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Learning From Supply Chains: Benetton Group S.p.A and the
Apparel Industry*
May 24, 2007
The history of the apparel industry is an interesting one. In the past, companies
competed primarily on style, price point, and marketing. These were the factors that mattered
most and impacted customer buying habits. As fashion was seen to change with the seasons,
products were prepared well in advance and new lines were marketed to draw customers. In
current times, these facts may still be true, but companies are now incorporating new
operational systems that are dramatically changing the face of the industry. Competing
companies now realize that customer specific needs are essential and should be captured in
sales. Costs associated with holding inventory are lowering profit margins and therefore
better inventory management policies must be put in place. Lastly, outsourcing has become
critical as companies are flocking to low cost manufacturing locations.
This article is meant to develop a better sense of the changes in the apparel industry over
time. As many industries are feeling similar pressures, we see that the lessons learned here
can be applied to other industries. A specific example is also given to illustrate how one
company has refined their supply chain process to not only strengthen the company, but also
improve their cost management. Again, this example is one that has been used in many
different areas of manufacturing and therefore can provide further thoughts to improve many
company's operations.
Introduction to the Apparel Industry
The apparel industry dates back thousands of years. It has evolved from a high number
of small local level assembly and manufacturers serving local demand to an intricate global
supply chain linking many countries. As the complexity has grown two aspects have defined
the development of this industry, 1....