Submitted by :

Nur Nahar Lima

ID :2017-1-10-247
MKT 418

SUPPLY CHAIN
MANAGEMENT
Submitted to: Md. Anamul Hoque,
Assistant Professor,
Department of Business Administration.
SECTION 1

An integrated system that synchronizes a series of interrelated business processes in order to create
demand for products, transform these raw materials and parts into finished products, acquire raw
materials and parts, distribute and promote these products to either retailers or customers, facilitate
information exchange among various business entities (e.g., suppliers, manufacturers, distributors,
third-party logistics providers, and retailers) is known as a supply chain. Its main objective is to
enhance the operational efficiency, profitability, and competitive position of a firm and its supply
chain partners. More concisely, supply chain management is defined as “the integration of key
business processes from end-users through original suppliers that provide products, services, and
information and add value for customers and other stakeholder.

Before the 1950s, logistics was thought of in military terms, it had to do with procurement,
maintenance, and transportation of military facilities, materials, and personnel. In the 1960s and
1970s the study and practice of physical in distribution and logistics emerged. The logistics era
prior to 1950 has been characterized as the “dormant years,” when logistics was not considered a
strategic function. When physical distribution management in manufacturing firms was recognizes
as a separate organizational function the importance of logistics increased considerably, Around
1950s changes occurred that could be classified as a first “Transformation. The supply chain must
have been viewed as a single entity and that strategic decision-making at the top level was needed
to manage the chain in their original formulation. This perspective is shared with logisticians as
well as channel theorists in marketing. In the early 1980s SCM has become one of the most popular
concepts within management in general since its introduction. The evolution of SCM continued
into the 1990s due to the intense global competition. To integrate the company’s intricate network
of business relationships Business management has entered the era of inter-network competition
and the ultimate success of a single business will depend on management’s ability.

Since last couple of decades, environmental issues have been increasing and traveling faster than
forest fire, country to region, region to world level territory, which is a serious cause of climate
change and global warming. So researchers applied Green supply chain which are integrating
ecofriendly concept into supply chain management to improve environmental sustainability with
different green practices including, green purchasing, green distribution and warehousing, green
transportation with usage of biofuels, green manufacturing processes and the products’ end-of-life
management The term sustainable or green supply chain refers to the idea of integrating
sustainable environmental processes into the traditional supply chain. Instead of mitigating
harmful impact of business and supply chain operations, green supply chain involves value
addition through the operations of whole chain. Undeniably, reducing air, water and waste
pollution is the main goal of green supply chain.

another worldwide survey of financial executives conducted by FM Global and Harris Interactive
indicates that supply chain disruptions are the biggest threat to a firm’s revenue drivers
.Considering the enormous impact of supply chain disruptions on a firm’s financial status, today’s
firms are increasingly pressured to manage their supply chain right. Thus, supply chain
management has become the forefront of the firms’ competitive strategy. The discipline of supply
chain management, however, is still undergoing an evolutionary process.

Table summarizes the changes in the philosophy, focus, and performance metrics of supply chain
management, from the earlier stages to the current era.

Table: The Evolution of Supply Chain Management Disciplines

Evolution Time Period Philosophy Key Driver Key Performance

Stage Metric

I Early 1980s Product driven Quality  Inventory turns

 Production cost

II Late 1980s Volume Cost  Throughput

 Production capacity
driven

III Early 1990s Market driven Product  Market share

 Order fill rate
availability

IV Late 1990s Customer Lead time  Customer

satisfaction
driven  Value added
 Response time

V Early twenty- Knowledge Information  Real-time

communication
first century driven  Business
intelligence
Hannes & Mauritz AB (H&M) is a Swedish multinational clothing-retail company known for
its fast-fashion clothing for men, women, teenagers and children. H&M operates in 74 countries
with over 5,000 stores under the various company brands, with 126,000 full-time equivalent
positions. It is the second-largest global clothing retailer, Founded by Erling Persson and run by
his son Stefan Persson and Helena Helmersson, the company makes its online shopping available
in 33 countries.

Competitive analysis is a strategy in which we can identify major competitors and study their
products sales and marketing strategies. By doing this we can create solid business strategy that
can improve the competitors competitive analysis is a key part of a company’s marketing plan.

H&M has become one of the leading fast fashion companies using its supply chain and technology
as core competitive advantages.

H&M’s business model consists of creating value for customers by offering fashion and quality at
the best price.it also focused on researching and predicting customer trends with a partly flexible
operating system. But, even if each company has its own focus, they all focus on customer
preferences as a core competitive advantage. H&M strives to provide varied range of merchandise
that incentivizes customers to both browse and shop passionately.

H&M's supply chain procedures are globally recognized for being a successful and expansive retail
giant in terms of market and financial prosperity, H&M's Supply chain strategy is a continuous
search for promising markets, cost-efficiency in production of goods, and reduction in lead times
for their retail inventory. Their supply chain is centralized. Focused in highly innovative
infrastructure, purchasing flexibility, and turn around speed at 20 days.
SECTION 2

H&M offers products for women, men, teenagers and children. Products include sportswear,
underwear, shoes, accessories, cosmetics, home textiles and decorations. The company sells
through retailers and through its online site Hm.com.

