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1. INTODUCTION This report shows the Supply Chain Management of United Colours of Benetton which is a manufacture in global fashion. This group is present in around 120 countries and produces over 150 million garments every year. Its Headquarters is located in Villa Minelli near Venice, Italy. This company was founded in the year 1965 by the three Benetton brothers. Benetton fallows the global strategy by selling the same garments throughout the world. The companys logistics are managed in Italy and the finished good are sent directly to the retailer groups around the world. Benettons deals with highly competitive and time sensitive market with a rapid change over in products to meet the immediate demand of consumer. This report firstly discusses about the supply chain management and it is explained in figure1: supply chain management of Benettons, then shows the five major performance objectives which includes Quality, speed, dependability, flexibility and cost. At the end of the report it shows the alignment of performance objective of different members of the supply chain.

1.1 Why United colours of Benetton? The companys core business is fashion with a style, quality and passion as its Italian character which is seen in the brand. It has contemporary stores of around 6000 around the world. Benetton offers a high quality customer service and its total turnover are generated over 2 billion euro.

2. SUPPLY CHAIN MANAGEMENT According to Lysons et al. (2006) A supply chain is that network of organisations that are involved, through upstream and downstream linkage, in the different process and activities that produce value in the form of products and service in the hands of ultimate customer or consumer. Supply chain management is the process which establishes a good relation between all the members of the organisation during the process of converting the raw materials into final products so that the end customers can be consumed in the market. In this report explains the supply chain management of Benettons who take part from manufacturing of raw materials to distribution like sub contractors, agents and transportation until the finished goods are delivered to the stores. This process is illustrated in Figure 2.1:
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Figure 2.1 Supply Chain Management of Benettons (Adapted by Joseph et al, 1993)

Raw Materials Suppliers

Orders

Benetton

Benetton Agents

Schedule

Update actual

Exclusive Subcontractors

Information Demand daily

Send cut Garments CAD Design & cutting of Garments Garments

Sales Data

Management Data

Data on colour Preference based on demand

Return Finished Undyed Garments Finished Dye Products Ship to design & cutting Key: CAD - Computer Aided Design Information Flow Physical Flow
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Retail Stores

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3. MAJOR PERFORMANCE OBJECTIVES

They are five major performance objectives Quality Speed Dependability Flexibility Cost

3.1 Quality: Slack et al. (2010) found that quality is a major objective in all operations. It has an important influence on customer satisfaction or dissatisfaction. Quality is the most visible part of what an operation does. It is something that makes a customer easy to judge about the operation. Quality is to do things right. Quality in an operation means not only producing services and products to satisfy the external customer but also inside the operation as well. According to the company the most important characteristic of Benettons production process is from the raw materials to the finished garments with high quality. The company manufactures and maintains an international style in quality and fashion. To maintain this standardization of the products they produce good quality of raw materials according to the everyday season. It offers a wide range in selection of accessories and quality. By using the advance high technology facilities it is capable of producing a turnover of 150 garments every year. (United colours of Benetton [online], 2009)

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3.2 Speed:

According to slack et al. (2010), speed means the time elapsed between products requested by the customer or services and receiving them. Inside the operation speed is very important. The main benefit to external customers in operations is the speedy delivery of goods and services. The faster they provide product or service, the more likely they buy it. If the response to the external customers is speedy the movement of materials is fast. In the present days speed is the important scenario, which helps in reducing wastage of time and money. Benetton uses new technologies for production cycles and also for packing and delivery like automated sorting system which is fully innovated to handle individual orders of around 6000 shops worldwide. The methods of folding and handling the garments are also automatically sorted and packed into boxes and send to the distribution. Once the order is placed the products are directly delivered from the distribution center for shipping. The company use advanced technologies like (EDI) Electronic Data Interchange to connect the agents and factories.

