Supplying Fashion Industry
1. How do they differ in terms of their approach to design stage of the supply chain?
Regarding the design stage, H&M, Zara, and Benetton do not follow the conventional production practice. By designing two collections per year, they have diminished the cycle time in their supply chain (Lashen, 2012). In the design stage, H&M involves fashion designers, clients, and budget regulators. The goal is to find the best balance among fashion, level, and cost. Zara’s design approach is slightly different from that of H&M. Its design department involves better designers, trade specialists, and greater number of buyers. The biggest dissimilarity is that trade specialists properly connect Zara retail shops, considering the reaction of clients to new designs.
The design approach of H&M, Zara, and Benetton clearly targets three groups, namely clothes for women, children, and men. As a consequence, this indicates that retail shops are not the ending point of the entire supply chain, but the start of its design stage. It is the cause why Zara can quickly respond to customer requests. Besides, the design of Benetton is different from that of Zara or H&M, as it does not only develop for its brand, but likewise focuses on exploring modern materials and clothing conceptions. Designing clothes is performed by 300 designers (Academic Mania, 2014). Its designs are standardized from country to country.
2. How do they differ in terms of the manufacturing stage of the supply chain?
With regard to the manufacturing stage, H&M, Zara, and Benetton have divided their manufacturing procedures to reduce risks. Therefore, they can flexibly respond to the client and create clothes that are required on the market. Additionally, both Benetton and Zara have the ability to manufacture their products, and this is the cause why the latter has an opportunity to eventually become the fastest in manufacturing (Hansen, 2012). Nearly half of production is conducted in factories in Spain.
As for Benetton, operations can be called “capital-intensive” or “work-intensive” that are performed by subcontractors. Its central production facility has high-price technological abilities. It synchronizes with other working subdivisions in the network of minor contractors (Lashen, 2012). Even though, H&M is not the owner of any plants for production, it has a lot of suppliers. Thus, its manufacturing stage is not similar to that of Benetton and Zara. Therefore, the most momentous thing is that H&M production departments need to coordinate suppliers in order to make manufacturing quick and flexible. Relations between suppliers and manufacturing departments control the basic demand for clothing throughout the world and define its purchase.
3. How do they differ in terms of the distribution stage of the supply chain?
With regard to distribution, Zara and Benetton have extremely automated warehouses that are located near their manufacturing centers. Such can keep, pack, and collect personal items for their retail networks. Benetton installed an automated warehouse and spent a lot of money on automation operations. There are spare rooms, which receive goods. Zara made great investments to automate warehouses, which can be closer to manufacturing enterprises. Storing operations, collection, and the packing of items are executed in this unit (Lashen, 2012). Besides, the assembly is conducted in these warehouses in accordance with specifications. Automation has called for a huge investment, but benefits of this have been fully realized.
However, H&M is not similar to Zara and Benetton in its distribution stage. Here, stock administration and material distribution are initially handled internally. Inventory management is conducted within the country. Its stores check orders, verify, and distribute centrally (Lashen, 2012). There is a main storage room, the name of which is “Call off Warehouse.” It serves as the ultimate store for sale. Although the distribution of these fast fashion items is different, they can quickly replenish stores considering what they have sold.
4. How do they differ in terms of the retail stage of the supply chain?
With regard to retail, both H&M and Zara stores are hold and operated exclusively by themselves. The main dissimilarity is that Zara’s clothing rarely remains in stores for more than 15 days (Shah, 2009). Stores owned by H&M have decor and atmosphere that are convenient and inspiring. In addition, Zara’s stores have smaller size than those of H&M. Motivation behind buying clothes is individual. Clients are looking for a modern look of their garments at all times. It is the most prominent feature of Zara’s stores. As for Benetton, its stores showcase a full range of its products. In addition, Benetton’s and Zara’s supply chain strategies are highly arranged and automated, while an H&M’s retail stage deals more closely with subcontractors and providers (Lashen, 2012). Warehouses’ automation makes the supply chain active and well-founded. Zara’s strategies have the most uninterrupted retail chain. Small batches with normal periods of time are delivered to these stores. It allows avoiding delays and increases purchases.
5. For each brand, identify and explain a SCM strategy or trend utilized in its supply chain.
The supply chain management (SCM) strategy of H&M is quite effective. It pre-produces 80% of its retail stock and manufactures another 20% based on current market trends throughout the year. Up to now, it has been considered by many as a cheap price retailer because of the constant policy of low firm prices (Lashen, 2012). The management is trying to arrange this situation for now. To date, H&M clients have an opportunity to find jumpers for 60 Euro (Lashen, 2012). A luxury label of the firm has been also launched.
As for Zara, it can rapidly conform to the fastest fashion trends. As a result of continuously changing client needs, the company completes production of about 450 million units a year for its stores (Lashen, 2012). Zara shops receive contemporary supplies daily. SCM strategy begins by refining couture trends in the main market and after that leads to production, division, and retail trade. To operate the overall process, a large number of products are stored in-house. On its part, Benetton has found a method of executing SCM strategy effectively by making “gray” or non-colored garments and postponing painting until clothes are properly prepared (Academic Mania, 2014). It has captured contemporary fashion trends in its products more accurately. In addition, a wide network of Benetton connecting its center of design with external producers, dealers, outlets, and transport carriers lets the supply chain become clear.
6. In your opinion, which of the three companies have the best SCM and why?
In my opinion, Zara has the best supply chain management strategy, because its clothing brand is world-famous thanks to affordable, fashionable, and high-quality products. In Zara, every purchase is very useful. This retailer delivers trendy and fashionable things for various tastes that are served through an operated and integrated process completed in time. Clients do not buy garments because they like them, but for the reason that they cost approximately $50 (Hansen, 2012). In addition, coupled with its ability to produce high-speed fashion, Zara has also managed to take preferences of the mobile digital area. Due to stores and models available online, the image of the company and looks of new products are rapidly transmitted to trendy responsive followers.
SUPPLYING FASHION INDUSTRY
As the company frequently relies on advanced sources of cutting and sewing fabrics closer to its headquarters, wages of its employees are higher than those of developing colleagues are. Due to such high-speed production, operational management of inventories, and social networks, which cooperate with followers, Zara can cultivate an internal and commercial supply strategy successfully as no other can. With the restricted production of its clothes, Zara decreases the risk of unwanted garments accumulation. This artificial deficit indicates that there are not enough items, which can be recycled or lowered by selling prices. It eventually means that the company sells the majority of its products at a full price as compared to the industry standard.