OF THE WORLD
Barilla has a very complex distribution network consisting of Grand Distributors (owned by large
Supermarket chains), Organized Distributors (independent third-party distributors) in addition to its
own depots. Due touch a complex and multi-echelon network, Barilla has been experiencing large
amounts of variability in demand which are resulting in operational inefficiency and increased
manufacturing, inventory and distribution costs. Brando Vitali, Barilla’s ex-Director of Logistics, had
proposed a Just-In-Time Distribution(JITD) system to counter this demand variation. This system
required the distributors to share their sales data with Barilla, who would then forecast and deliver
appropriate amounts of products to the distributors at the right time in order to effectively meet
demand. This was a radical change from the current and more traditional supply-chain setup where
the distributors were not sharing any data and could place orders at will. This change has been also
an improvement about the cost saving.
Barilla’s vertically integrated
distribution system is susceptible to
result of an amplification of orders
placed on suppliers, each level in the
supply chain periodically reviews its
inventory and places orders with the
preceding channel.
Distributors receive orders from
supermarkets and grocery stores and in
turn place orders to Barilla central
distribution enters, which then put the
order forward to the factory. The
unawareness of the real demand causes
distributors to sometimes run out of
products or overstock their inventory,
and that raises the cost of distribution.
This is also called the Bull Whip effect:
“In a supply chain, for a typical
consumer product, even when consumer sales do not seem to vary much, there is a pronounced
variability in the retailers’ orders to the wholesalers”. (Lee and Padmanabhan, 1997). The matter is
further complicated by the long lead times that it takes for Barilla to fulfil an order from the
distributor, which was usually between 8 and 14 days from when the order is received. As a result,
higher levels of safety stock were maintained by all parties in the supply chain to avoid potential
stock-outs, but that still increases the cost of the chain.
MARKETING
There are four principles on which the Barilla strategy is based: to market higher quality products at
a good price; to meet the needs of the consumer by involving it at every stage of the research and
development process; seek competitive advantage in all that is done; introduce their own major brands
in the world's major markets with the necessary products, as needed, to the tastes and the local habits,
but always emphasizing, in respect of traditions, the characteristic of "authentic Italian brand".
BARILLA COMMUNICATION – THE JOIN TO BE TOGETHER
Barilla communication strategy has always aimed to reach directly customers, from the first brand in
1910, a simple and straightforward tale, easily recognizable even by those who could not read.
In 1958 began the TV era, with commercials based on the values that had always been at the centre
of the company’s advertising – family, children, friendship – and the “Joy of Being Together”.
The company focused on high-level testimonials also to penetrate foreign markets: from Mina and
Albertazzi to Gérard Depardieu and Cindy Crawford under direction of filmmaker like Fellini and
Tornatore.
In 1975, Mulino Bianco foundation contributed to relaunch the brand’s image, introducing the
“sorpresine” (little surprise) destined to become cult objects in the eighties.
Barilla has always promoted sports values connecting pasta: positive energy that sets life alight,
feeding passions and turning them into winning feats. For this reason, pasta is also an essential source
of carbohydrates for all those who need vitality and taste to keep pursuing their dreams. And the issue
is that consumers are increasingly aware of what they are eating on their plate today and expect
producers in the agri-food industry to demonstrate the quality and safety of the raw materials used
and sold. That involved a new communication strategy: “Good for you, Good for the planet”.
Thank the media effect of an event such as the EXPO that sparked the spotlight on food and, of
course, the general food security, the digitalization project Safety for Food (S4F) started.
This initiative not only to ensure greater transparency and security of the supply chain but wanted to
develop a platform for consumer relations with the aim of improving their relationship with food.
Following the story of that particular game of pasta or sauce, consumers are able to better correlate
the product consumed with the culture of the territory in which the raw materials were grown, with
the actors of the whole process of transformation, with the traditions of the companies and the
methods of working and processing.
BARILLA RECIPE FOR DIGITAL MARKETING: FROM THE COUCH TO THE CART
Also a product of the most traditional and distinctive of 'made in Italy', such as pasta, can be promoted
with the latest Digital Marketing technologies.
