HM Supply Chain and Logistics Management Strategies

HM provision Chain and Logistics Management StrategiesIntroductionHennes Mauritz AB, abbreviated to HM, a Sweden-based international musical mode retail company, was established in 1947, serving a trade concept of offering good- select product with the dress hat toll along with making sustainability (HM, 2014a). HM is the solid ground bite largest contrive retailer. In 2013, HM has opened 356 new stores and expanded into five new trades Chile, Indonesia, Serbia, Lithuania and Estonia ( mountain pass, 2014).HM is a innovate of fast(a) fashion which inspired by the trendy catwalk fashion and modify them into affordable fashion frequently. Rather than being followers, it perceives the bid of consumer-lead (Passport, 2014). HM manages its pock with a combination of Uniqlos and ZARAs marketing strategies, which atomic number 18 using long product development cycles and building efficient make out cosmic string (Petro, 2012). This report bequeath critically evaluate t he communicate train and logistics c drop offing strategies of HM.Which markets live with been targeted and why?Demographically, HM aims to target younger age groups, especially those who aged 18 to 30 and are sensitive to the latest fashion and trend. HM fundamentally advocates for offering quality products with the unbeatable value and a high frequency of launching new products (HM, 2014a). It has divided its customers based into devil distinct groups which are practical customers and trendy customers. The former requires basic and easygoing garments while the latter seeks for fashionable and sartorial products.The number of global deal course impart expected to expand to 4.9 billion by 2030, compared to 1.8 billion in 2009, signifi weedtly contributing by Asia (Pezzini, 2012). The upsurge of the middle class in Asiatic countries are believed to be sufficient to cope up with the impetus for conception take aim (Kharas, 2010). Kharas (2010) excessively stated that t he rebound of consumer crave would depend non only on USA, but also Asian countries, especially mainland China and India. Therefore, geographically, HM not only targets at the westward atomic number 63, where generated almost 71% of revenues in 2013, but also widely targets at USA and Asia Pacific (Passport, 2014). Figure 1.1 indicated that there is material increase gross revenue in both North America and Asia Pacific.What has been Zaras approach to Supply Chain Management?HM employs 160 in-house designers who officially work unneurotic with pattern makers and print designers to create HM a wide strain of products. They strive to find the right balance among fashion, quality and best price as well as involving sustainability awareness. Although HM collection are centrally planned, it does not own any factories instead of outsourcing from 800 independent suppliers, approximately 40% in Europe and 60% in Asia (Petro, 2012). In addition, HM has set up 21 production office outsid e Sweden, 50% of them are based in Asia and 50% of them are based in Europe (Tokatli, 2008). Due to geographic and lead measure priorities, HM still persists in choosing Europe as production countries quite an than China (Goransson et al, 2007).HM develops a long-term partnership and industrial plant closely with these suppliers to ensure its product quality. These suppliers are examined and evaluated twice a yr to determine their performance and keep introduce good communication in mark to respond to changeable demand (Siegle, 2013). Moreover, HM requires all its suppliers, subcontractor and avocation partners to sign the Code of Conduct which is employ in e real aspects of the organisation. Full loyalty with the Code must be fulfilled throughout the tote up chain.HM seldom works with middlemen. It strategically works with its production offices that are closely located to its suppliers and served as the second hub of information flow. From choosing suppliers, handling pr oduction offset, reviewing sample to checking quality, HM can exploit its efficiency to be more responsive to customers demand.HM basically launches deuce seasonal collections each year, producing approximately 2000-4000 items on average (Tokatli, 2008). Sub-collections have also been offered within each season in order to continually modify its inventory. Usually, the main collection would be long-lead time items whereas the sub-collection would be mulct-lead time items (Petro, 2012). HM will produce 80% of its products in advance (Cha, 2013) and the lead time of producing the remaining 20% may vary, generally from two weeks to six months (Saini, 2007).HM also develops its production plan six to twelve months in advance, organize with the purchasing process accordingly. This planning system helps to achieve its belief in exceeding customer expectations and contributing sustainable work in the supply chain. The process from designing products to retailing takes only 20 days to get laid (Saminather, 2007).HM has developed an IT system which connected each store with embodied logistics, procurement systems and the central warehouse (Petro, 2012). This system enables the visibility of the entire process to every departments that involved. As a result, a more securable and effective counseling can be applied crossways all channels.What market intro strategies have been adopted and why? How do HM manage their marketing channels?Its involution target is to open 10%-15% new stores per year and this can be implemented by its marketing strategy that is increase like-for-like sales (Passport, 2014). In spite of reporting that HM like-for-like sales figures have been declined for five consecutive months, it still plans to open 350 new stores in 2014 (Milne, 2013). disrespect the concern that excessive store numbers could affect HMs cachet, but the rapid growth of consumer demand is exceedingly enough to championship its expansion (Passport, 2014). In fact, H M has 3511 stores across 55 countries in 2014, compared to 3132 stores across 53 countries in 2013 (HM, 2014a), accounting for 379 additional stores.HMs expansion strategy in emerging markets is through establishing wholly-owned subsidiaries in order to asseverate its direct operational control condition (HM, 2014a). All HM stores are take up by HM, therefore, franchising would not be its favourable method. Nevertheless, some excepted markets necessarily bespeak collaboration via franchising. For instant, HM reached a franchise agreement with Kuwait-based company, M.H. Alshaya to expand market in the Middle East. This partnership ensures a great success in bringing HMs spirit to a new market. enounce venture can be considered as a dominant excerption for multinational enterprise (MNE) to discover emerging markets (Zhou and Xu, 2012). HM adopted a 5149 joint venture with Mumbai-based firm Tata Group. This allows HM to let on understand the know-how of local market before access ing to foreign markets, meanwhile, the Indian governing body regulates 100% foreign