Benetton is an Italian brand created in 1965 by Benetton family. Its core business is clothing and fashion wears. The Benetton group is composed by four brands specialized in different segments:
• United Colors of Benetton: which is a global brand well known all around the world present in different sectors like eyes wear, perfumes, accessories and every day wear.
• Undercolor of Benetton: which is an extension of the united color of Benetton .this brand is specialized in undergarments.
• Sisley is another brand of Benetton group to answer to fashion wear request. Sisley makes a special attention on design, fabrics and new ships.
• Play life this brand is specialized leisure wear.
Nowadays, Benetton is a strong implanting brand present in 120 countries all around the world. Benetton’s group produce every year more than 130 garments and is retail generates over 1.9 billion Euros.
Our case study explains how Benetton adapted his supply in order to answer to a rapid and important industrial change. In fact Benetton had to face an aggressive competitor’s strategy like Zara and H&M witch produce 12 collections per year whereas Benetton is only able to do two. We will present you in a first part the principal problems Benetton had to face and in a second part how Benetton decided to adapted his supply chain design in order to be as fast as possible and competitive.
The Benetton Operation Model
Benetton had three kinds of tiers. The first one was composed of suppliers of raw materials and unfinished products and production plants. The second tier consisted of contractors and subcontractors and the third one had retail outlets spread all over the world. Those outlets operated as franchises and agents.
The responsibility of designing and staying aware of the innovations happening in the apparel retail sector was kept in the Headquarters of Benetton in Italy. The design center had several designers from different backgrounds and cultures.
To understand customer preferences, Benetton set up in-store surveys and tests among customers. Getting information about the trends was Benetton designers’ deed. Some of them, however, were in charge of taking clues from fashion shows across the world and adapting them to fit into Benetton price range.
Benetton operated through a licensor-licensee relationship. The retail market expectations are gathered by agents who obtained license from Benetton to sell its products. The agents are responsible for recruiting retailers, showing Benetton’s collections in a particular region, processing retailer orders, selecting retailer locations, training and letting the company know the latest trends in a particular region.
It is important to mention that the store owners did not have a formal agreement with Benetton. There were no written contracts. They were dealing directly with the agents.
The licensees had to agree to stock and sell only products and accessories supplied by Benetton. The company supplied on a no-return basis.
The Postponement Strategy.
In its initial model, the garment manufacture process began with spinning the cotton or purchasing the yarn. Then, Benetton dyed the yarn and finished it to knit different parts of the garments. To develop the final product, different parts were joined. They were then stored to be sent to the retailers. This model had a disadvantage as any change in the demand could not be met immediately and the lead times for making garments were long.
In order to be more flexible, Benetton came up with the idea of a new manufacturing process consisting of the postponement of the dyeing step. Only after the demand was assessed, the garment was dyed in the required colors and then shipped to the retailers.
Each fashion season generally began with ten alternative colors of which only two or three recorded high demand. As Benetton delayed dyeing of the garments,...