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MGT-OM-713
Course Code MGT-OM-713
Program MBA Evening
Term 6
Submitted To Prof. Nilay Gosavi
NAME RAVEENA VENU
REG. NUMBER 1712014
date 19/02/2019
EMAIL ID raveena_venurejitha1@dxb.manipal.edu
Hennes & Mauritz
SHORT LIFE CYCLES AND
SHORT SELLING SEASONS
CONSUMERS TASTES CHANGE
QUICKLY AND VARY
MANY COMPANIES MOVED
PRODUCTION TO DEVELOPING
NATIONS TO CUT COSTS
 Quickly interprets recently runway trends into affordable
low priced items available at the mass market
 Affordable prices with quick response
 Emphasizes on making fashion trends quickly and cheaply
available to consumers
 Optimizing certain aspects of the supply chain
 This philosophy of quick manufacturing at an affordable
price is used in large retailers.
 Consumers are typically under 40
A Swedish Multinational Clothing-
retail Company
Second-largest global clothing retailer,
(behind spain-based Inditex) + 2nd
most valuable apparel brand in the
world (behind Nike)
Headquarters in Stockholm, Sweden
Known for its fast-fashion
Trendy
and classy,
but high
rates
01
You have
to search
a bit, but
it’s fine
02
Only if there is
some offers its
good, otherwise
unnecessarily
expensive
03
ZARA has
better
clothes
04
Not bad,
but rates
are high
05
Its not my
type
06
I didn’t
like it
07
Have
never
been to
H&M
08
No idea
about
H&M
09
1947
 A single womenswear store in
Sweden
Now
 43 online markets and more than
5000 stores in 69 markets.
This Photo by Unknown Author is licensed under CC BY-ND
DIFFERENTIATOR
VALUES:
A new reality where you
can wear a designer
brand at an affordable
price.
BRAND ATTRIBUTE:
Status, Luxury And
Affordability
Men Women Teenagers Children
Womenswear, Menswear, Children’s
wear,
Footwear, Accessories, Cosmetics Home
Furnishing
s.
30%
70%
Product
Fast fashion
Basic clothing
 Represents 30% of the clothing
 Less lead times
 More trendy
 More expensive
 Represents 70%
 More cost effective
 Brings higher profit margin
Vision : To lead the change towards a circular
and renewable fashion industry, all while being
a fair and equal company.
Mission: To drive long-lasting positive change
and improve living conditions by investing in
people, communities and innovative ideas.
Values: "We believe in people, We are one
team, Constant improvement, Straightforward and
open-minded, Entrepreneurial spirit, and in all we
do, sustainability is a natural part“
Business Concept: “Fashion and quality at the
best price”
H&M group aims to source 100%
sustainable cotton
2020
H&M group aims for 100% recycled
or other sustainably sourced
materials.
2030
H&M group aims to have a
climate positive value chain
2040
 The ambition to serve our
customers in a sustainable
way.
 According CEO Karl-Johan Persson
 Mission for 2019:- To adjust to the new market dynamics through targeted
investments.
 Investment in 3 key enablers:-
 Supply chain: proximity sourcing + automated warehouses = faster + flexible +
efficient SC
 Advanced analytics: Better data and artificial intelligence = improved trend
detection+ quantification & allocation + price management & personalization
 Technology foundation: RFID to 1,800 stores in 2019 + experiment with
omnichannel programs + new-format stores = better reach customers
H and M Operations
H and M Operations
Germany = 4.4
billion U.S.D (2017)
LARGEST
MARKET ?
Quick Turnaround
Time
160+ designers,
400+ product
developers
900+ suppliers
High impulse purchasing
High volatility
H&M forecasts, but they put less focus on it due to
variability in demand such as:-
Short selling seasons
High level of uncertainty
Lack of historical data for trendy produtcs
Demand forecasting companies such as Worth Global Style
Network Ltd.
BANGLADESH,
BULGARIA,
CAMBODIA,
CHINA,
CZECH REPUBLIC,
DENMARK,
ESTONIA,
ETHIOPIA
• 20% = strategic partners.
• Roughly 180 to 200 out of
900 suppliers.
