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H&M SUPPLY CHAIN ANALYSIS
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Contents
FROM IDEA TO STORE: THE DESIGN PROCESS .............................................................................
FROM IDEA TO STORE: PLANNING AND BUYING .........................................................................
FROM IDEA TO STORE: PRODUCTION PROCESS ..........................................................................
FROM IDEA TO STORE: LOGISTICS LOGISTICS AND DISTRIBUTION DISTRIBUTION ................ ........ ................ ................ ................ ................ ................ ................ ........ Efficien Efficientt flows ............................................ ..................................................................... ............................................... ............................................. .......................
Green Green transpor transports ts ............................................ ...................................................................... ................................................ ......................................... ...................
SUPPLY SUPPLY CHAIN ANA ANALYS LYSIS IS ............................................. ...................................................................... ............................................... ..................................... ...............
Buyers Buyers ............................................... ........................................................................ ............................................... ............................................... ................................ .......
Merchand Merchandise isers rs ............................................... ......................................................................... ................................................ ......................................... ...................
Audit Auditors................ ors......................................... ............................................... ................................................ ................................................... ................................... ..........
Suppli Suppliers............ ers..................................... ............................................... ................................................ .................................................. ...................................... ..............
Second Second-tier -tier supplier supplierss ............................................... ........................................................................ ............................................... ................................. ...........
Factor Factory y employ employees ees ............................................. ....................................................................... ................................................ ..................................... ............... CONSCIOUS MATERIA MATERIALS LS FOR A MORE MORE SUSTAINABLE FASHION FASHION FUTURE..... ................ ........ ................. ................ .......
FASHION FASHION FOR FOR ALL .............................................. ....................................................................... ............................................... .............................................. ........................ 1)
Women Women .............................................. ....................................................................... ............................................... .............................................. ........................
2)
Men Men ............................................... ........................................................................ ................................................ ................................................ .........................
3)
Kids Kids ............................................ ...................................................................... ................................................ .............................................. ............................... .......
4)
Divide Divided d ............................................... ........................................................................ ............................................... .............................................. ........................
5)
Denim Denim ................................................ ......................................................................... ............................................... .............................................. ........................
6)
Access Accessori ories es ............................................. ....................................................................... ................................................ ......................................... ...................
7)
Cosmeti Cosmetics cs ............................................... ......................................................................... ................................................ ......................................... ...................
8)
H&M Home ............................................ ...................................................................... ................................................ ......................................... ................... Sign up to vote on this title Sport Sportswear swear ............................................. ....................................................................... ................................................ ......................................... ................... Useful Not useful
9)
H&M SUPPLY SUPPLY CHAIN STRATEGY - SUCCESSFUL SUCCESSFUL RETAIL INVENTORY CONTROL ................ ........ ................. .............. .....
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Cost reduction: ..........................................................................................................
Flexibility: ..................................................................................................................
Specialization:............................................................................................................
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INTRODUCTION
H & M Hennes & Mauritz AB (H&M) is a Swedish multinational clothing-retail comp known for its fast-fashion clothing for men, women, teenagers and children.
The clothing retailer H&M was founded in 1947, but during the last decade the company made it to the top with $20.3 billion yearly sales. Forbes now lists H&M 31 in its brand v Top 100, along with Apple and Coca-Cola. H&M was established in Västerås, Sweden in 1947 by Erling Persson.
FROM IDEA TO STORE: THE DESIGN PROCESS Fashion, quality and sustainability – are the core values of H&M’s design process.
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H&M’s design department employs 160 in-house designers and 100 pattern makers Offic well as several design assistants and print designers. Working from our Head Sign up to vote on this title Stockholm, they create H&M’s wide -ranging and varied collections.
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The team is large and diverse, representing different age groups and nationalities that
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FROM IDEA TO STORE: PLANNING AND BUYING The right mix of modern basics, current fashion and the very latest trends.
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Unlock full access with a free trial. which means that each store H&M always has the best customer offering in every market, to stock the right pieces – a varied range that inspires customers to both browse and sh Download With Free Trial Each of their concept teams consists of designers, buyers, assistants, pattern makers, a se manager and a controller, who are together responsible for producing just the right m garments, accessories and other products. Team members are all knowledgeable wh comes to fashion and trends, and keep up to date with H&M customers and their interests
Flexible assortment planning ensures that each store’s selection feels updated, on trend relevant to its customers every day of the year. Different factors determine the composition of merchandise. Figures for past seasons are combined with analysis o Sign up to vote on this title coming trends, colours and fits.
