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    CS 04 - The Benetton Supply Chain

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    Daniel Ghossein
    Benetton has achieved success through its innovative supply chain management. It relies on a network of contractors and subcontractors to manufacture garments, allowing it to adjust production in response to demand fluctuations without directly bearing costs. On the demand side, agents own and operate stores in geographical areas and require fast deliveries from Benetton factories. The factories use a process of manufacturing garments in grey and then dyeing them based on evident demand for colors. This supply chain model provides Benetton with production cost advantages and the flexibility to quickly deliver trendy colored clothing to stores.

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    CS 04 - The Benetton Supply Chain

    Uploaded by

    Daniel Ghossein
    269 views1 page
    Benetton has achieved success through its innovative supply chain management. It relies on a network of contractors and subcontractors to manufacture garments, allowing it to adjust production in response to demand fluctuations without directly bearing costs. On the demand side, agents own and operate stores in geographical areas and require fast deliveries from Benetton factories. The factories use a process of manufacturing garments in grey and then dyeing them based on evident demand for colors. This supply chain model provides Benetton with production cost advantages and the flexibility to quickly deliver trendy colored clothing to stores.

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    CS 04 - The Benetton supply chain

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    Benetton has achieved success through its innovative supply chain management. It relies on a network of contractors and subcontractors to manufacture garments, allowing it to adjust production in response to demand fluctuations without directly bearing costs. On the demand side, agents own and operate stores in geographical areas and require fast deliveries from Benetton factories. The factories use a process of manufacturing garments in grey and then dyeing them based on evident demand for colors. This supply chain model provides Benetton with production cost advantages and the flexibility to quickly deliver trendy colored clothing to stores.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    269 views1 page

    CS 04 - The Benetton Supply Chain

    Uploaded by

    Daniel Ghossein
    Benetton has achieved success through its innovative supply chain management. It relies on a network of contractors and subcontractors to manufacture garments, allowing it to adjust production in response to demand fluctuations without directly bearing costs. On the demand side, agents own and operate stores in geographical areas and require fast deliveries from Benetton factories. The factories use a process of manufacturing garments in grey and then dyeing them based on evident demand for colors. This supply chain model provides Benetton with production cost advantages and the flexibility to quickly deliver trendy colored clothing to stores.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 1

    The Benetton supply chain

    One of the best known examples of how an organization can use its supply chain to achieve a
    competitive advantage is the Benetton Group.
    Founded by the Benetton family in the 1960s, the company is now one of the largest garment
    retailers, with stores which bear its name located in almost all parts of the world.

    Part of the reason for its success has been the way it has organized both the supply side and
    the demand side of its supply chain.
    Although Benetton does manufacture much of its production itself; on its supply side, the
    company relies heavily on ‘contractors’. Contractors are companies (many of which are
    owned, or part-owned, by Benetton employees) that provide services to the Benetton factories
    by knitting and assembling Benetton’s garments. These contractors, in turn, use the services
    of sub-contractors to perform some of the manufacturing tasks.
    Benetton’s manufacturing operations gain two advantages from this:
    1) First, its production costs for woolen items are significantly below some of its
    competitors because the small supply companies have lower costs themselves.
    2) Second, the arrangement allows Benetton to absorb fluctuation in demand by adjusting
    its supply arrangements, without itself feeling the full effect of demand fluctuations.
    On the demand side of the chain, Benetton operates through a number of agents, each of
    whom is responsible for their own geographical area. These agents are responsible for
    developing the stores in their area. Indeed, many of the agents actually own some stores in
    their area. Products are shipped from Italy to the individual stores where they are often put
    directly onto the shelves.
    Benetton stores have always been designed with relatively limited storage space so that the
    garments (which, typically, are brightly colored) can be stored in the shop itself, adding color
    and ambience to the appearance of the store.
    Because there is such limited space for inventory in the stores, store owners require that
    deliveries of garments are fast and dependable. Benetton factories achieve this partly through
    their famous policy of manufacturing garments, where possible, in grey and then dyeing them
    only when demand for particular colors is evident.
    This is a slightly more expensive process than knitting directly from colored yarn, but their
    supply-side economies allow them to absorb the cost of this extra flexibility, which in turn
    allows them to achieve relatively fast deliveries to the stores.

    Case Study Questions:

    1) How well do the major operations’ management objectives of Benetton’s; Retail,


    Distribution, Factory and its Supply Chain, fit together? Explain your reasons

    2) What other recommendations would you offer Benetton to enhance the efficiency of its
    operations’ management?

    Operations Management – EMBA 553 Page 1


    Case Study 7 – Homework Assignment

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