Postponement has also decreased the risk that a new product will fail and the inventory costs of these failures will hurt profitability across all products. In current fact, Benetton price logistic factors keep Benetton price logistic important but new companies are now incorporating new operational systems Benetton price logistic are dramatically changing the industry dynamics.
All the products are first sent to one of the distribution centers, then to the nearest harbor, and finally exported to Italy. Does the Sector Matter? Yet cultural differences represent an issue to take into consideration since it has been proven Benetton price logistic they negatively affect communication and so coordination among the different components of the supply chain.
Nowadays the system is highly centralized and allows for better quality control of materials and logistics management. Indeed, Benetton realized that if the colouring process was moved to the end of the manufacturing cycle, the company would gain flexibility in the production and significantly lower inventory costs.
By using this model, Benetton has realized significant efficiencies through coordination, high control, increased speed of production and reduced inventories achieving at the same time tight control over the whole supply chain and sufficient flexibility to rise to market challenges.
Benetton Revenues Geographical Distribution The Group Profit Analysis The process of defining the capabilities for each group is critical and very specialized.
Analysts believe this blend of low cost, third-party labour and high-technology in the in-house operations, gives Benetton a manufacturing cost structure that is competitive and comparable with Asian producers. On the one hand it needs to develop flexibility and speed in order to meet the demands of fashion and the rapidly changing needs of the customer.
Through this model, the head production pole in Italy concentrates on the fashion design and electronically sends the product specifications to the regional poles that identify the production needs and source to a specific local manufacturing network.
Benetton price logistic this way each part of the manufacturing process cutting each piece of the clothing, stitching, assembly, adding accessories, and packaging is all coordinated among the members of the manufacturing network so that each has a defined role and responsibility.
This is frowned upon by consumers who see it as yet another profit and lucrative action. In the apparel industry, a postponement strategy aims at delaying some supply chain activities until custom demand is revealed in order to maintain both low system wide cost and fast response.
China GDP per Capita There are other ethical issues that have generated much criticism from and discussion among customers, journalists and international organizations. As we can see from the chart below, indeed, GDP per capita growth has experienced an significant acceleration in the last decade when Chinese citizens more than doubled their salaries on average.
This allows the company to gain a competitive advantage increasing customer satisfaction and improving the lead time for new product introductions. Benetton Transforms its Global Network. Challenges of Outsourcing in China At each step of the supply chain Benetton has made a conscious decision about whether to process in-house or subcontract, bearing in mind impact factors such as cost, flexibility, speed and service.
The balance between quality, cost and time to market drives this sourcing allocation, and the ongoing scouting of third party vendors allows the Group to maximize total benefits, as in the industrialized production system.
Concerning the products, Chinese plants are used for lean manufacturing process and long series, planned well in advance. Finding a partner and creating a trusting relationship is a better way to avoid local regulation problems and to coordinate all the phases of the production process.
Another important key, to the Networked Manufacturing, is the coordination among manufacturers whose responsibility is similar. On the other hand, with the outsourcing to China, Benetton loses the benefit of proximity.
Moreover, Benetton has difficulty with effectively coordinating these external production units because the physical distance makes the internal and external flow of information more difficult. Outsourcing to China means decreased job opportunities for Italian citizens and in a period of economic distress, it is not the best decision to support the growth of the country.
This is a problem that almost every player in the clothing market is facing since the flow of outsourcing directed to Asian countries started. Back to the Future: Conclusion Benetton provides an example of an organization which has truly grasped the meaning of integrated logistics across national boundaries.
On the one hand this is the natural consequence of globalization and Benetton is just following the same path of its competitors. Lastly, outsourcing has become critical as companies are flocking to low cost manufacturing locations. This allows clear guidelines for manufacturers, lowers setup costs, eliminates the necessity to switch machinery, improves speed and ensures proper resource utilization.
Meanwhile, the company controls the logistics phase for both self-manufactured and sourced products, and has invested in modeling, organization, and automation of logistic processes in order to integrate the production cycle, from client orders to packaging and delivery.
Networked Manufacturing is a system where groups of manufacturers collaborate on specific orders that are targeted to their capabilities, batch size, flexibility, and lead time to the central pole.
Costs associated with holding inventory are lowering profit margins and therefore better inventory management policies must be put in place. The network of the company with Asian producer is managed by Asia Pacific Ltd, based in Hong Kong, which controls the logistic platforms in Shenzhen and Shanghai.
Product life cycles are planned to be short to maintain consumer interest. This means, that by using subcontractors, Benetton can maintain its rapid expansion rate without the need for massive capital or labour force investment.
However this represents a much more relevant issue for Benetton if we consider that the image that the group gives to its customers is of a multiracial and multinational enterprise and Benetton price logistic message driven by its advertisements is world peace with racial and national harmony. For that reason, customers with a strong sense of brand loyalty could feel betrayed by Benetton behavior and the reduced satisfaction could strongly impact on sales and revenues.
On the other hand, to compete in the fashion industry it must maintain high levels of efficiency.Establishing logistic functionality in China is the key for maintaining low prices and Benetton achieved this goal through the selection of qualified local manufacturers at a large-scale trade fair held to manufacture its products.
Free Essay: Comparison of Zara and Benetton Supply Chains REPORT Master Supply Chain and Purchasing Management (MSCP) Date Outline I. Supply Chain. Licensees must agree to stock and sell only Benetton products, merchandise and display the garments according to Benetton guidelines and also follow price guidelines.
Benetton - Global logistics in. Strategy Analysis: Benetton 20 plants specified by plants control to Sub production and logistic product type only use at subcontractors (tend to contractors and all process 60% of capacity > high reduce the numbers) production strategies and flexibility + efficiency just need to pass quality controlsLogistic Just in time.
Benetton Price&Logistic Essays: OverBenetton Price&Logistic Essays, Benetton Price&Logistic Term Papers, Benetton Price&Logistic Research Paper, Book Reports. ESSAYS, term and research papers available for UNLIMITED access. 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.Download