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Demographics and geography also influence the distribution of products: high-fa garments produced in limited quantities are sold mainly in big cities while basics are ord
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FROM IDEA TO STORE: PRODUCTION PROCESS
H&M doesn’t own any factories, instead we work with around 820 independent supplie who are close, long-term partners.
They work with long-term partners and invest significant resources in our sustainability in the supply chain.
H&M does not own any factories; their products are sourced from independent supp mainly in Europe and Asia. These suppliers manufacture our products and generally so fabrics and other components needed.
Customers must feel confident that everything they buy at H&M is designed, produced distributed with the greatest consideration for people and the environment. They work cl with our long-term partners and invest significant resources in our sustainability work i supply chain. They contribute to over a million jobs in the sourcing countries – where we work actively to promote lasting improvement of working conditions and environm impacts.
The H&M production offices located in our sourcing markets are the main point of co for the local suppliers, handling timing and practical aspects of all orders.
You're Reading a Preview H&M has a team of around 80 people who audit working conditions at supplier fact against our Sustainability Commitment. The production offices also perform exte Unlock full access with a free trial. safety and quality testing as well as ensuring chemical requirements are met. Download With Free Trial
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FROM IDEA TO STORE: LOGISTICS AND DISTRIBUTIO
Efficient logistics and greener transport make sure the latest trends and the right basic always available in stores – at the best price and with minimum impact on the environm
Efficient flows
You're a Preview H&M is both importer and retailer, and Reading they make careful choices regarding every tran link in the supply chain from factory to full store. Unlock access with a free trial.
Efficient flows and cost-consciousness at every stage are crucial to our success. These fa Download With Free Trial ensure that the right goods end up in the right quantity for each store – and at the best for customers.
The greater part of shipments from the suppliers’ factories goes di rectly to logistic centr their markets, which support stores in their geographic vicinity independently of nat borders. Further, stores do not have back up stocks, but are replenished as required fro distribution centres.
Around 90 percent of all transports are by rail or sea. Sign up to vote on this title
Green transports
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SUPPLY CHAIN ANALYSIS
The approach is to use their influence wherever possible to promote good practice and awareness, not only among our suppliers and their employees as well as others along value chain. They believe that working together in partnership is the best way we can ma positive difference.
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Buyers
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Their buying office is based in Stockholm, Sweden. Here, the designers, pattern makers Download With Free Trial buyers, together with merchandisers in the production offices, create, plan and purchas collections.
Merchandisers
Based in one of the 21 production offices in Asia and Europe, merchandisers are the between H&M’s buying office and our suppliers. They identify which suppliers to orders with. Sign up to vote on this title
Auditors
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Also based in the production offices, the sustainability teams consisting of more than
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Suppliers
All their first-tier suppliers sign their Sustainability Commitment before producing for H and then monitor their compliance with it. The aim for the suppliers is to increasingly ownership for ensuring good working conditions and environmental performance. Sinc launch of our Sustainability Commitment they work even more with promoting owne amongst the suppliers, encouraging them to take responsibility of their own sustaina work.
H & M supports them in a number of ways, including the provision of training and cap building. They also help them to develop and improve management systems that wil non-compliance on an ongoing basis. The primary focus is on our strategic suppliers, w are their best suppliers in terms of sustainability.
A supplier may own different factories. In some cases, suppliers may also subcontract factories for certain tasks. All factories in which production for H&M takes place, no m if directly contracted or subcontracted must comply with our Sustainability Commit before entering a business relationship with H&M.
Second-tier suppliers
These are the suppliers of H & M’s suppliers. They might include fabric or manufacturers for example. In general, H&M has no direct relations with these compa You're Reading a Preview Accordingly, they have less direct influence. However, since 2015, they've integrated sec full access with50% a free of trial. tier supplier factories involved in Unlock making at least our products into our sustaina assessment. They aim for 60% by 2016. They also work in various ways to contribu improvements at this and other stages upstream in Free our value Download With Trial chain.
Factory employees
Their supplier factories employ about 1.6 million people. They think that factory emplo should know their rights and be able to claim them. As a buyer, they have a responsibility an opportunity to contribute to better workplace conditions and to work to raise awarene rights at work among both factory employees and managers. Sign up to vote on this title
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CONSCIOUS MATERIALS FOR A MORE SUSTAINABLE FASHION FUTURE
H & M wants to make conscious choices in fashion desirable and easily accessible fo many people as possible. The right choice should be an easy and attractive one. Piec piece this will reduce the impacts that fashion has on the planet.
