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    Best Practices in Supply Chain Management at H&M: Fawad Zahir Adil Zhantilessov

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    prateek gandhi
    H&M has a dual supply chain model with clothing produced both in Asia and Europe. Their supply chain involves design, production, and distribution processes that complete a full cycle in just 21 days. While H&M outsources all production, their integrated IT systems and relationships with 800+ suppliers allows them to offer fashionable clothing at low prices. Looking ahead, H&M plans to expand into new markets and promote new brands while ensuring sustainable operations.

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    Best Practices in Supply Chain Management at H&M: Fawad Zahir Adil Zhantilessov

    Uploaded by

    prateek gandhi
    735 views26 pages
    H&M has a dual supply chain model with clothing produced both in Asia and Europe. Their supply chain involves design, production, and distribution processes that complete a full cycle in just 21 days. While H&M outsources all production, their integrated IT systems and relationships with 800+ suppliers allows them to offer fashionable clothing at low prices. Looking ahead, H&M plans to expand into new markets and promote new brands while ensuring sustainable operations.

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    H&M

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    H&M has a dual supply chain model with clothing produced both in Asia and Europe. Their supply chain involves design, production, and distribution processes that complete a full cycle in just 21 days. While H&M outsources all production, their integrated IT systems and relationships with 800+ suppliers allows them to offer fashionable clothing at low prices. Looking ahead, H&M plans to expand into new markets and promote new brands while ensuring sustainable operations.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    735 views26 pages

    Best Practices in Supply Chain Management at H&M: Fawad Zahir Adil Zhantilessov

    Uploaded by

    prateek gandhi
    H&M has a dual supply chain model with clothing produced both in Asia and Europe. Their supply chain involves design, production, and distribution processes that complete a full cycle in just 21 days. While H&M outsources all production, their integrated IT systems and relationships with 800+ suppliers allows them to offer fashionable clothing at low prices. Looking ahead, H&M plans to expand into new markets and promote new brands while ensuring sustainable operations.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 26
    At a glance
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    The key takeaways are that H&M is a Swedish multinational retailer known for affordable fashion. It discusses the history and expansion of H&M internationally and details of its supply chain operations.

    H&M expanded internationally starting in the 1940s-50s in Europe and then expanded globally from the 1970s onwards opening stores in countries like the UK, US, Asia and the Middle East. By 2014 it had presence in over 50 countries.

    H&M's supply chain is characterized as having a short lead time of 21 days. It centrally designs collections and sources from over 800 suppliers globally with two supply chains for rapid reaction from Europe and cost optimization from Asia.

    Best Practices in Supply Chain

    Management at H&M
    Fawad Zahir
    Adil Zhantilessov
    H&M: Content

    1. History
    2. Supply Chain
    3. Comparison with ZARA’s Supply Chain
    4. Strengths of H&M Supply Chain
    5. Future development
    H&M Today,
    the second largest global clothing retailer

    Origin Swedish
    Business Multinational retail clothing
    Market 53 countries
    Stores More than 3000
    Number of employees More than 116 000
    Suppliers More than 800
    Revenue 150 billion SEK
    Profit after Tax 17,2 billion SEK

    Figures of 2013
    H&M Brands
    How to characterize H&M Supply Chain
    Management

    “ A short lead time is not an end in itself, since it is always a


    matter of getting the right balance between price, time and
    quality”

    H&M Annual Report, 2006


    H&M History

     Established as a store selling clothes for women by Erling Persson


    in Vasteras, Sweden in 1947
     Expanded into Stockholm, Sweden, after acquiring Mauritz
    Widforss and stocked men’s clothing in 1968
     Expanded during 1960s in Europe
     Opened the store in 1976 in the UK
     Introduced clothes for teenagers and babies in 1977-78
    H&M History

     Acquired Rowell’s mail order company in 1980 after which it


    started selling clothes through catalogues
     Changed the concept from “cheap clothes” to “fashioned garments
    at a low price” since1982
     Began selling clothes through the Internet in the end of 90s
    H&M International Expansion
    Year Markets
    1947 Sweden
    1964 Norway
    1967 Denmark
    1976 United Kingdom
    1978 Switzerland
    1980 Germany
    1989 Netherlands
    1992 Belguim
    1994 Austria
    1996 Luxembourg
    1997 Finland
    1998 France
    2000 USA, Spain
    2003 Poland, Czech Republic, Portugal, Italy
    H&M International Expansion

    Year Markets
    2004 Canada, Slovenia
    2005 Ireland, Hungary
    2006 Franchisee (Dubai & Kuwait)
    2007 Hong Kong, China
    2008 Japan, countries of Middle East
    2010 South Korea
    2011 Singapore
    2012 Malaysia, Thailand, Mexico
    2013 Indonesia, Chile, Estonia, Lithuania, Serbia
    2014 Philippines, Australia
    H&M, Revenue and Net Profit, 2009-2013

    Data is given in Million SEK

    2009 2010 2011 2012 2013

    Revenue 118 697 126 966 128 810 140 948 150 090

    Net Profit 16 384 16 798 15 703 15 454 17 136


    H&M, Revenue and Net Profit, 2009-2013
    160000

    140000

    120000

    100000

    80000 Revenue
    Profit
    60000

    40000

    20000

    0
    2009 2010 2011 2012 2013

    Data is given in Million SEK


    H&M: Organization of Supply Chain
    The company has well integrated Supply Chain consisting of
    the following processes:

    1. Design
    2. Production
    3. Distribution

    The complete cycle takes 21 days.