One of the main pillars of the group's digital marketing strategy is the Mobile App iPasta. In summary,
iPasta enhances the products (through the proposition of recipes organized according to different
consumer-based criteria), and offers to the user's tool both for the purchase phase.
Barilla promotes also social network activities that allow the company to interact with its audience.
In 2013 Italian pasta maker Barilla has reacted to the global storm caused by its chairman's comments
that he would never use a gay family in his advertising by saying it planned to make the company
more diverse and run a more inclusive TV ad campaign.
Guido Barilla's remarks to a radio interviewer in September led to calls by gay rights groups to boycott
the products of the company. Social media quickly spread the comments that gave rise to numerous
Internet satires.
He said the shock could lead to a shift in focus from rosy depictions of traditional Italian family life
that have always been the staple of Barilla advertising campaigns.
"We are already working on new advertising concept that will be much more open and much more
inclusive," he said, without elaborating.
Barilla started a walk that bring the company to receive the HRC Corporate Equality Award in 2017.
The award recognizes Barilla's exceptional growth and commitment to equality for the LGBTQ
community.
"Barilla has made huge strides and become a real leader for LGBTQ inclusion," said Deena Fidas,
director of the HRC Workplace Equality Program. "Barilla is an example of the transformational
progress that companies can make when they put effort and investment into improving inclusion for
LGBTQ employees and customers."
Barilla's welcoming environment is the result of the company's ongoing efforts to identify and remove
barriers for LGBTQ employees. After the company's chairman made insensitive comments about
featuring LGBTQ families in company advertisements in 2013, Barilla did more than issue an
apology statement—they worked to address core diversity and inclusion issues to create a more
inclusive environment for employees and consumers. The company formed a Diversity & Inclusion
Board of internal and external advisors, named their first-ever Chief Diversity Officer, created new
affinity groups, and implemented a plan to become one of the leading international companies on
LGBTQ inclusion.
In order to ensure that resources are allocated appropriately in operations it is necessary to record,
monitor and review aspects of operations performance.
A key task in this process is the identification of appropriate measures of performance that relate to
the internal and external factors that are relevant to organisational competitiveness. They could be
described by the five basic operations performance objectives which allow the organisation to
measure its operations performance. The performance objectives are quality, speed, dependability,
flexibility and cost.
To analyse Barilla’ s case, let’s start with dependability. Why is it so important in multinational
corporation? We will try to understand it by an example.
How many people would consider the Big Mac to be
the best tasting hamburger in the world? Probably not
many. Yet, despite its culinary shortcomings, the
McDonald's signature hamburger is so successful and
ubiquitous that The Economist uses it as a reference
point for comparing the cost of living in different
countries. How is it that a mediocre hamburger has
become so successful around the world? We believe
the reason has a lot to do with dependability. No
matter where in the world I am or what time of the
year it is, if I walk into a McDonald's, I can depend
on getting the exact same Big Mac. You might make
the world's best burger on your best day, but McDonald's makes more money than you do, and they
do it by being dependable. (http://mashable.com/2011/07/22/dependability-
business/#k.3SUaleZaqZ)
The same happens with Barilla. It is not the best quality Pasta. If you'd like to pay a bit more you can
look for artisan brands like Benedetto, Cavalieri from Puglia, the Gragnano pasta Vicidomini, Gentile
or Afeltra, or Felicetti from Trentino. They're not that easy to find but they surely are the best italian
brands you can have. You could also find really good pasta (better than Barilla with a similar price)
in supermarkets: De Cecco, Garofalo and sometimes Rummo are everywhere in Italy but very
difficult to find abroad. So why Barilla is the most sold pasta in the world? As first for two reasons.
Distribution, Barilla is everywhere, from the smallest Greek market to the American malls Barilla is
there. Then marketing, indeed, in recent years they spent a lot of money for advertising and branding
campaign and their blue paper package reminds you about tradition and handmade stuff. For us,
Italian people who live abroad, when you find Barilla in a supermarket you buy it because you do not
know the quality of other brands sale, instead of Barilla which it’s always and everywhere a good
quality Pasta.
