Supply chain management strategy
Assignment Instructions:
Contrast the approaches taken by H&M, Benetton and Zara in managing their supply chains. Consider the following focus points:
1. How do they differ in terms of their approach to design stage of the supply chain?
2. How do they differ in terms of the manufacturing stage of the supply chain?
3. How do they differ in terms of the distribution stage of the supply chain?
4. How do they differ in terms of the retail stage of the supply chain?
5. For each brand, Identify and explain a SCM strategy or trend utilized in its supply chain.
6.In your opinion, which of the three companies have the best SCM and why?
Working individually, analyze the “supplying Fast Fashion” case study and present your analysis in a report. Your work will be assessed according
to the linked rubrics on blackboard. You are encouraged to use online sources to support your analysis/recommendation. Make sure to properly
reference those sources in your report. The report should address all the questions raised in the case study. Please use appropriate headings and
subheadings where necessary. The report should consist of the following sections:
Title page
Executive Summary
Introduction
Discussion
Recommendations
References (if any)
Solution
Introduction
H &M, Benetton and Zara fashion companies are some of the world best selling garment
firms in the world. These companies have existed for a significant period which has contributed
to their rate of success currently. H &M was established in 1947 in Sweden and has grown from
then they currently have over 1000 stores in over 20 countries globally. The biggest market for H
&M is Germany where most of their products are largely bought. Benetton began almost 50
years ago by the production of brightly colored sweaters that immediately became a fashion hit
in the fashion industry.
Through this Luciano, Benetton developed the Benetton group firm which by 2005 had
developed in over 120 countries worldwide. Zara company opened in 1975 by Amancio Ortega
Gaona, the company began as a solution for canceled orders. The company has now over 1300
stores in 39 countries, the companies have been successful over the years, in 2003 the company
had become the worlds fastest growing garment retailer. All these companies have had total sales
of over one billion which keeps them on top of the fashion industry.
Discussion
Design
Design is an important aspect in the production of garments in the fashion industry. The
three companies have placed different strategies on their design mechanisms that have enabled
them to make great sales on their garments. H &M works with a lot of diverse designers who
have established themselves in the industry as one of the best designers this helps the firm come
up with quality designs that are affordable. According to Oliveira, (2014), Zara uses three
different mechanisms to come up with the necessary design inputs, the designers, the marketing
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specialist and the buyers who place orders on the suppliers.
The design stage at Zara is still split into two areas which include the women, men and
the children's clothing lines. Benetton has over 300 designers who research on new materials for
the designs. Benetton relies on this designers to come up with quality designs that will help them
gain more market for their products, the designs are custom made for the preference of each
country which makes it even better for the Benetton designs.
Manufacturing
This is the basic production of the products produced by the company, Benetton focused
more of its production on its Italian plants but currently, more of its production is carried out
outside Italy due to the availability of cheap labor yet the operations in all of the firm's plants are
carried out in similar manners. Bennetton performs most of its manufacturing operations
especially the expensive operations since it helps them save up on cost.
Accoriding Shen, (2014), H &M mostly takes place in Europe and Asia. The company
does not own any factories they rely on over 750 suppliers. However, the company has over 21
production offices that are used to coordinate the supplies from the suppliers. In this case, the
relationship between the production office and the suppliers is vital since they need to work
together to have a production of garments in time.
Zara company owns its own manufacturing companies and through this, they are able to
make various designs. The company relies on capital intensive methods of production that helps
them save cost. Zara has its own subsidiary where it gets 40% of its fabric which is undyed.
Distribution
According to Shen, (2014), H &M stock management is handled internally and the
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physical distribution is subcontracted. The goods are routed from production to the retail country
where they are inspected after production and distributed to the different H &M stores in the
country. Benetton and Zara have adopted almost the same technique in distribution, this is by
building warehouses close to their main production centers to make it easier to move their
products from production to storage after they have been inspected in the warehouse they can be
released for distribution to their stores in the country.
Retail
Benetto has done several changes to its retail stores over the years to suit the increasing
need for Benetton designs among the consumers. Benetton increased the size of their shops in
major cities and started running the shops themselves which reduce operational cost. Zara
company has unique characteristics with its retails distribution of its products, in Zara stores,
garments rarely stay for more than 2 weeks.
This is because Zara does not repeat designs and produces their garments in small
production, this leaves the consumers with limited time to get their goods in stores and
consumers will constantly check on new productions before they are removed from the stores. H
&M stores solely own all their retail stores, this makes it easy for consumers to find their choice
of garments from the stores and to this effect, they also have some of the largest stores (Michael,
& McCathie, 2010).
Supply chain management strategy
The main goal of supply chain management is to achieve efficient fulfillment of demand,
facilitate financial success, build network resiliency, and enhance organizational responsiveness.
H &M has developed its SCM which is strategic in that they are able to operate through all the
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four stages of the supply chain that enables them to operate more efficiently. Zara company does
not let most of their designs waste on their stores, and they keep renewing their designs in the
market to keep the consumers interested in the new trends they have. Zaras SCM is more tactical
in its operations. Benneton has created the best manufacturing strategy to help it reduce on the
cost of production, the company uses operational strategy to operate on low cost in order to
reduce the operational cost (Cecere, 2014).
Recommendations
Fashion industry requires one to use and have the best SCM strategy inorder to grow in
the industry and be successful. The best strategy is the tactical strategy where Zara company
does not produce a lot of garments in their factories which can lead to some products wasting
away. They instead produce few designs that are of high quality and leaves the consumers
scrambling to get the best of their designs. Although the tactical strategy is the best, other
strategies from Benetton and H &M can also be adopted in organizations since they assist the
firm in saving on cost. Fashion companies should adopt and strengthen the four key factors of
SCM in their organization to help them achieve their full success in the industry (Steenkamp,
2017).
References
Cecere, L, (2014, September 22). Seven Characteristics of Supply Chains to Admire. Retrieved
from https://www.forbes.com/sites/loracecere/2014/09/21/seven-characteristics-of-
supply-chains-to-admire/#65bba27877ad
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Michael, K., &McCathie, L, (2010, July). The pros and cons of RFID in supply chain
management. In Mobile Business, 2005.ICMB 2005.International Conference on (pp.
623-629). IEEE.
https://ro.uow.edu.au/cgi/viewcontent.cgi?article=1104&context=infopapers
Oliveira, C. L. B. O. D. (2014). Zara: Marketing in Fast Fashion: A case-study (Doctoral
dissertation).
https://run.unl.pt/bitstream/10362/15061/1/Oliveira_2014.pdf
Shen, B., (2014). Sustainable fashion supply chain: Lessons from H&M. Sustainability, 6(9),
pp.6236-6249.
https://www.mdpi.com/2071-1050/6/9/6236
Steenkamp, J.B., (2017). Customer Propositions for Global Brands.In Global Brand Strategy
(pp. 45-73). Palgrave Macmillan, London.
https://link.springer.com/chapter/10.1057/978-1-349-94994-6_3
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