In many supply chains, tiers of suppliers have been created to manufacture
specific component parts. Other supplier associations have been
formed to coordinate supply chain activities. In these businesses the trend
has often been to buy rather than make and to outsource non-core activities.
Benetton, which has been hailed as the archetypal example of a
network organization, is however bucking this trend by increasing
vertical integration and ownership of assets in the supply chain (Camuffo
et al, 2001). While it is retaining its network structure, it is refining the
network from product design through to distribution to its stores. While
Benetton previously customized around 20 per cent of its ranges to satisfy
national markets, it has reduced this to around 5 to 10 per cent in order to
communicate one image of Benetton in global markets. The streamlining
of its brands and in-store testing have allowed it to respond more quickly
to changing market trends.
Benetton is renowned for its relationship with small and medium-sized
enterprises (SMEs) in north-east Italy. These SMEs supplied the labourintensive
phases of production (tailoring, finishing and ironing) while the
company kept ‘in-house’ the capital-intensive parts of the operation
(weaving, cutting and dyeing). In the last decade it has established a hightech
production pole at Castrette, near its headquarters, to cope with