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    ZARA Vs H&M

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    qaiser manzil
    Zara is a vertically integrated fashion brand owned by Inditex that relies on customer feedback. It designs, manufactures, and distributes clothing to over 1800 stores globally within 2 weeks. Though it does some outsourcing, Zara maintains control over the process. H&M is a Swedish fashion company with over 3100 stores worldwide. Unlike Zara, H&M fully outsources production to over 800 suppliers in low-cost countries, but maintains control through 20 production offices that monitor quality, timeliness and quantities. Both companies distinguish themselves through rapid response to fashion trends, with Zara integrating more of the supply chain and H&M fully outsourcing production.

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    © All Rights Reserved

    ZARA Vs H&M

    Uploaded by

    qaiser manzil
    509 views2 pages
    Zara is a vertically integrated fashion brand owned by Inditex that relies on customer feedback. It designs, manufactures, and distributes clothing to over 1800 stores globally within 2 weeks. Though it does some outsourcing, Zara maintains control over the process. H&M is a Swedish fashion company with over 3100 stores worldwide. Unlike Zara, H&M fully outsources production to over 800 suppliers in low-cost countries, but maintains control through 20 production offices that monitor quality, timeliness and quantities. Both companies distinguish themselves through rapid response to fashion trends, with Zara integrating more of the supply chain and H&M fully outsourcing production.

    Original Description:

    Assignment on Out-sourcing strategies of Zara and H&M Retailors

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    Zara is a vertically integrated fashion brand owned by Inditex that relies on customer feedback. It designs, manufactures, and distributes clothing to over 1800 stores globally within 2 weeks. Though it does some outsourcing, Zara maintains control over the process. H&M is a Swedish fashion company with over 3100 stores worldwide. Unlike Zara, H&M fully outsources production to over 800 suppliers in low-cost countries, but maintains control through 20 production offices that monitor quality, timeliness and quantities. Both companies distinguish themselves through rapid response to fashion trends, with Zara integrating more of the supply chain and H&M fully outsourcing production.

    Copyright:

    © All Rights Reserved
    509 views2 pages

    ZARA Vs H&M

    Uploaded by

    qaiser manzil
    Zara is a vertically integrated fashion brand owned by Inditex that relies on customer feedback. It designs, manufactures, and distributes clothing to over 1800 stores globally within 2 weeks. Though it does some outsourcing, Zara maintains control over the process. H&M is a Swedish fashion company with over 3100 stores worldwide. Unlike Zara, H&M fully outsources production to over 800 suppliers in low-cost countries, but maintains control through 20 production offices that monitor quality, timeliness and quantities. Both companies distinguish themselves through rapid response to fashion trends, with Zara integrating more of the supply chain and H&M fully outsourcing production.

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    © All Rights Reserved
    of 2

    ZARA

    Introduction:
    Zara is the oldest and most successful brand from Inditex group. Since 1975, Zara has
    expanded the number of stores to 1808 in 86 countries and has constantly surprised with its up-to-
    date fashion design. This fashion brand relies heavily on customers’ feedback in order to “give
    shape to the ideas, trends and tastes developing in the world”. In 2012, Zara has experienced an
    18% growth in sales and is striving for further expansion in emerging markets.

    Outsourcing Strategy:

    Zara’s Business model is characterized by a high degree of Vertical integration compared to


    other models developed by their International competitors. It covers all phases of the fashion
    process:

     Design
     Manufacture
     Logistics and
     Distribution

    Sourcing is done from all around the world (Outsourcing). Less expensive material resembling
    the high end materials are used hence provide them at lower prices. Fabric purchased is gray so
    that designs can be easily added.
    Garments, both the in-house manufactured and mainly those purchased from external
    suppliers, arrive at the hubs Zara has in Spain, from there they are dispatched to the stores
    worldwide. Clothes are dispatched twice a week, and this frequency allows a continual renewal of
    our fashion offer.
    It has a flexible structure and a strong customer focus in all its business areas. Vertical
    integration enables them to shorten turnaround times and achieve greater flexibility, reducing stock
    to a minimum and diminishing fashion risk to the greatest possible extent.

    Distinguishing Feature:

    Zara distinguishes itself by a number of clever business model building blocks that reinforce
    each other. At its heart the company is building on a vertically integrated demand and supply chain,
    while most other textile chains rely on outsourcing and cheap labour in China.
    Zara studies its customers demand in the stores and tries to instantly deliver. This allows them
    to have a particularly appealing value proposition: A collection that is in line with the very latest
    fashion.
    HENNES & MAURITZ (H&M)

    Introduction:
    The history of H&M brand begins in 1947 with one store opened in Sweden. Now the store
    network accounts for 3100 stores in 53 countries. It comprises six brands: H&M, COS, Monki,
    Weekday, Cheap Monday and & Other Stories. The business concept of H&M is to offer “fashion
    and quality at the best price”. As for the values, this fashion giant relies on teamwork, as
    fundamental driver for performance with strong believe in members’ empowerment.

    Outsourcing Strategy:
    H&M has used globalization as part of their business model to spread their company
    around the world, using outsourcing and offshoring to make their business larger and more
    profitable in the global market.

    - Outsourcing:
    H&M outsources its production activities, i.e. it does not own any production plants.
    Instead, it has around 800 selected suppliers located mainly in Asia and Europe. The suppliers
    have their own subcontractors and all the overall amount of manufacturer units adds up to 2700.
    These include particularly low-wage countries like Turkey, Bangladesh, Indonesia, India etc.

    - Offshoring

    In order to maintain some degree of control over production activities, H&M has set up
    about 20 production offices in selected countries. Production Offices help the company maintain
    an effective Information and Communication Technology (ICT) Network. They take care of the
    key issues of time, quality and quantity; they make sure that the right quantity of merchandise is
    manufactured and distributed to stores at the right time, stressing on superior quality at all times.

    Outsourcing
    Offshoring

    Distinguishing Feature:
    The distinguishing feature here for H&M is that, it does not own any of their factories, it
    outsources all its production. Despite this, H&M maintains good control over their outsourced
    production phases. H&M has 22 production offices in Asia, Europe Africa and Central America.
    H&M purchases garments from over 800 suppliers as mentioned above and 60% of production
    takes place in Asia and the remainder in Europe.

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