Supply Chain Strategy: Barilla's Supply Chain Strategy

Barilla’s supply chain strategies includes the procurement of raw materials, the transportation of the materials to their production plants, manufacturing of raw materials into finished goods and finally distribution of their products to Barilla central distribution centres.

To increase responsiveness of the supply chain, Barilla can use four different supply chain drivers. The inventory driver contains all raw materials, work in process and all finished goods that is within a supply chain. The trade-off in inventory is between the cost of holding inventory and the amount of inventory that a product currently has in storage. More inventory entails greater responsiveness but comes at a greater cost while less inventory comes at a lower cost

JITD is also known as Vendor Managed Inventory (VMI). Barilla collects shipment data from their distributors and make a prediction system to send only what is needed at the stores rather than sending products to the distributors according to their internal planning processes. The ultimate decision on which SKUs to ship lies with Barilla with the POS data of different SKUs provided by the distributors.

Barilla can avoid holding a large amount of inventory and struggle in the manufacturing and distribution operations to meet distributor demands. This also helps Barilla to cope with the fluctuations in demand for their products.

In the transportation driver, Barilla outsourced Managed Transportation Service that utilizes TMS technology to aid in the scaling of the business, lower the overall costs and improve supply chain visibility. Managed transportation services that is supported by structured performance reporting have help to improve carrier performance through more active carrier management. Besides this, the Managed Transportation Services uses a payment process and best practice freight pre-audit that increases billing accuracy and reduces resources that are required at the same time. Shipments and service are closely monitored as all shipment data are captured with real-time visibility. Planning in the company is thus centralized, expenses are under control

The plants include large flour mills, pasta plants, and fresh bread plants and in addition, plants producing specialty products like croissants. Other facilities consists of state-of-the- art research and development centres and a pilot production plant that develops and tests new products and production processes. All of the facilities either store Barilla ‘fresh’ and ‘dry’ products between the different supply chain stages such as barilla owned warehouses or general warehouses, distribution centres and other retailers or transform the raw ingredients into packaged pasta. Barilla uses the functional focus in which products within the same family of pasta products are allocated to plants based on the size and shape of the pasta. Different pasta products which are “short” such as macaroni and “long” pasta products such as spaghetti is produced in separate facilities because of the different sizes of equipment