PRICING AND LOGISTICS
In the mid-1990s Benetton adopted a strategy of price-reduction worldwide. The strategy was designed to enable the company to guarantee its clients an ever more suitable and competitive supply of products. Simultaneously, Benetton decreased production costs. This combination of price and cost reductions resulted in an 8 percent increase in both items produced and sold in 1994. Benetton also has an extensive system of outlet stores in which to sell clothing at signiﬁcant discounts, as a result of the price cuts. In the late 1990s Benetton restructured its distribution net-work in order to implement a new system that would integrate a logistics system in which the ware houses are the system’s junction and are part of the distribution system rather than just places for storing facilities. The new system would eliminate fragmentation of inventories across the world by concentrating the ﬁnished goods in three sorting centers, one in the U.S. , one in Italy , and one in the Far East. The automatic distribution system handles over 30,000 packages a day and is managed by a 10-member staff, rather than a traditional system that requires a staff of 400. These new automated systems, along with the production facilities, have improved the efﬁciency and speed of customer service, and reduced transport costs by more than 10 billionlirein 1996. One feature that was crucialto Benetton’ssuccess in its early years was its advanced dyeing process, where by the ﬁnished product could be dyed instead of dyeing the yarn ﬁrst. As tastes in color changed with the whims of the fashion industry, this innovative dyeing system allowed Benetton to establish a customized production system that keeps up with the latest market trends.
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