Benetton Supply Chain Analysis

772 Words 4 Pages
Supply Chain Operations of Benetton.
Benetton has changed its supply chain model in a number of ways. Originally, Benetton S.p,A, outsourced labor intensive productions such as tailoring, finishing, and ironing to local manufacturing networks. It only kept heavy investment strategies and operations such as weaving, cutting, dyeing and quality control at all phases and finished goods packaging internally. The diagram below explains about the historic supply chain model for Benetton.

As the growth accelerated in mid 90’s, Benetton constructed a primary center to manage production, logistics and distribution. This new facility was located near the company’s headquarters in Italy. With the establishment of the primary center, which worked
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From this development, the head production pole in Italy now concentrates on the fashion design and having been able to send the product specifications to the regional poles electronically. Then regional poles identify the production needs and source to a specific local manufacturing network. Once the products are finished, they were sent back to the central pole for final shipment preparation and distribution to the retail outlets. As a result, Benetton maintains total 32 production centers. The diagram below represents this new supply chain orientation. Through this model, Benetton has realized significant enhancement in coordination, increased control, improved speed of production, and reduced inventories. In general, the Central Pole Distribution Center only act as an information transfer center and quality assessment center which distributes the product to the retail outlets
Table 1 highlights some of the major events that have been taken place at Benetton.
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With the addition of postponement to the logistics system, Benetton gained tremendous competitive advantages in the industry. Instead of preparing an entire seasons’ product line, and holding a large safety stock, the company could produce smaller batch sizes to initially stock stores and adjust to customer preferences as the season went on. This process improvement has helped to increase customer satisfaction and improved the lead-time for new product introductions. Postponement has also deceased the risk significantly that a new product will fail and the inventory costs of these failures will hurt profitability across all products. The investment in adding dyeing machines was well worth the costs saved in lowering the inventory holding cumulatively among the entire retail outlet. Now retail outlets maintain a grater level of selling floor space, and able to receive new shipment, which go directly to the shelf for

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