Benetton Summary

1. B7801 Operations Management Benetton Summary Benetton has created a “machine” (operating system) for effectively servicing its target market. It provides end customers what they want (colorful fashion, high quality), when and where they want it (convenient, city-center stores) at a price that creates value for consumers and high returns for Benetton and its agents/shop-owners. Target Market/Channel - Young, fashion-oriented - High variety (colors) - High quality/moderate price - Autonomous agent network, easy-to-operate store format Operational Requirements (What they need to do well.) - Flexible production process - Responsive, reliable logistics and information/planning systems - Competitive cost/quality Configuration/Capabilities (How they do it.) 1) Industrialization of key steps to achieve high quality and economies of scale: - centralized procurement/manufacturing - automated knitting/dyeing - centralized distribution - product development & global advertising - “We gave kept the same strategy all along - to put fashion on an industrial level.” 2) Use of technology, subcontractors and agents to provide flexibility and responsiveness: - garment dyeing - flexible assembly and finishing subcontractor network - flexible store development and operations network 3) A focus on key components of the operation that limit the scope of Benetton’s responsibilities and provides for a consistent pattern of investment and process development: - focus on limited set of functions (prod. dev., procurement, dyeing, distribution) - focus on capital/technology-intensive operations not labor-intensive operations. - focus on wool processing and knitting technology. - global product - standardized, simplified store format - logistical and information systems expertise to support store operations Strong synergy between marketing and operations strategies - Marketpositioning matches Benetton’s operational capabilities very well 6 March 1998