Cotton is the raw material we use the most. H & M’s aim is for all cotton in our rang come from more sustainable sources by 2020.
A better fashion future is closer than you think. One reason for that is our ongoing suppo new materials and clothes-making techniques. They have made it easy for us to find the conscious fashion in H & M stores – all Conscious garments have the green hang tag.
Cotton Recycled wool Organic leather Organic linen Organic hemp You're Reading a Preview Organic silk FSC Natural rubber Unlock full access with a free trial. Recycled polyester & polyamide Recycled plastic Download With Free Trial Lyocell Denimite Recycled glass
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FASHION FOR ALL
H&M caters for the hottest trends to the very best in basics. H&M’s design team cr sustainable fashion for all, always at the best price.
1) Women
H&M’s fashion for women is the largest of the collections. It comprises everything from latest must-haves to updated fashion classics. From casual daywear to amazing party dre via relaxed leisure separates, high performance sportswear and contemporary mate apparel – it’s all here.
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2) Men Men looking to create contemporary, flexible wardrobes should always find what they at H&M. The collection offers smart suits and shirts for work and festive occasions, everyday favourites, sports clothing, shoes and accessories. The collection includes the trends, tailored classics and comfortable leisurewear. Sign up to vote on this title
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3) Kids
H&M Kids offers children everything from supercool jeans to pretty dresses, in sizes baby to 14 years. H&M children’s clothing should be fashionable and comfortable always carefully tested to ensure it meets strict requirements for quality, function, safety sustainability. Kids’ fashions must be soft on the skin, yet designed to withstand lively and rigorous washing.
``
4) Divided
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Fashion-conscious young men and women flock to H&M for up-to-the minute, funct clothing and accessories at Divided, covering theFree spectrum Download With Trial from relaxed basics with s influences to eye-catching party outfits that will please fashionistas of every age.
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5) Denim
Denim is everywhere on the fashion scene and is always part of the H&M fashion pic Both denim trends and ever-popular classics are available in a variety of colours, design washes, along with updated shirts, jackets, dresses, skirts and shorts – all in denim.
6) Accessories
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full access with a free trial. H&M offers diverse fashion toUnlock express individual and personal style. Customers complete their fashion look with perfectly matched accessories – from scarves, belts, hats Download With Free Trial jewellery to fashion footwear and bags for women, men, teenagers and children.
7) Cosmetics
Make-up and skincare are often essential in expressing one’s personal style, and H provides everything required for the season’s new looks. H&M’s cosmetics are never t on animals, and all of H&M’s products fulfil at least the minimum requirements stipulate the laws and regulations in H&M’s sales markets. Sign up to vote on this title
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8) H&M Home
H&M Home provides fashion for every room in the house. The collection offers towels linen, curtains and other home textiles in trendy colours and prints, as well as home d items in glass, metal and wood.
9) Sportswear
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At the beginning of 2014, H&M launched new, and extended sports co Unlock full accessawith a freeupdated trial. available for women, men and children. It will be a broad range of sportswear and access in specially developed functional materials. Download With Free Trial
H&M is also proud to be dressing the Swedish teams for the Winter Olympics Paralympics in Sochi 2014, and the Summer Olympics and Paralympics in Rio de Ja 2016. The athletes will also be giving their input into the new expanded sports collec which means customers get the possibility to buy clothes and accessories tried and teste world-class athletes, at affordable prices. Sign up to vote on this title
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H&M SUPPLY CHAIN STRATEGY - SUCCESSFUL RETAI INVENTORY CONTROL
Fashion isn't just all about dressing up and H&M's supply chain procedures are a testame that. Globally recognised for being a successful and expansive retail giant in term market and financial prosperity , H&M's supply chain strategy is a continuous search promising markets, cost-efficiency in production of goods, and reduction in lead time their retail inventory.
H&M, which ranks number three on Gartner's Supply Chain Top 15 , is the wo second-largest clothing retailer . This is certainly no easy feat for a company that has stores in 19 countries, and raked in a whopping turnover of 14.6 billion Euros in 2013. such staggering figures, one can only wonder how the retail giant manages to success stay afloat and ensure adequate stock control for its fleet of stores.