• 20% suppliers = 50% goods
• Transparency
• Audits roughly twice a year
Idea &
design
Range
planning
Buying &
production
Logistics &
distribution
Warehouses Stores Customer
Design
Raw
materials
Fabric
production
Garment
production
Transport
Warehouse Store
Customer
IDEA &
DESIGN
Central design and buying
department
160+ in-house designers,
100+ pattern makers.
An additional 400+ people
involved in other aspects
of product development
RANGE
PLANNI
NG
Each concept (women’s, men’s
etc.) is allocated a product with
right mix between fashion and
comfort.
Stores and countries are
allocated products based on
what the customers there
‘want’.
Some products are allocated
based in limited quantities
while rest can be re-ordered.
BUYING
/
PRODU
CTION
 Focused on a trade-off between price,
time and quality
 All manufacturing outsourced to 900+
suppliers
 Lead time varies:
 2 to 3 weeks = high fashion items
 6 months = basic products
Local
Production
offices
Manages
suppliers
Places orders
Manages
quality
assurance
LOGISTI
CS &
DISTRIB
UTION
 Outsource transportation needs
 Mainly shipping and rail
 Transported by sea and rail 90%
 Occasionally by road and air.
 Uses trucking companies
 Trained drivers and no old trucks
 CO2 reduction plan
 Currently operates more than a dozen
DCs and call-off centres
Suppliers Transportation Warehouses
 Centralised warehouse
 Goods that do not go to the stores go to a centralised stockroom.
 Goal of centralised stockroom ? To replenish item levels in stores according to
selling trends
 The ERP system delivers rapid replenishment
H&m in Burjman, Dubai. As of Valentine’s day 2019.
H and M Operations
H and M Operations
H and M Operations
H and M Operations
H and M Operations
H and M Operations
H and M Operations
H and M Operations
H and M Operations
H and M Operations
H and M Operations
H and M Operations
H and M Operations
H and M Operations
 Uniform layout
 EPOS (Electronic Point Of Sale) system connects store floor to the stockroom.
 Customers can hand in unwanted clothing
 Program: collect, re-use and turn into something new
 20% of their specific clothing line are made entirely from recyclables.
 https://www.youtube.com/watch?v=41htZRvz9Gg
H and M Operations
 Quick response
 Effective in the constantly changing
industry
 Avoid stockouts
 Avoid high exposure to excess inventory
 Ability to create, manufacture and
deliver products in 2 to 6 weeks
Ability to do this:-
Technology
Production offices
Vertical integration
High focus
on
sustainabilit
y
01
Fashion and
design at an
outstanding
value — but not
at any price.
02
consider the
needs of
present and
future
generations
03
entire business
must be conducted
in a way that is
economically,
socially and
environmentally
sustainable.
04
Transition from a
linear production
model
To one that reuses
old products, as
the resource for
new desirable
fashion.
Short term = this
will help keep
textiles from
ending up in
landfills.
Long run = this
can change the
way fashion is
made and used,
Benefit =
massively
reducing the need
for extracting
natural resources
from our planet
while promoting
conscious
resources for our
designs.
ANNA GEDDA, HEAD OF SUSTAINABILITY
H and M Operations
59 % of the cotton
used in 2017 was
sustainably
sourced. Goal is
100% by 2020
In 2017,
customers handed
in 17,771 tonnes
of old textiles to
the program for
reuse or recycling
Supplier factories
representing 53%
of total production
volume have
workplace
dialogue training
96% renewable
electricity in their
own operations in
2017
reduced
greenhouse gas
emissions by 47%
in 2016.
H and M Operations
The Rana Plaza Factory
Collapse in Dhaka,
Bangladesh, on April 24,
2013. Photo: Zakir Hossain,
 One of the worst CSR crisis of corporate history
 Deadliest garment factory disaster in world history
 1129 workers killed. Around 2500 injured.
 birth of the Fashion Revolution movement
 The first company to sign up to the Bangladesh accord
on fire and building safety
 November 2013, announced that 850,000 workers in its
supply chain would be paid a fair living wage by 2018.
 No increase in salary in the pay slips of the poor workers
 most of the factories used by H&M were still unsafe
 Clean clothes campaign.
