Abstract:

Based on a case study from the apparel industry, the paper addresses how the organizational innovations adopted by Benetton and Inditex allowed them to balance lower production costs in developing countries with an adequate response time to frequent preference changes and increasing demands for customisation. Findings confirm the fragility of multinationals whose offshoring strategy has not considered the costs of coordinating suppliers in far-off locations and suggest organisational improvements that make production costs, variety and time to market goals compatible. Our research thus provides a view of the conditions and processes that can overcome in increasingly volatile environments the misalignment between demand changes and the limited reactivity of industrial infrastructures. Furthermore the innovation strategy of textile companies has created generalizable lessons for other sectors in which demand uncertainty is high, life cycles short, and customers are, to some extent, prepared to pay for “speed to market”.