In December 2014, Ivan Manfredi, founder and CEO of Emilia Foods, was in the lounge of the Los Angeles airport waiting for his flight back to Bologna, pondering a crucial decision that could change the fate of his company forever. Emilia Foods, an Italian supplier of frozen pizzas and ice cream in the United States, was a fast-growing startup with a unique business model: to act as an intermediary between small Italian food producers and large U.S. food retailers.
The U.S. food and beverage market was growing rapidly, driven by trends related to healthy, high-quality, international products. In this context, Emilia Foods had quickly gained a significant presence thanks to its simple but effective business model, which allowed it to establish itself not only as an intermediary, but also as a valuable and reliable partner for both its customers and suppliers. For its customers (U.S. food retailers), Emilia Foods was able to offer significant value by providing quality Italian products that could be customized to their needs. For its suppliers (the Italian food manufacturers), the company represented an opportunity to simplify business transactions across national borders, increasing total sales volume and diversifying target markets.
However, growth had brought with it new challenges: until that time, Emilia Foods placed orders with manufacturers only after a certain volume of orders from U.S. retailers had been reached. This model had worked well initially, but as order volume increased, Ivan had begun to perceive its limitations clearly. Delivery times were long, often 40 days or more, due to the difficulty of forecasting production schedules and the consistently long intercontinental transit times. This model could not meet customer demands for speed and variety.
Ivan had therefore begun to consider an alternative solution: finding local warehouses where products could be stored and transported more quickly to customers. But this choice would require a major reorganization of skills, combined with new investments in logistics and inventory. The trip to the United States had been helpful for Ivan to meet customers and had persuaded him further, but now he had to convince his colleagues in Italy that this was the best strategy to grow the company. Emilia Foods’ logistics manager was the most skeptical of the management members. Her words echoed in Ivan’s mind, “You’re just taking a nice ride in California. It’s an extraordinarily high risk. We are a startup, not a multinational corporation. Our resources are already stretched to the limit.” These were all fair observations: Emilia Foods was a new company, growing steadily since its creation, but there were many risks associated with such a large investment. Ivan, for his part, was convinced that strengthening the quality and timeliness of the service offered to customers would ensure the longevity of the company. He thought that the quality of Italian products offered to their customers should be accompanied by faster and better organized service, which was difficult to achieve without on-site warehouses.
As he returned to Europe, Ivan tried to summarize his thoughts. Were there alternatives to moving to a different supply chain model? What were the real benefits of this choice, not only from an operational and supply chain management point of view, but also from a strategic point of view? Were customers willing to pay a higher price to receive the same products more quickly?
In conclusion, the case of Emilia Foods offers Bologna Business School students attending Business Management, Strategy, or Strategic Supply Chain Management courses valuable lessons on how a startup can address and overcome complex supply chain management challenges. By putting themselves in the shoes of Emilia Foods’ management team, students are offered the chance to weigh the pros and cons of different perspectives and how certain choices can change a company’s fate.