3.3 Dependability:

Slack et al. (2010), highlights that dependability is delivery of goods and services to the customers exactly when they are needed in time, or at least when they are promised. Dependability of operation can only be judged by the customer after the product and service has been delivered. Dependability inside an operation gives stability and saves money and time. Benetton starts working for the production once the subcontractors places the order for the finished goods. The company uses automated distribution which covers a large area with a capacity of 800,000 boxes of finished garments which makes the process of manufacturing quickly and frequently. Benetton mainly focuses on the customer priority which raises the overall turnover of sales. This distribution can handle 120,000 incoming/outgoing boxes daily with a very less work force of only 28 members. The company allows the physical distribution operation it has an ability to replenish the stock quickly to the orders places by the retailers. (United colours of Benetton [online], 2009)

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Slack et al. (2010), concludes that flexibility is the ability to change the operations according to the situation. It may mean changing what the operation does, how it is doing it, or when it is doing it. To provide some of the requirements customers need the operations to change. There are four types in requirements of flexibility. 1. Product/service flexibility it is the ability of the operation to introduce new products and services. 2. Mix flexibility it is the ability of the operation to produce a wide range or mix of products and services. 3. Volume flexibility it is the ability of the operation to change its levels of activity and output to produce different volumes or quantities of products and service overtime. 4. Delivery flexibility it is the ability of the operation to change the timing of the delivery of its service or products. Benetton has a constant commitment for the factor of development. There is a special attention for the research of new materials and production to integrate logistics. It has a staff of around 300 designers around the world, which creates different collection according to seasons and demand. The company is engaged in creating new lines and new materials with rich output and latest design according to the trend. The flexibility in company depends on which the dyeing of grey process allows the operation to respond quickly to the orders placed by the retail operation. (United colours of Benetton [online], 2009)

3.5 Cost : According to slack et al. (2007), cost is the last objective but not the least performance objective of supply chain management. The lower cost in the production of the goods and services, the lower can be priced to the customers. Cost can influence in operation management largely when the operation cost are incurred. Both cost and quality are important in the manufacture house. Cost means different things in different operations, Low cost is a universally attractive objective. In the company cost depends on the quality of the product and its services. Benetton uses the contractors and sub contractors in the supply chain which reduces the cost because they have the lower wage rates in their own factories. By using the advance technologies like automated sorting system and automated distribution center also reduces the cost of labour.
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4. Performance objectives of supply chain management. Supply chain can be defined as (Ganeshan and Harrison, 1995): A supply chain is a network of facilities and distribution options that performs the functions of procurements of materials, transformation of these materials into intermediate and finished products to customers. Supply chain in an organisation refers to the networks of the companies which coordinate and work together and encompasses the activities needed to design, make, deliver and use a product and service. According to (Mentzer et al) The systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across business within the supply chain, for the purpose of improving the long- term performance of the individual companies and the supply chain as a whole. Supply chain management is important in an organisation because it is linked to the logistics which helps in maintaining a supply chain for the coordination of the participants during inventory, location, production and transportation among all the participants to achieve a responsive and efficient market. Benetton has a direct control over the logistics phase for both own manufactured and sources products. It has invested for developing new technologies in the organisation for production as well as distribution of the products during operation which reduces the cost of labour and can provide quality goods for low rates. Benetton invested in modelling and in the organisation for the automation of logistics process to complete the entire production cycle from client orders, to packing and delivery which is an objective of speed. The company has made big changes in its core business, casual wear in term of production design, supply, and retailing with production networks as a result it created a trend of fashion and demand for the products in different seasons which show that the company is flexible for changing its operation according to seasons. Dependability of good depends up to the contractors and sub contractors they had a wide range of delivery options as per customer needs. Deliveries of the stock to the retailers in time also add up to the retailers to maintain a relation with the customers with a wide range of collections in the stores. Which increase the demand and brand image of the brand without keeping the store out of stock.

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1. Benetton groups (2009) [online]. Available from: www.benettongroup.com (Accessed14 may 2010). 2. Dupuis, M. and Dawson, J. (1999, p 162) European case in Retailing. 1st ed. USA: Blackwell Publishers Limited. 3. Govil, M. and Marie Porth, J. (2002, P 9) Supply chain design and management. USA: Academic Press. 4. Hugos, M. (2006, P 3) Essentials of supply chain Management. 2nd ed. USA: John Wiley and sons, Inc.

5. Lambert, Douglas M. Stock, James R. and Ellram, Lisa M. (1998, P 568) Fundamentals of logistics management. International edition. Singapore: McGraw-Hill Education. 6. Lysons, K. and Farrington, B. (2006) Purchasing and supply chain management. 7th ed. London: Pearson Education Limited. 7. Mentaer, John, T. De witt, W. James, S. Keebler, Min, S. Nancy W. Nix, Carlo D. Smith, and Zach, G. Zacharia, 2001,Defining the supply chain Management, Journal of business logistics,Vol.22,NO.2,P.18

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