The organisation's reliance on efficient and integrated systems for retail inve management in the major components of its supply chain has played a huge part in ena success in its stock control management and a well -earned placing in the Gartner list.
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Design & Production
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"The design team is very important to us and all our designers are very well-educat says Bosch.
What comprises of this fashionable A-team you ask? Well, its designers come from all the globe; From Holland, South Africa to Japan. The entire team works from H&M's d center in Stockholm, popularly known as the "white room". It does not stop there how The team works closely with a mind-boggling number of services to produce its rang apparel - 60 pattern makers, 700 suppliers and 20 worldwide production centers exact.
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Download With Free Trial Indeed, the production rate of H&M's retail inventory is elevated by its heavy dependenc outsourcing from design to production. Although H&M’s core operation relies on designers, creative directors, and pattern makers to stay on top of the latest trends, it also the services of fashion trend forecast companies such as Worth Global Styles Netw (WGSN). As a fast-moving retailer, it takes on an innovative direction in determi consumer interests through both traditional analysis and experimental augmented-r technologies. Sign up to vote on this title
With customer-driven reports of future trends in hand, H&M that str useful Usefulcreates Notcollections good balance between latest trends and the basics. Street fashion, haute couture, trends the '50s and clean lines from the '60s are examples of a few recent avenues of inspiratio
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Manufacturing
H&M manufactures 80% of its retail inventory in advance and introduces remaining 20% based on the most current market trends . The retail giant's ability to affordably priced apparel is largely due to its strong supplier relationships and manufacturing strategies to reduce lead times .
The most admirable characteristic of H&M is its ability to collaborate efficiently wit partners. Not having any factories of its own, it utilises over 700 partner companies in than 20 countries , relying on a network of external suppliers to manage its buying production. H&M purchases garments from around 750 suppliers, with 60% of produ taking place in Asia and the remainder mainly in Europe .
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H&M fosters close and effective engagement with its partners by strategically locatin production oversight offices as a mediating function and to enable easier contact wit partner companies on the latest fashion trends and the internal matters of the company helps to ensure the goods are produced at the accurate quality and price and tha suppliers abide to the company's code of conduct. These production offices play a signif role in checking and testing sample garments. Sign up to vote on this title
Technological Integration
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H&M'S SECRET TO CHEAP, AFFORADABLE AND FASHIONABLE CLOTHING: OUTSOURCING
H&M opened its first store in Vasteras, Sweden in the year 1947. Today H&M expanded to over 3300 stores in 54 countries and has a pool of over 116,000 employ H&M offers clothes, accessories to women, men, teenagers and children. This is m possible by a design and purchasing department which manufactures all the clothes. clothes and accessories arrive to the stores every day and H&M is capable of mo apparels from design to hanger in mere 20 days.
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Map showing H&M's globalWith presence Download Free Trial
Buying and Production:
H&M does not own any of their factories ; it outsources all its production. Despite H&M maintains good control over their outsourced production phases. H&M ha garm production offices in Asia, Europe Africa and Central America. purchases Sign up to vote H&M on this title from over 800 suppliers and 60% of production takes Useful place in Asia and the remaind Not useful Europe. H&M has 22 productio n offices in Asia, Europe Africa and Central America.
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H&M Case Study
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Zara, H&M and Benneton Supply
Competitive Analysis for ZARA
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has a well-established and efficient distribution channel and relies heavily on its IT syste work efficiently.
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Clothing Industry Supply chain
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Green supply chain:
Logistics is challenging for every fashion industry and H&M places a big emphasis o green transportation. Goods sent from producers in Asia are transported almost exclus by ocean. Within Europe, H&M strives to increase the share of movements by rail over More than 90 percent of all transports are done via ocean, rail or road. Air is used on exceptional cases when faster deliveries are required. Sign up to vote on this title
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Zara, H&M and Benneton Supply
Competitive Analysis for ZARA
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Drivers for Outsourcing:
Cost reduction: The Company is saving money on initial start-up costs of p
equipment and building. H&M enjoys advantage of labor arbitrage and cheap materials. Flexibility: Since the fashion industry is ever changing, the company can mo production patterns which will result in higher profit margins. Clothes that are higher demand can be re-ordered whereas those that have lesser demand can lower re-orders. Specialization: Through outsourcing activities H&M can focus more time effort on designing as this is their core competency.
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