Sticking to the subject of knitting, an important factor in Benetton’s success selling sweaters has been the policy of garment dyeing. The traditional, efficient method of producing coloured sweaters is to dye the fibres, spin them into yarn, and knit them. A less efficient approach is to dye the yarn, but this is still better (cheaper) from a manufacturing perspective than dying the knitted article. The secret of being effective on the other hand is to get the colour mix right through each fashion season, with the aim of never being out of stock of the best sellers, and not being overstocked with less popular colours to the extent that they have to be marked down in price at the end of the season. Manufacturing cycles mean that colour forecasts have to be made ahead of the season’s start.
Benetton solved this problem by retaining 10 per cent of their stock undyed (known in Italian as grigio). The effectiveness of this ‘inefficient’ process was – and is – superb, as it provides time to react each season, something which could not be done through knitting because the machines are already in use for next season, and a re-order process would probably take too long anyway. The extra cost of dyeing the sweaters made as grigio is clearly compensated for by their selling for a full profit contribution instead of being cleared out at a small loss.
Strategic choice
The choice of an effectiveness or an efficiency strategy is really a matter of computing the costs and benefits of both and making a decision. What does not work is opting for one and trying to do the other, and each may result in some forgone sales, either because the price is too high, or the delivery is too slow.