Supply Chain Analysis of H&M

H&M (Hennes & Mauritz AB) is a retail chain fashion Swedish multinational company. Erling Persson founded the retail chain fashion brand in 1947; the company has established a network of approximately 4801 retail chain stores in 75 markets and countries across the world. Today, we’ll discuss the supply chain analysis of H&M; it focuses on various SCM elements like procurement planning, production and manufacturing, inventory management, warehousing, automation, transportation, and distribution.

Supply Chain Analysis of H&M

Let’s discuss the main elements of the supply chain analysis of H&M are as follows;

Fashion Designing

H&M invests a significant amount of capital resources in the development of creative and artistic teams for unique fashion designs of clothes and fashion accessories. The retail chain brand has approximately over 100 designers in its creative team. They produce fashion designs for all varieties and sizes of product lines and for different seasons in various countries across the globe.

The company is highly careful and responsible about flexible planning; it allows the company to keep updating relevant to the changing market trends and patterns.  For instance, the company develops unique fashion products in small quantities and distributes them to various retail chain stores in big cities to check and analyze the market acceptance level.

H&M is heavily reliant on the proficiency of creative fashion designers located in diverse locations regions and locations like Japan, Holland, and other locations across the globe. They allow the company to keep up with the growing market trends, fashion styles, colors, and patterns.

Outsourcing Production and Manufacturing Suppliers

The most admirable trait of H&M is outsourcing the production and manufacturing operations from design to the actual physical product. The retail chain brand collaborates and coordinates with various suppliers and manufacturing partners. For instance, the company has partnered up with more than 800 production factories in over 30 countries across the globe.

H&M has divided its suppliers into the following categories;

• Silver: suppliers have a long-term relationship with the brand; H&M offers them sufficient training and development opportunities for their growth
• Platinum & Gold: they’re the preferred suppliers and they produce approximately 60% of the product; only the top suppliers with a sustainability focus develop these products
• Others: suppliers and manufacturers are in their initial stages of production with a focus on test and trial

H&M implements both lean and agile production and manufacturing strategic approaches to achieve the maximum benefits of fast fashion. Lean production offers greater flexibility and effectiveness and it has a higher customer satisfaction level. For instance, Asian suppliers implement the lean production strategy; while European suppliers implement the agile production strategic approach.

Logistics and Transportation

H&M employs various transportation and 3rdparty logistics channels like roadways, railways, waterways, and other mediums of transportation. Their role is to move products and goods from the suppliers and manufacturers to the warehouses, distribution centers, retail chain stores, and the end. However, the objective of the retail chain brand is to employ the fastest route and cheapest mode of transportation for the delivery of products and goods.

Distribution Centers

H&M has a very large network of distribution centers comprising approximately 13 in various regions and countries across the globe. Their location is in the specific region’s proximity to the retail chain stores to reduce the cost and the delivery time. However, the role of the distribution centers of the fashion brand is to manage and organize stock, import stocks, and inventory, and distribute goods to the retail chain stores.

For instance, if H&M plans to expand its retail chain operations into new regions and countries; then it doesn’t have to develop a new warehouse or distribution centers. Rather it employs the existing nearby distribution centers to launch its operations; it reduces the overall operational cost.

Inventory Management

H&M implements both centralized and decentralized inventory management systems relevant to the situation and the circumstance. The decentralized inventory management system allows the retail fashion brand to develop a better relationship with customers. However, the retail store of the brand doesn’t keep the backup of the stock; they place the request for the replenishment of goods and then deliver it to the regional replenishment centers for further. H&M implements RFID technology for the efficient processing of various inhouse inventory management operations.

Warehouses Management

H&M has a very large network of warehouses in various countries. They directly receive the finished goods from the suppliers and manufacturers. However, the retail chain brand employs ICT (information communication technology) to avoid excessive production.

Conclusion: H&M Supply Chain Analysis | H&M Supply Chain Management

After the in-depth study of the supply chain analysis of H&M; we have realized that H&M is the world’s leading retail fashion brand. If you are learning about the H&M supply chain analysis; then you should keep in mind the abovementioned SCM elements; procurement, planning, transportation, automation, inventory management, and warehouse management.