The risks and impacts associated with the management of the supply chain are forcing a rethinking of the global production model, with a strong push toward vertical integration, nearer production sources and small batch production, all made possible by digitization. Dealing with possible supply chain disruptions is a central issue that company CEOs must face worldwide. Rising commodity prices, caused by inflation, the energy crisis, logistics blockages and fragmented and relocated production pose growing risks to the continuity of manufacturing operations and call for a paradigm shift in supplier relationship management. In particular, strengthening business relationships with strategic partners enables brands to mitigate risks, increase control over the supply chain and invest in innovation and sustainability projects.
Nearshoring
From the supply chain management standpoint, Benetton Group’s strategy is moving toward “nearshoring,” with a view to limiting the distance from the target market and thus producing less and better, so as to promptly meet the needs of end consumers on time. Nearshoring makes it possible to reduce lead time, increase control over the supply chain and make logistics more efficient. This is a first step in curbing overproduction, the biggest challenge for a brand that aims to act responsibly. With many practices remaining unchanged for several years, the current business model is neither responsive nor economically and environmentally sustainable. The increasing volatility of demand requires a shift from a made-to-stock production system to a pure retail model, which is the Company’s goal in the coming years. In addition to revising the business model, Benetton Group intends to strengthen sustainability in the production platforms in Tunisia, Serbia and Croatia by implementing energy efficiency measures and transitioning to renewable energy sources.