Benetton Group’s Supply Network Management Case Study

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The main differences between the conventional and the new Benetton networks

The following is the case for Conventional vs. New Benetton’s Networks

CONVENTIONAL BENETTON NETWORK	NEW BENETTON NETWORK
Product design Multi-domestic products are differentiated across cultures and countries.	Product design Globally uniform Innovate for higher quality
Supply and production External supplies for thread and textiles, outsourcing, Castrette production managed by Benetton with SME activities.	Supply and production Vertical with threads, reproduction in foreign lands, SME sub-tasking, subsidies transfers, integration, in-house collaboration.
Distribution and Retailing Small unlicensed retail outlets distribution channel.	Distribution and Retailing Traditional retail network, from large to medium outlets, specialized market segment, increased average t=retail outlets.

The major characteristics of Benetton’s innovative strategy to design and manage its global supply network

Supply network re-organization (upstream and downstream)

By the use of I& CT B2B and B2C networking infrastructure to minimize costs and enable knowledge codification. That is achieved by strategizing to exploit the potential performances using e-business tools in a complex well designed upstream and downstream vertical integration.

Replication of its core capability (supply chain design and management)

That is achieved by mobilizing knowledge and organizational core competencies, nurturing knowledge sharing and competitor based learning, and refining strategies. Replicating core capabilities, optimizing externalities, economies of scale, minimizing investment, and flexibly differentiating Benetton’s strategy with differentiation, and quick responses add up to effectiveness.

What and where outsourcing

Draws on innovative business, effective logistic management, knowledge-based task categorizations, and specializations to compete with low-cost labor markets for the well-being of businesses and nations. That allows organizations to concentrate on information-driven manufacturing by monitoring foreign operations by maintaining product quality and image drawing on Benetton as a learning example from Italy.

How does Benetton aim to remain flexible and responsive without generalized outsourcing?

The need for internal and external flexibility is undeniably indispensable in a dynamically fierce competitive business environment in network models reflected in Benetton’s N-form enterprise model. Here, production is extensively outsourced to external sub-contractors, with an externally flexible supply chain strategy that can be redesigned.

References

Camuffo, A. (2003). Case 16 Benetton Group. In R. Johnston (Ed.), Cases in Operations Management (3rd ed., pp. 83–87). Prentice Hall.

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