People search dependability. They are not gambling. They will choose 100 small wins stacked on top
of each other, day in day out, over a few meteoric successes surrounded by an unstable pattern of
failures.
Dependability is an important strength for Barilla, indeed it is a
reference point for both food industry and Italy in general. For this
reason, it decided to open “Academia Barilla”, the first international
centre dedicated to the development and promotion of Italian
Gastronomic Culture.
Its goal is to bring the Italian food and Barilla everywhere, increasing
the access of small-scale food companies to reach national and
international markets thanks to Barilla’s experience and commercial
distribution platforms. Another objective of “Academia Barilla” is to
increase the quality of its product.
Quality produces both external and internal benefits. As external benefits, quality contributes to
enhances the product or service in the market. As internal benefits, quality prevents errors slowing
down speed, internal unreliability and low dependability, and wasted time and effort, therefore saving
cost.
Quality reduces costs and increases dependability. Also, high quality can influence customer
satisfaction and leads to stable and efficient processes.
The quality scale is measured by four items that are:
• Conformance to specification
• Client retention
• Service recovery
• Company image
Quality, food safety and nutritional value of the products have always been an absolute priority for
Barilla: products comply with the standards and regulations in force and the most high standards of
quality, nutrition and safety for people and the environment, thanks to the continuous improvement
that comes from the evolution of the scientific studies and evidences.
This commitment is also achieved through a program of continuous improvement of the nutritional
profile of products, such as reducing salt and fats.
Since 2013 the Company have been working to a better balance of saturated fat, operating both on
the reformulation of existing bakery products and on the planning of new launches, taking into
account the latest nutritional guidelines.
To achieve these results, in bakery products it has been using different types of oils and fats, by
completely replacing the richest in saturated fats, such as palm oil.
With regards to recent news concerning the presence of horse meat in some ready to use Lasagna in
the UK, Barilla reassured retailers and consumers that horse meat is totally absent in any Barilla
products. Moreover, Barilla guarantees the high quality, clear origin and total traceability of all meats
used in its products.
Sustainability is a key driver that touches every area of business “from field to fork.” To guide the
efforts, Barilla has set three strategic priorities:
• Building Knowledge: Contributing to solve the problems linked to food and nutrition, creating
knowledge to guide the daily work of those who work in Barilla.
• Building a Sustainable Company: Managing the company by continuously improving
processes and products in a “Total Quality” manner, focusing on consumers and planet's wellbeing.
• Building Local Relations: Contributing to local development with all the best practices and
resources the group has built over time, and channelling those resources to support causes like food
security and rebalancing the great paradox of hunger and obesity.
To meet the strategic priorities, Barilla set operational goals in the categories of nutrition, supply
chain, biodiversity in the supply chain, environment, people, community, governance and
sustainability, while producing best quality products. Some of these objectives include:
• Reducing the ecological footprint throughout Barilla’s supply chain;
• Implementing a globally integrated operational model, defining global processes and
establishing the normative body to secure a sustainable business;
• Developing and strengthening partnerships with key suppliers of raw materials and packaging
to ensure the quality and safety of supplies and of food production while respecting the planet, animal
and human rights.
All Barilla suppliers are certified, and they follow rigorous standards and specifications. Barilla
monitors the respect of these directions continuously through analyses made directly or through
qualified external laboratories.
The role of packaging is pivotal for food companies: it protects the product, keeping it from spoiling
and enabling it to be consumed away from where it was produced.
Barilla has always been very attentive to the quality of its packaging, both in designing new solutions
and constantly improving the packaging it has already developed.
Over the last decades, packaging has been evolving and continually improving with the introduction
of the “Sustainable packaging” principle, requiring packaging design and methods to be re-specified
in line with the times.