    H&M, Design

     The collection is designed centrally by the purchasing design


    department
     Trying to find the balance between viable and latest designs
     Inspiration of designs came from the trends
     The collection in collaboration with renowed designer
     Analysis of styles and designs of previous year
    H&M, Production
     Production is outsourced because H&M does not own the
    factories or manufacturing units
     60% of the items are produced in Asia
     European suppliers are for fashion sensitive clothes
     The suppliers are selected on efficiency and working
    conditions
     Flexible purchasing
     Economy of scale
    H&M, Distribution

     Cost-effective mode of transportation (ships, trains)


     Central and local distribution centers
     Stores restocking every day
     Best available location for stores
     Huge number of stores around the world
    Comparison between Supply Chains of ZARA and H&M

    ZARA H&M
     Vertically integrated  Dual Supply Chain
    Supply Chain
     Inspiration comes mainly  Inspiration comes from
    from the stores trends and designers
     Own production capacities  The production is
    but outsourced sewing outsourced fully to suppliers
     Production mainly in Spain  Fast fashioned clothes are
    and Portugal produced in Europe
    Comparison between Supply Chains of ZARA and H&M

    ZARA H&M
     Own railway track and the  The cheapest types of the
    fastest types of the transport transport (ships, trains)
    (trucks, planes)  Centralized and local
     Centralized distribution distribution
     The prime location of the  The best available locations
    stores
    Comparison between Supply Chains of ZARA and H&M

    ZARA, 2013 H&M, 2013

     Markets - 87  Markets - 53
     Stores - more than 6 000  Stores - more than 3 000
     Employees- more 128 000  Employees- more 116 000
     Revenue – 16 274 Mln. Euro  Revenue – 15 790 Mln. Euro
     Net Profit – 2 382 Mln. euro  Net Profit – 1 803 Mln. euro
    ZARA’s Supply Chain
    H&M’s Supply Chain
    Strengths of H&M Supply Chain
    Management
    1. The entire operations (from the designing to the store
    management) are conducted via a common IT platform.
    Procurement analyzes the sales by item, country, store.
    2. Two Manufacturing Supply Chains (“cost optimizing” from Asia
    and “rapid reaction” from Europe) bring price and quantity
    advantage.
    3. A range of stylish apparel for each customer group.
    4. The big distribution net including more than 1 500 stores
    worldwide owned by the company.
    5. Collaboration with well-known designers and its own strong
    design team. Outstanding advertisement campaign.
    Future Development

     New markets: India, South Africa


     Expansion in the presenting markets: new 375 shops in 2015
     Promoting the new brands
     4 new online stores in 2014
     Operations in sustainable way
    References
    1. Indu P., Supply Chain Practices of three european apparel companies: ZARA, H&M
    and Benetton, IBS Center for Management Research, 2008.
    2. Indu P., H&M Supply Chain Management Practices, ICFAI Center for Management
    Research, 2008.
    3. H&M Annual report 2013,
    http://about.hm.com/content/dam/hm/about/documents/en/Annual%20Report
    /Annual-Report-2013_en.pdf
    4. Zara Annual report 2013,
    http://www.inditex.com/documents/10279/18789/Inditex_Group_Annual_Repor
    t_2013.pdf/88b623b8-b6b0-4d38-b45e-45822932ff72
    5. Bloomberg, H&M November Sales Beat Estimates on Online-Retail Growth,
    http://www.bloomberg.com/news/2014-12-15/h-m-november-sales-beat-
    estimates-helping-quarterly-jump.html
    6. Bloomberg, H&M’s Accelerating Sales Growth Eases Mild Weather Concern,
    http://www.bloomberg.com/news/2014-11-17/h-m-revenue-growth-accelerates-
    in-october-surpassing-estimates.html
    References
    7. Economic Times, H&M's October sales up 14 per cent; beats forecasts,
    http://economictimes.indiatimes.com/news/international/business/hms-
    october-sales-up-14-per-cent-beats-forecasts/articleshow/45174922.cms,
    8. H&M Annual report 2012,
    http://about.hm.com/content/dam/hm/about/documents/en/Annual%20R
    eport/Annual-Report-2012_en.pdf
    9. Official website of H&M, www.hm.com
    10. Deutsche Welle, Ethiopia - next stop for textile industry?,
    http://www.dw.de/ethiopia-next-stop-for-textile-industry/a-17043826

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