H&M pursues the strategy focused on the long term view in which combined with the distinctive
business model ‘high fashion with low prices’ provides the company with a sustained position in
the apparel market. With focused on the economics of scale with low wage and high volume in
production the company maintains low input costs and often has the latest trends in its stores within
the month of the initial design. They are focusing Design, manufacturing process, logistic support,
and technology to achieving their strategic fit.

Design: A mix of traditional and trendy collections

H&M has a group of approximately 160 in-house designers and 100 pattern makers that decide on
the collections. The company offers two main collections each year, one in spring and one in fall.
H&M has two design processes: long term planning of collections and real-time design driven by
customer trends in the market. The real-time design allows H&M to respond to the market in a
faster way and be more flexible in the eyes of the customer.

Manufacturing: Independent suppliers, but strong relationships

H&M doesn’t own factories. Its products are produced by 850 independent suppliers, mainly in
Asia and Europe. Usually products with longer lead times are produced in Asia and products with
shorter lead times are produced in Europe. H&M has production offices in strategic locations close
to suppliers.

Production offices have several functions:

 They are the liaison between the designers and the suppliers. They work with information
from both to choose the suppliers that are more convenient and efficient for a specific
product.
 Act as auditors and perform extensive safety and quality testing to ensure requirements of
the company are being met.
 Create a closer relationship with suppliers and help them improve working conditions and
standards. This allows the company to work with suppliers to reduce lead times.
Logistics: Managing inventory out of the stores

Most of the manufactured products from the factories go directly to the logistics centers and from
there are distributed to the stores closer to the area. Stores don´t have back up stocks, but inventory
is held in regional replenishment centers from where it is distributed to stores.

Technology: Integrating the system, from product design to sales

the company relies on a very well developed IT system that integrates the headquarters,
administrative offices, production offices and stores due to the complexity of the supply chain,
This allows for real time communication.

 Through IT, the company has information about the fabrics that each supplier has and can
make informed decisions as to where to place a specific order.
 There is a central inventory management software. Each store is connected to corporate
logistics and H&M warehouses which makes the process of ordering and restocking stores
more efficient.
 The head office can monitor the trends from sales in each store and use this information
for design and production choices oriented to the customer.

Figure: H&M Supply Chain Structure.

Operating in the fashion industry is a risk in itself. Fashion has a limited shelf-life and there is
always a risk that some part of the collections will not be sufficiently commercial. H&M group
may face risks and uncertainty that are related to the shift in the industry, fashion, weather
conditions, macroeconomics and geopolitical events, sustainability issues, foreign
currencies, taxes and various regulations. H&M group’s faces operational and financial risks.

Corona virus outbreaks results in rapid changes in the business environment and in economic
downturn, which changed consumer purchasing behavior and thus negatively impact the group’s
sales. Social instability in production and sourcing markets and changed consumption patterns and
customer attitudes ultimately have major effects on the H&M group’s sales – both positive and
negative.

SECTION 3

Supply chain is the way of increasing efficiency, better transparency and happier customers. The
Internet has brought new opportunities for the Supply Chain field. Companies have to adapt their
Supply Chain to the Internet and to connect through Web technologies with their business partners
to create Supply Chain networks.

Covid-19 is speeding up the digital shift in the H&M industry as more and more shopping takes
place online. To meet customers’ expectations of a convenient, inspiring experience enabled by
interacting channels, the company’s E-SCM is really effective matter. H&M is reaching customers
around the world - through online, stores, digital marketplaces and external platforms. They
accelerate their digital development and integrate their digital and physical channels to create a
smooth and inspiring experience for the customers wherever they want to meet them. H&M only
started selling online in 2010. It seems that the retailer was slow to see the opportunity that e-
commerce presented, or else thought that its store network was enough to see off online
competition. To be competitive online, H&M needs to match and even beat its rivals for user
experience. Mobile is especially important, as H&M’s target market of under 25s are heavy mobile
users. H&M’s mobile site is usable, but there are a few areas for improvement. For example, the
navigation is sometimes confusing. Recently, it looks as though H&M has made some positive
changes to their mobile site, including more links on home pages and delivery FAQs. So H&M
really needs to ensure its web-based technologies and effective management of the supply chain
for its target audience.
Facts and figures of H&M for maintaining an effective supply chain management

 Net sales SEK 233 billion in 2019

 52 markets with online shopping (Oct 2020)
 Around 5,000 stores in 74 markets
 In the H&M group, 71% of the employees in positions of responsibility were women
in 2019
 In 2019, our customers handed in 29,005 tons of old textiles to our program for reuse
or recycling
 Supplier factories representing 85% of our total production volume have
democratically elected worker representation
 96% renewable electricity in our own operations in 2019

H&M is driven by a desire to make great design available to everyone in a sustainable way.
They are focusing to support positive transformation in the fashion industry — driving
innovation, collaborating with others, pushing for greater transparency and rewarding
sustainable actions. In addition to maintaining green supply change management, they
priorities for getting there are increased energy efficiency, renewable energy and carbon sinks
that can absorb unavoidable greenhouse gas emissions.

REFERENCES:

 https://hmgroup.com/about-us/h-m-group-at-a-glance.html
 https://www.ukessays.com/essays/international-business/global-logistics-supply-
chain-management-of-hm.php
 https://digital.hbs.edu/platform-rctom/submission/hm-how-fast-fashion-translates-
into-low-prices-and-success/
 https://en.wikipedia.org/wiki/H%26M