direct investment (FDI) in single spot retailing, unleashing market liberalisation (Passport, 2014). These two opportunities inevitably assist HM to enter Indian market. It aims to invest 100 million for opening 50 stores in India, focusing not only in major cities such as New Delhi and Mumbai, but also early(a) cities like Ahmedabad and Jaipur (Passport, 2014).HM has elect vertical integration as one of its concern strategies to better control the whole supply chain. From manufacturing to assembling, merchandising to retailing, all these processes are under its control. It works closely with its production offices, suppliers and buyers. While finish designing at capital of Sweden headquarters, its partnership suppliers will seek for the most suitable raw materials and matched them for assembling. HM places bulk order to minimise the risk of price fluctuation and get it on a certain level of eco nomy of scale (Goransson et al, 2007). Then, the production offices will arrange for merchandising. HM stores do not prepare any fan stock, but are replenished from the nearest distribution centre. 90% of HMs goods is transported from the suppliers warehouses to distribution centres via Hamburg, the main transit point of HM, by rail or sea (HM 2014a). Those garments are generally served with price tags and ready for sale (Hasan and Alim, 2010).How is the mark differentiated and how is it positioned?HM identifies a sustainable competitive advantage for its make through providing augmented products. The purpose of creating augmented products is to add value to supplementary elements, aiming to exceed customer expectation (Crassous and Gassmann, 2011). HM realises the fact that customers are not well-prepared to pay extra money for sustainable value, but it is believed to be a leading trend in the future (HM, 2014b). Hence, HM emphasizes offering the best price, not the cheapest pr ice, certainly involving a part of sustainability. It would never compromise the commitment of providing fashionable and quality products with the best price.HM is positioning itself as an ethical company that produce fast-fashion and ethics simultaneously (Siegle, 2012). For example, HM has invested heavily in sustainability in order to remove the label of disposable fashion maker (Passport, 2014). It realises how all all-important(a)(p) the natural resources to them, thus, it makes use of 13.7% of organic cotton over follow cotton use. According to framework Exchange (2014), HM is swayed as the world top users of organic cotton. It also changes its linear production model to aviator production model to serve conscious fashion. HM no thirster focus on making short-term profit, it has stated the importance of ontogenesis long-term sustainability to be a significant differentiator (HM, 2014b). For instant, HM has collaborated many non-governmental organizations (NGOs) such as Fair Labour Association (FLA) and Fair fee Network to develop a criteria for benchmarking sustainability to entire industry (HM, 2014b).Furthermore, the transparency of HMs supply chain is another key differentiation from other fast fashion retailers. HM made an effort of creating supply chain transparency by publishing its suppliers factory list. HM is one of the few fashion companies to publish its supplier factory list (Doward, 2012).Is Country of Origin ( murmur) significant?COO could influence on customer-based soft touch equity, especially in B2C markets. It has added values to the grease and the perceived quality, one of the factors of brand equity, has been recognised as a driving force in order to generate brand awareness (Chen et al, 2011). However, the strength of the link of COO across products may differ as the variation in product categories can be hard to identify (Tseng and Balabanis, 2011). For example, the credibility of French perfumes and Russia vodka are hi gh, compared to the credibility fast fashion. The latter is more concern with the style of fashion rather than COO. Thus, the Swedish original roots may not be significant in inspiring HM collection that what target customers are expected. In comparison to Sweden, Milan, Paris and Tokyo are more likely to be defined as global fashion cities (Jansson and Power, 2010). Therefore, HMs COO is unlikely to be significant in influencing customer purchasing decisions. substantiate there been issues of supply chain ethics or provenance?HMs commitment is to be ethical through its value chain, steadily rooted in its belief. A great efforts have been paid with awarded the world most ethical company (HM, 2014b). In spite of adhere to be ethical, some unexpected issues might occur under its vertical control. However, HM tried its own best to best solving those problems. For example, a Bangladeshi factory that making clothing for HM and other companies prone to fires payable to poor safety stand ard (Hickman, 2010). HM alleged that it only bought a small portion of garments from this factory. However, it appointed representatives to visit that place immediately to actualise those affected and their families. HM has regularly audited this factory and announced that this factory has succeed the Code of Conduct. Following this unwanted incident, HM produced a series of short films, concerning fire safety and other ethical issues in order to lift workers vigilance (Siegle, 2012).Another example was 288 Turkish workers were suffered from verbal harassment during HMs external assessment. HM followed up this circumstance and settled complicate by giving proper training to their supervisors and putting less press on them (Fair Labour Association (FLA), 2009).ConclusionIn conclusion, this report has evaluated the supply chain and logistics management strategies of HM. erect brand, HM achieves its best prices promise by employing in-house designers, having no middlemen, choosin g its own suppliers, utilising resources in every part of business, and the most important aspect is having effective logistic management within the supply chain. The highly responsive supply chain distinct HM from its competitors, enabling HM to react quickly to the up-dated fashion trend. The selected suppliers not only responsible for manufacturing quality product, but also ensuring the processes are operated under good ethical conditions.Sustainability plays an important role in implementing HM business strategy. HM works very hard to be recognised as an ethical company. These remarkable achievements will obviously lead an increase in brand reputation and customer confidence Therefore, it is essential for HM to continuously place sustainability as its basal objective to clearly become HMs competitive advantage.ReferencesCha, Y (2013) The Big 3 Fast Fashion (SPA) Brands and Strategies, Maeil line of business Newspaper, 9 June.Chen, Y. ,Su, Y. and Lin, F. (2011) Country-of-origi n cause and antecedents of industrial brand equity, Journal of Business Research, 64, p1234-1238.Crassous, T. and Gassmann, J. 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