Barilla’s first guidelines for packaging design appeared back in 1997. Today the “Barilla Guidelines
for Sustainable Packaging Design” have been designed:
• Reducing the quantity of material in packaging
• Utilizing recyclable packaging
• Utilizing materials from responsibly managed forests
• Validating the choice of technical packaging solutions using LCA impact analysis
Barilla’s goal is to make a significant impact on all areas of the value chain: from suppliers to
consumers. The efforts today are systemic and each area within the company is committed to
delivering its goals in support of its vision statement “Good for you, Sustainable for the Planet.” It is
particularly involved in two tasks:
For consumers: Barilla committed to producing products with a better nutritional impact, educating
and informing people about food and good nutritional behaviours.
For planet: it wants to minimize the environmental impact from of products, operations and office
facilities.
Barilla established the Sustainability Operating Group which sets the objectives, establishes projects
and monitors progress and sustainability indicators. The Group has developed a Sustainability
Management System to link the daily activities to the goals and to monitor all activities with specific
key performance indicators.
All along the retail chain, Barilla encourages a model designed to minimize environmental impact
and waste, reducing the Ecological Footprint and consistent with the Barilla Code of Ethics.
In 2011, Barilla began the Next Level of Retailers’ Collaboration Project. The project is aimed at
expanding Barilla’s partnerships with customers through key long-term collaboration projects
including agricultural supply chain, environment and education.
In 2011, the Company also became part of Consortium E-SAVE that aims to develop services and
tools for collaboration between producers and distributors to improve energy efficiency and reduce
environmental impact.
FLEXYBILITY
Flexibility means different things to different people. At the plant level, flexibility is about the
ability to adapt or change. But there are many ways to characterize such an ability.
Product range can mean different things. For example, a plant can have the ability to make a small
number of products that are very different from one another, or it can have the ability to produce
concurrently a large number of stock-keeping units that are only slightly different from one another.
Speaking of flexibility in terms of Product/service flexibility and mix flexibility, Barilla can do
both, as it may seem strange; as mentioned earlier barilla produces a wide variety of pasta and
sauces. Focusing on the pasta and considering that an average plant produces 20/30 different types
of pasta, and that the cost of a pasta-extruder is around 100 euros, with 3000 euros and about 30
minutes per machine, 30 new types of pasta can be produced: this is flexibility.
The same flexibility with which they change the range of products can be applied to the production
volume; thanks to the high plant automation, the possibility of storage and to slow or speed up
every single machine in order to produce less or more, keeping the number of employee stable.
COSTS
Pasta consumption was relatively consistent throughout the year, but nowadays Barilla faced extreme
demand variability. It is the bullwhip effect. As we have seen, Barilla and its distributors suffer a high
cost in distribution channels caused also by the lack of forecasting and poor inventory management.
On the aim to minimize cost facing the extreme demand variability, Barilla’s former Director of
Logistics Brando Vitali has developed a new system: “Just-In-Time Distribution” (JITD). Just-in-
time distribution involves rapid response to changes in demand. The company needs to access data
on distributors’ deliveries to retailers. Based on such data, the company decides how much product
should be delivered to distributors in a certain timeframe. JITD program enables the company to ship
product when it is needed. The implementation of such a project is expensive in terms of logistics,
but in the long run this will be largely absorbed, rather than building enormous stocks of inventory at
both the manufacturing facility and the distribution centres, the JITD program centralizes demand
information and decision making, thereby lowering costs. It is therefore profitable, but the human
cost is great, the strength of sales of the stocks can be in danger, because with the JITD Barilla
minimizes its management of the inventory, leaving this role to the distributors.
To keep its position against the competition from Spain and Turkey, Barilla is now using high quality
North American wheat (in addition to other sources of supply), which allows it to minimize costs
(because this wheat is cheaper to produce) and to optimize its capital, because Barilla then sells it
25% more expensive.
So, in terms of costs Barilla has had to deal with some chaos in the supply chain. But the company
has managed to innovate, and develop new structures and ideas to overcome these problems. Its cost
management is now an advantage for Barilla thanks to these innovations.
SPEED DEPENDABILITY
FLEXIBILITY COST