Benetton Case Study
Benetton operates a dual supply chain system comprised of speculation and postponement. Retailers have the responsibility of ordering 7 months in advance of the season from their agents. These agents then order directly from Benetton manufacturing, allowing them to operate on a “make-to-order” (JIT) basis. Their superior methodology supports their high volume, low variety production very well.
Supply Chain Management Tool
Leaders of Benetton have gained confidence in the supply chain through visibility and controls. Benetton’s extensive network linking its design center with the network of outsourced manufacturers, sales agents, retail outlets, transportation carriers and logistics centers allow the supply chain to become transparent. The investments in flexible manufacturing lines provide cycle time reduction. The distribution center enables quick response to demand signals allowing production schedules to distribute the accurate products to the right markets. This enables the company to introduce new products in the middle of a season in response to the fashion trends of the season.
Product and Process Postponements Benetton used an innovative manufacturing and supply chain strategy based on postponement to meet customer service expectations that requires high levels of inventory of finished garments. In this case Benetton does not dye the yarn or cloth before making certain sweaters, but the entire sweater when knowing the color demanded by the customers. After initial shipments of dyed sweaters are shipped to stores, the company receives information about the colors they are selling. Next they dye the remainder of their sweaters to more accurately meet the emerging demand pattern for the different colors. Value should be added in the supply chain as late as is consistent with meeting customer needs. This process provides cost savings by delaying the addition of expensive dyes, increases sales by having customer desired stock available
Supply Chain Management Tool
Leaders of Benetton have gained confidence in the supply chain through visibility and controls. Benetton’s extensive network linking its design center with the network of outsourced manufacturers, sales agents, retail outlets, transportation carriers and logistics centers allow the supply chain to become transparent. The investments in flexible manufacturing lines provide cycle time reduction. The distribution center enables quick response to demand signals allowing production schedules to distribute the accurate products to the right markets. This enables the company to introduce new products in the middle of a season in response to the fashion trends of the season.
Product and Process Postponements Benetton used an innovative manufacturing and supply chain strategy based on postponement to meet customer service expectations that requires high levels of inventory of finished garments. In this case Benetton does not dye the yarn or cloth before making certain sweaters, but the entire sweater when knowing the color demanded by the customers. After initial shipments of dyed sweaters are shipped to stores, the company receives information about the colors they are selling. Next they dye the remainder of their sweaters to more accurately meet the emerging demand pattern for the different colors. Value should be added in the supply chain as late as is consistent with meeting customer needs. This process provides cost savings by delaying the addition of expensive dyes, increases sales by having customer desired stock available