The paper “ Operations Management of Benetton” is a fascinating example of the case study on management. This paper provides an analysis of the Benetton case, by answering four questions on the strategies and management operations that the company should embrace. Benetton is an Italian multinational enterprise dealing with apparel. The company was founded in 1965 and now operates in more than 120 nations and has 18 plants, of which 12 are in Italy. Benetton has approximately 6,500 retail stores selling high-quality clothing at fair prices. Q1. Bullwhip EffectBenetton’ s sales and retail strategy reacted to the thought of complete downstream integration, away from the horizontal business model that had been operated from its establishment in the 1960s.
Benetton has begun opening its own outlet stores to better collect and manage customer feedback, exhibiting complete collection and ensuring that the corporate image is maintained. The company gathers information about customer preferences directly from its over 6,500 stores, agents, and franchises across the world. Through this strategy, the blurred effect of information from point-of-sale on the upward supply chain is minimized through the bullwhip effect. In the modern times, companies are entangled in complex networks of customers and suppliers in an international scale and outdo their competitors with a sophisticated supply chain management instead of marketing techniques (Steckel et al. , 2004).
The difficulties of the supply chain dynamics have been thoroughly reviewed by different studies, defining the bullwhip effect as its initial requirement. Order differences increases as orders move up the supply chain and generate cost inefficiencies because of unchanged times of inventory stock-outs and surpluses. According to Lee et al. (1997), the bullwhip effect is caused by issues categorized as system behaviors, resulting in order inflation; communication problems; order batching impacts, caused by fixed costs; and promotional campaigns and dynamic pricing that complicates order forecasting. By the end of 2000, Benetton changed its supply chain strategy to counter emerging competition without altering the interconnected features of the business model through two major strategies.
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