Read the case study and answer the questions. One of the best-known examples of how an organization can use its supply chain to achieve a competitive advantage is the Benetton Group. Founded by the Benetton family in the 1960s, the company is now one of the largest garment retailers, with stores which bear its name located in almost all parts of the world. Part of the reason for its success has been the way it has organized both the supply side and the demand side of its supply chain. Although Benetton does manufacture much of its production itself, on its supply side the company relies heavily on 'contractors'. Contractors are companies (many of which are owned, or part-owned, by Benetton employees) that provide services to the Benetton factories by knitting and assembling Benetton's garments. These contractors, in turn, use the services of sub-contractors. to perform. some of the manufacturing tasks. Benetton's manufacturing operations gain two advantages from this. First, its production costs for woollen items are significantly below some of its competitors because the small supply companies have lower costs themselves. Second, the arrangement allows Benetton to absorb fluctuation in demand by adjusting its supply arrangeme: without itself feeling the full effect of demand fluctuations. On the demand side of the chain, Benetton operates through a number of agents, each of whom is responsible for their own geographical area. These agents are responsible for developing the stores in their area. Indeed, many of the agents actually own some stores in their area. Products are shipped from Italy to the individual stores where they are often put directly onto the shelves. Benetton stores have always been designed with relatively limited storage space so that the garments (which, typically, are brightly coloured) can be stored in the shop itself, adding colour and ambience to the appearance of the store. Because there is such limited space for inventory in the stores, store owners require that deliveries of garments are fast and dependable. Benetton factories. achieve this partly through their famous policy of manufacturing garments, where possible, in greggio, or in grey, and then dyeing them only when demand for particular colours is evident. This is a slightly more expensive process than knitting directly from coloured. yarn, but their supply-side economies allow them to absorb the cost of this extra flexibility, which in turn allows them to achieve relatively fast deliveries to the stores. Questions: 1. Brief your understanding about Benetton Supply Chain operations. 2. In your understanding, what is the specialty of Benetton's contractors? 3. Does this method provide Benetton competitive advantage over their competitors? Is this method sustainable in the long term? must include at least 5 reference using APA style.

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12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
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Read the case study and answer the questions
One of the best-known examples of how an
organization can use its supply chain to achieve a
competitive advantage is the Benetton Group. Founded
by the Benetton family in the 1960s, the company is
now one of the largest garment retailers, with stores
which bear its name located in almost all parts of the
world. Part of the reason for its success has been the
way it has organized both the supply side and the
demand side of its supply chain.
Although Benetton does manufacture much of its
production itself, on its supply side the company relies
heavily on 'contractors'. Contractors are companies
(many of which are owned, or part-owned, by Benetton
employees) that provide services to the Benetton
factories by knitting and assembling Benetton's
garments. These contractors, in turn, use the services
of sub-contractors to perform some of the
manufacturing tasks. Benetton's manufacturing
operations gain two advantages from this. First, its
production costs for woollen items are significantly
below some of its competitors because the small supply
companies have lower costs themselves. Second, the
arrangement allows Benetton to absorb fluctuation in
demand by adjusting its supply arrangements, without
itself feeling the full effect of demand fluctuations.
On the demand side of the chain, Benetton operates
through a number of agents, each of whom is
responsible for their own geographical area. These
agents are responsible for developing the stores in
their area. Indeed, many of the agents actually own
some stores in their area. Products are shipped from
Italy to the individual stores where they are often put
directly onto the shelves. Benetton stores have always.
been designed with relatively limited storage space so
that the garments (which, typically, are brightly
coloured) can be stored in the shop itself, adding
colour and ambience to the appearance of the store.
Because there is such limited space for inventory in the
stores, store owners require that deliveries of
garments are fast and dependable. Benetton factories
achieve this partly through their famous policy of
manufacturing garments, where possible, in greggio,
or in grey, and then dyeing them only when demand
for particular colours is evident. This is a slightly more
expensive process than knitting directly from coloured
yarn, but their supply-side economies allow them to
absorb the cost of this extra flexibility, which in turn
allows them to achieve relatively fast deliveries to the
stores.
Questions:
1. Brief your understanding about Benetton Supply
Chain operations.
2. In your understanding, what is the specialty of
Benetton's contractors?
3. Does this method provide Benetton competitive
advantage over their competitors? Is this method
sustainable in the long term?
must include at least 5 reference using APA style.
Transcribed Image Text:Read the case study and answer the questions One of the best-known examples of how an organization can use its supply chain to achieve a competitive advantage is the Benetton Group. Founded by the Benetton family in the 1960s, the company is now one of the largest garment retailers, with stores which bear its name located in almost all parts of the world. Part of the reason for its success has been the way it has organized both the supply side and the demand side of its supply chain. Although Benetton does manufacture much of its production itself, on its supply side the company relies heavily on 'contractors'. Contractors are companies (many of which are owned, or part-owned, by Benetton employees) that provide services to the Benetton factories by knitting and assembling Benetton's garments. These contractors, in turn, use the services of sub-contractors to perform some of the manufacturing tasks. Benetton's manufacturing operations gain two advantages from this. First, its production costs for woollen items are significantly below some of its competitors because the small supply companies have lower costs themselves. Second, the arrangement allows Benetton to absorb fluctuation in demand by adjusting its supply arrangements, without itself feeling the full effect of demand fluctuations. On the demand side of the chain, Benetton operates through a number of agents, each of whom is responsible for their own geographical area. These agents are responsible for developing the stores in their area. Indeed, many of the agents actually own some stores in their area. Products are shipped from Italy to the individual stores where they are often put directly onto the shelves. Benetton stores have always. been designed with relatively limited storage space so that the garments (which, typically, are brightly coloured) can be stored in the shop itself, adding colour and ambience to the appearance of the store. Because there is such limited space for inventory in the stores, store owners require that deliveries of garments are fast and dependable. Benetton factories achieve this partly through their famous policy of manufacturing garments, where possible, in greggio, or in grey, and then dyeing them only when demand for particular colours is evident. This is a slightly more expensive process than knitting directly from coloured yarn, but their supply-side economies allow them to absorb the cost of this extra flexibility, which in turn allows them to achieve relatively fast deliveries to the stores. Questions: 1. Brief your understanding about Benetton Supply Chain operations. 2. In your understanding, what is the specialty of Benetton's contractors? 3. Does this method provide Benetton competitive advantage over their competitors? Is this method sustainable in the long term? must include at least 5 reference using APA style.
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