Benetton's 'Dual Supply Chain' System
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Case Details:
Case Code : OPER065
Case Length : 19 Pages
Period : 1998-2006
Organization : Benetton SpA
Pub Date : 2008
Teaching Note :Not Available
Countries : Italy
Industry : Apparel Retailing
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts
The Operations
Benetton operated a three-tier model. The first
tier consisted of suppliers of raw materials and unfinished
products, and production plants. The second tier had contractors and
sub-contractors, and the third tier had retail outlets spread across
several countries, which operated as franchisees and agents...
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Production and Distribution
Benetton operated through production facilities which produced garments in high
volume and with few varieties. In 1984, Benetton planned to invest in advanced
production facilities in Castrette, Italy. The plant became fully operational in
1986. However, investments in this plant continued through the 1990s, leading to
an increase in production capacity. By the year 1999, the plant covered an area
of 190,000 sq. meters, and capacity to produce upto 100 million units every
year. By 2006, the automatic sorting system in the plant, could sort garments
for more than 5,000 Benetton outlets...
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Retailing
Benetton functioned through a licensor-licensee relationship, where the
needs of the retail market were catered to by agents, who obtained a license
from Benetton to sell its products. The agents were responsible for
recruiting retailers, showing Benetton's collections in a particular region
in a country, processing retailer orders, selecting retailer locations,
training, and letting the company know the latest trends in a particular
region...
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The Postponement Strategy
Every year Benetton came out with two collections, one for each season
(spring/summer and fall/winter). The collection primarily comprised of a
base collection , which included the classic items, and garments according
to the prevailing trends. For collections that were to reach the stores in
January every year, the final designs were decided in March of the previous
year. The store owners could place orders for the new designs till July. In
July, Benetton began producing the clothes, considering the first 10% of the
orders... |
Excerpts Contd...>>
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