Logistics and Outsourcing in China: the Benetton Group S.P.A. Case

Topics: Supply chain management, Logistics, Supply chain, Italy / Pages: 13 (3085 words) / Published: Nov 10th, 2012
Introduction
The aim of this paper is to analyze the supply chain management, of United Colors of Benetton, in order to understand the key logistic factors that have made this company so successful in the apparel industry. In addition, after an overview of the outsourcing model in China, I analyze the costs and issues that Benetton has faced in moving its operations in Asia. Although there have been problems, Benetton is a clear example of a successful outsourcing process directed to China.

Company overview
Benetton is an Italian manufacturer of men 's, women 's, and children 's casual wear, footwear and accessories founded as a single shop in Belluno, northeastern Italy in 1965. Three years later, the company opened its first store in Paris, as a first step in the international expansion and development program outside Italy, which took place in the 70’s. As a consequence in the next decade, Benetton spread throughout Europe and by 1979 it was established in the United States. By mid-80’s the company was serving 60 countries through approximately 3200 stores, evolving towards one of the main Italian industrial reality in the sector. Benetton Group specializes in the designing and manufacturing of clothing. Nowadays Benetton group consists of the Sisley, United Colors of Benetton, Playlife and Undercolors of Benetton (UCB Kids) brands widely diffused over 120 countries served by 6400 franchised and directly managed stores. Figure 1. Benetton Sales Distribution by Brand 2011. Group Investors Presentation
This huge network of sales points made the group able to experience revenues for over 2 billion euros in the last four years and a net income of 102 million euro in 2010, despite the crisis that strongly affected world performance in the industry. Figure 2. The Group Profit Analysis 2010. Benetton Investors Report

The importance of Logistics for the Apparel Industry
In the past, the main players in the apparel industry used to compete



Bibliography: • Alfaro L., (2003), ‘Foreign Direct Investment and Growth: Does the Sector Matter?’, Harvard Business School • Camuffo, A., Romano, P., Vinelli, A • Evans, D. (2004). Benetton in Greater China Push to Build Brand Awareness. Asia’s Media & Marketing Newspaper • Feuling A • Kirkegaard, J.F. (2005), Outsourcing and Offshoring: Pushing the European Model Over the Hill, Rather than Off the Cliff! IIE Working Paper • Kletzer, L.G • Kumar A. (2007), ‘Does Foreign Direct Investment Help Emerging Economies?’ Federal Reserve Bank of Dallas, 2(1) • Rodrik D., (2006), ‘What’s So Special About China’s Exports?’, National Bureau of Economic Research, Working Paper no • Tang C.S. (1996). Postponement in Supply Chain Risk Management. International Journal of Production Economics • Tang C.S • Tattara, G., Crestanello, P (2008) .Towards a Global Network. Competition and Restructuring of the Benetton. University of Venice, C`a Foscari • Vu K

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