Benetton Supply Chain Management

PRESENTED BY -- GROUP-2

 G.KARTHIKMUKESH CHOUBEYMADHUSUDAN PATTANAIKRAMESH MENONSUSHIL KUMAR

Benetton

Benetton was founded in Italy in 1965.

The first Benetton store was started in 1968 and by 1978 there were 1000 franchised outlets worldwide.

Benetton is well established in Europe with a diversified range of clothing. Woolen garments, which are seasonal products, are the main stay of the business.

The Supply chain caters to following main seasons–Spring/Summer: February to July –Fall/Winter: September to December

Introduction

Manufacturing

Performed In houseScale Sensitive

Dyeing @ Benetton does not follow the “Traditional Process”

DYEING

Thread purchased and Supplied to Contractors by Benetton

Manufacturing (Outsourced Model)

• Only Dyeing is done In-House as it is “Scale Sensitive”

• Other Processes work on outsourced model – Knitting : 80 subcontractors – Stitching : 100 subcontractors – Finishing : 20 subcontractors

• High No. of contractors • High Capacities

exclusive to

BENETTON

build responsiveness to

supply chain

Manufacturing (Outsourced Model)…

Purchase

Designing done by freelancers & best designer.Every season has around 1000 designs.Meeting of designers with Guilana Benetton helps

finalization of about 50 designs.These are mainly the hit styles presented in the

fashion shows of the season.Product development - “012 Benetton, Sisley &

Merceric”

Design

• World’s largest purchaser of wool thread

• Purchase is totally centralized • Contracts with 2/3 thread suppliers

– Availability – @ Competitive prices

• Global Player: 2000 retail outlets.• Agents

– about 100 commissioned agents chosen directly by Luciano Benetton on entrepreneurial spirit rather than experience.

– co-ordinated by Area Managers (employees of Benetton).

– supervise all retail outlets in their assigned exclusive sales territories.

– encouraged to own the shops themselves.

Marketing Channels

• Retailers– No experts in garment business.– Florists, hairdressers hired and helped to set up

shops. This ensures loyalty.– Larger cities have large shops owned by Benetton.

• Rules for Retailers– Only Benetton merchandise.– Benetton plans layout of shops.– Furniture from one of three designated Italian

suppliers.– Local advertisements to be approved by Benetton.– No discount sales without approval of Benetton.– All stock displayed on shelves – tracking fast moving

stock is easy and further orders can be customised.

Marketing Channels contd…

• Styles- Finalized before Spring/Summer & Fall/Winter.

• Orders-Ph – I : 7 Month in Advance - 80% of Vol.

Ph – II : Flash Collector - Quantity Flexible Orders -10% V

70% Specific (size, color…) 30% unspecified – to be decided according to demand

witnessed.

Ph – III : – Re Assortment -10% Vol.- Rapid delivery

• Shops Supplied Twice a week

Supply Chain : Ordering & Delivering System

Supply Chain Of BenettonCompany outsourced labour intensive

production such as tailoring,finishing,ironingInvestment strategy,operations such as

weaving, cutting, dying & quality control kept internal

Benetton maintained “ central Pole”located near Head Quarter to manage production logistics and distribution

Consolidated central shipping centre saved 20% of the transportation cost

Historic Supply Chain of Benetton

• Single Central Warehouse in Production centers to serve as finished goods inventory.

• Inventory centralization reduces inventory and inventory carrying costs.-Carefully Scheduled.

• Goods shipped directly from warehouse to shops through air/road/ship as required.

• No middlemen/agents ensures quick response to demands.

• Warehouse management and Transportation services outsourced to a 3rd party logistics provider.

Improvement on logistic system:

- Elaborated new Information system, relaying on automatic cash register in cluster of 10.

- Additional 20,000 sft central ware house facility….

Logistics : Warehousing & Transportation

• Push Based Stock System• Push/Pull Based System

– Point of Sales (POS) data collected directly from retailers to discern the products in demand.

– Make Ready the Right ProductDyeing & Distribution based on Point of Sales

(POS)

Information System

STRENGTH : strength Benetton Group is a world leader in the design, manufacture and marketing of distinctive casual apparel for men, women, and children. Benetton clothes are high quality products usually made of wool. Benetton is traditionally known for knitwear and casual clothing in a wide array of colors, featuring fashionable Italian design and projecting a youthful image.

WEAKNESS :  In Europe, Benetton products are expensive which gives opportunities to many competitors who provide lower prices for the same quality. - Increase in competition due to direct selling by others.

OPPORTUNITIES : Benetton does not have market shares in the United States, so it can improve its position in that market. Benetton can capitalise on the strong image of Italian design.

THREATS : THREATS The clothing market is getting saturated and the competition is getting tougher and tougher (GAP, Old Navy, Ralph Lauren, Tommy …).

SWOT analysis

Challenges/ dilemmas

Rise of new fashion houses in Europe Benetton products reaching saturation in ItalyWhat should be the future strategy? Whether

only Europe Centric or explore Avenues in US,Japan etc.

Competition from Levis, large retail chains such as The Limited,Charming Shops, Petrie etc in US

Whether to apply European supply chain model in US?

Challenges/ dilemmasWhether Italian fashion will be acceptable in

US?What should be the product mix in these new

markets?Whether to open lead store or take space in

departmental stores?Whether to open plant in US or to import

from Italy?Should they acquire an existing plant in US ?

Recommendations for Europe Market

There is a still a scope of sales increase of 15% annually in Europe

Benetton should introspect, whether the “ Flash Collection” can become a regular trend in next season onwards.

In addition to their regular distributors , Benetton should explore possibility of new range of distributors dealing with competitors products.

Benetton should increase the no of stores in other European counties

Recommendations for US

Gradual presence in US to be increased by occupying space in departmental stores

Import from Italy in the beginning to cater to the requirements of US

Focus on advertizing After getting noticed in the market for a

while Lead Store of Benetton can be openedOpen new ware house and strengthen

distribution channelAcquire a plant in US for manufacturing

Developments after 1990 in BenettonGrowth of business encouraged to set up

additional regional poles to identify production needs and source to local manufacturing network

“Networked manufacturing” & “Postponement of Dying” are key steps in development of Benetton supply chain

industrial operations are based on a "double supply chain", which balances efficiency and speed.

Current Supply Chain of Benetton

Current Supply Chain of Benetton

Thank You