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

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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…show more content…
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. Once complete, the finished products are sent back to the central pole for final shipment preparation and distribution to the retail outlets. 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. Another aspect of the model that contributes its success is the Dual system of manufacturing and logistics, composed by “Networked Manufacturing” and “Postponement in Dyeing”. 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. Manufacturing of products would not begin without an actual order in hand from a retail store. Once the order was placed, Benetton would purchase the raw materials and ship directly to the Networked Manufacturing groups. As the company actively seeks manufacturers for specific product segments, they look for and combine their efforts working together closely. In this way each part of the manufacturing

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