Friday, August 8, 2008

Supply Chain Practices of Three European Apparel Companies: Zara, H&M and Benetton

Hennes & Mauritz
· Sweden based – founded by Erling Persson
· Though compared to its competitor Zara, H&M took more time to deliver the clothes, the extra time gave the company a cost advantage and clothes were 30-50% cheaper compared to those at Zara.
· Stocks are replenished every day and no item was allowed in shelf for more than a month.
· Clothes were designed by H&M and mfg by 600 suppliers located in 22 countries across the world to be shipped to more than 1300 stores spread in 25 countries across the world.
· All of H&M’s collection are planned and designed centrally by the company’s purchase and design department. The department had over 100 in house designers and cooperation from around 100 buyers and 50 pattern designers.
· The design was based by balancing three parameters namely fashion, quality and price.
· Every year H&M brought out two main collections, one during the spring and one during the autumn season. Within each season, several sub-collections are released.
· H&M also brought out collections in collaboration with renowned designers of the world
· H&M did now own any factories or manufacturing units, and clothes were procured from more than 700 independent suppliers.
· The main responsibilities of production office included identifying new suppliers, placing orders with the right suppliers, negotiating price, ensuring suppliers maintained quality, minimizing transport time etc.
· H&M essentially operated through two supply chains in order to optimize time and cost. The first chain took care of the cost component and the manufacturing was done mainly in Asian countires. The second one termed ‘rapid reaction’ was used for fashion sensitive garments, and was based in Europe.

· The production was sent to warehouses which act as transit terminal.
· The merchandise is delivered to store in daily shipments.
· The goods from the Asian countries were shipped by sea in order to minimize costs. When the orders from a particular store were large, the shipment was sent directly to stores. If the garments were in demand only in a particular country, then they were sent directly to the distribution centre in that country.
· All the H&M stores were managed by the company and operated in the best available locations.

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