Italy's Benetton is bringing production closer to home, boosting manufacturing in Serbia, Croatia, Turkey, Tunisia and Egypt, with the aim of halving production in Asia from the end of 2022, Chief Executive Massimo Renon told Reuters.
Confirming comments made by the Benetton CEO Massimo Renon to Reuters, the group says the move is a “strategic decision to have more control over the production process and also transport costs”.
Renon said in the interview a shipping container that used to cost $1200-$1500 can cost $10,000 to $15,000 with no certainty of a delivery date.
Benetton has had production in low-wage countries since the early 2000s.
Renon told the publication even if production costs remained 20% lower in Vietnam and Bangladesh versus Mediterranean countries, that benefit was offset by longer lead times sparked by supply snags; going from an average lead time of 4-5 months to 7-8 months due to the lack of ships.
He contrasted this with production in Egypt which meant delivery time could be shortened to between two and two and a half months. In the case of wool garments produced in Serbia and Croatia, it can take just 4-5 weeks.
In those two countries, as well as in Tunisia, Benetton plans to ramp up production at its own sites, while in Egypt and Turkey it is working with suppliers.
Last week Benetton Group said it was implementing a new automation solution at its logistics facilities in Italy to make its picking operations more efficient, flexible and agile.
News source: Reuters