What is H&M supply chain?
Globally recognised for being a successful and expansive retail giant in terms of market and financial prosperity, H&M's Supply chain strategy is a continuous search for promising markets, cost-efficiency in production of goods, and reduction in lead times for their retail inventory.
H&M manufactures 80% of its retail inventory in advance and, during the year, introduces the remaining 20% based on present-day market trends. Affordability is reached with strong supplier relationships, paired with manufacturing strategies that reduce lead times.
A supply chain is the network of all the individuals, organizations, resources, activities and technology involved in the creation and sale of a product. A supply chain encompasses everything from the delivery of source materials from the supplier to the manufacturer through to its eventual delivery to the end user.
Nevertheless, H&M has a decentralized system. There are 20 production offices dealing with 800 suppliers, and 20 country offices within 33 sales countries, handling all business affairs for the region it responsible for. Planning and organizing, such as store operation, advertising are carried out by managers.
Benetton has developed a dual-supply chain model to respond to changes in demand by balancing all operations. For standard garments delivered before the beginning of the season, Benetton uses a sequential dual supply chain based on push-demand.
H&M has 2,383 supplier factories around the world, according to its 2018 Sustainability Report. The retailer has pledged to reach 100% recycled or sustainable materials across its supply chain by 2030 and 100% sustainable cotton sourcing this year.
China: main clothing supplier
As seen in the present graph, China, Bangladesh and India are top three locations where H&M sources its products. This is also true for. In Sweden, where the retailer is headquartered, there are a total of 21 suppliers and factories manufacturing H&M's clothing products and accessories.
Examples of supply chain activities include farming, refining, design, manufacturing, packaging, and transportation.
| Rank | Company |
|---|---|
| 1 | Cisco Systems |
| 2 | Schneider Electric |
| 3 | Colgate-Palmolive |
| 4 | Johnson & Johnson |
The links of a chain have but two physical connections: a single link on the input and a single link on the output, hardly representative of the way our supply systems work today. When the chain is working, its links can rub together while they are, in effect, pulling against each other.
What type of organizational structure does H&M have?
In the case of H&M, they had adopted matrix structure, one of the traditional organizational structure, into their business. As shown in figure 1, range of functional groups is listed horizontally across the table and on the other is product/task with a manager taking control of each.
H&M has a matrix organisation. The general meeting is the company's highest decision-making body and is the forum in which shareholders exercise their right to decide on the company's affairs. Under Swedish law, the employees have the right to appoint employee representatives with deputies to the company's board.
Business Model Patterns:
Direct Selling. How they do it: H&M's products are exclusively distributed through its chain of retail stores, catalogues and online store. This allows the company to have full control over their value chain and profit from earning the full retail margin.
Benetton possesses a Sustainable Competitive Advantage (SCA) because it. not necessarily non-duplicable or inimitable.
During the 1980s and early 1990s, Benetton was the world leader in the casual apparel market with stores spread across the world. The company was well known for its postponement strategy, wherein the dyeing of the garment was postponed till the colors in vogue for the season were identified.
Contractors are companies (many of which are owned, or part-owned, by Benetton employees) that provide services to the Benetton factories by knitting and assembling Benetton's garments.
Zara's overarching strategy is achieving growth through diversification with vertical integrations. It adapts couture designs, manufactures, distributes, and retails clothes within two weeks of the original design first appearing on catwalks.
H&M does not depend on third party for its logistics and uses its own logistics services in the name of “H&M International Transportation, Inc.” H&M mainly uses Railways, Waterways and Roadways as their mode of transportation to Page 4 Vol-5 Issue-4 2019 IJARIIE-ISSN(O)-2395-4396 10784 www.ijariie.com 1560 deliver the ...
H&M ban the use of hazardous and environmentally damaging substances thoughout all production processes. All H&M suppliers commit to comply with our requirements and are educated in how to run production to our standards. Regular controls and inspections are also conducted to ensure your safety.
Please note that items can sell out quickly and the stock inventory is just an estimate. Please visit the store to know for sure. Best of luck!
How does Zara manage inventory?
Zara has 12 inventory turns per year compared to 3 – 4 per year for competitors. Stores place orders twice a week and this drives factory scheduling. Such short term focused order cycles make forecasts very accurate, much more accurate than competitors who may order every two weeks or every month.
While H&M doesn't have an official restock policy, it is widely known that most stores receive new shipments at 6am every day. Each morning the restock begins up to three hours before the store opens to give time to replenish the store and make sure that all new arrivals are back on the floor.
What Is Inventory Management? Inventory management refers to the process of ordering, storing, using, and selling a company's inventory. This includes the management of raw materials, components, and finished products, as well as warehousing and processing of such items.
Pandemic and Recession
The lockdown that had to be imposed because of the pandemic has affected the flow of products and raw materials from one place to another, which can heavily impact H&M's sales.
The H&M brand emphasizes offering their quality products cheaper as a means to keep customers trooping into their shops. They are known to offer huge discounts very often, unlike most of their competitors.
In terms of Supply chain Management, H&M outsource the products in low-cost countries, focusing in economy of scale, with high-volume and low-cost. The company idea is maintain low imputs costs and have the more inovative fashion trend in H&M stores with a fast output between a month of the initial design.