 The exploitation of workers in the Third World factories
 Misleading
H and M Operations
H and M Operations
H and M Operations

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H and M Operations

  • 2. Course Code MGT-OM-713 Program MBA Evening Term 6 Submitted To Prof. Nilay Gosavi NAME RAVEENA VENU REG. NUMBER 1712014 date 19/02/2019 EMAIL ID raveena_venurejitha1@dxb.manipal.edu
  • 4. SHORT LIFE CYCLES AND SHORT SELLING SEASONS CONSUMERS TASTES CHANGE QUICKLY AND VARY MANY COMPANIES MOVED PRODUCTION TO DEVELOPING NATIONS TO CUT COSTS
  • 5.  Quickly interprets recently runway trends into affordable low priced items available at the mass market  Affordable prices with quick response  Emphasizes on making fashion trends quickly and cheaply available to consumers  Optimizing certain aspects of the supply chain  This philosophy of quick manufacturing at an affordable price is used in large retailers.  Consumers are typically under 40
  • 6. A Swedish Multinational Clothing- retail Company Second-largest global clothing retailer, (behind spain-based Inditex) + 2nd most valuable apparel brand in the world (behind Nike) Headquarters in Stockholm, Sweden Known for its fast-fashion
  • 7. Trendy and classy, but high rates 01 You have to search a bit, but it’s fine 02 Only if there is some offers its good, otherwise unnecessarily expensive 03 ZARA has better clothes 04 Not bad, but rates are high 05 Its not my type 06 I didn’t like it 07 Have never been to H&M 08 No idea about H&M 09
  • 8. 1947  A single womenswear store in Sweden Now  43 online markets and more than 5000 stores in 69 markets. This Photo by Unknown Author is licensed under CC BY-ND
  • 9. DIFFERENTIATOR VALUES: A new reality where you can wear a designer brand at an affordable price. BRAND ATTRIBUTE: Status, Luxury And Affordability
  • 11. Womenswear, Menswear, Children’s wear, Footwear, Accessories, Cosmetics Home Furnishing s.
  • 12. 30% 70% Product Fast fashion Basic clothing  Represents 30% of the clothing  Less lead times  More trendy  More expensive  Represents 70%  More cost effective  Brings higher profit margin
  • 13. Vision : To lead the change towards a circular and renewable fashion industry, all while being a fair and equal company. Mission: To drive long-lasting positive change and improve living conditions by investing in people, communities and innovative ideas. Values: "We believe in people, We are one team, Constant improvement, Straightforward and open-minded, Entrepreneurial spirit, and in all we do, sustainability is a natural part“ Business Concept: “Fashion and quality at the best price”
  • 14. H&M group aims to source 100% sustainable cotton 2020 H&M group aims for 100% recycled or other sustainably sourced materials. 2030 H&M group aims to have a climate positive value chain 2040
  • 15.  The ambition to serve our customers in a sustainable way.
  • 16.  According CEO Karl-Johan Persson  Mission for 2019:- To adjust to the new market dynamics through targeted investments.  Investment in 3 key enablers:-  Supply chain: proximity sourcing + automated warehouses = faster + flexible + efficient SC  Advanced analytics: Better data and artificial intelligence = improved trend detection+ quantification & allocation + price management & personalization  Technology foundation: RFID to 1,800 stores in 2019 + experiment with omnichannel programs + new-format stores = better reach customers
  • 19. Germany = 4.4 billion U.S.D (2017) LARGEST MARKET ?
  • 20. Quick Turnaround Time 160+ designers, 400+ product developers 900+ suppliers
  • 21. High impulse purchasing High volatility H&M forecasts, but they put less focus on it due to variability in demand such as:- Short selling seasons High level of uncertainty Lack of historical data for trendy produtcs Demand forecasting companies such as Worth Global Style Network Ltd.
  • 22. BANGLADESH, BULGARIA, CAMBODIA, CHINA, CZECH REPUBLIC, DENMARK, ESTONIA, ETHIOPIA • 20% = strategic partners. • Roughly 180 to 200 out of 900 suppliers. • 20% suppliers = 50% goods • Transparency • Audits roughly twice a year
  • 23. Idea & design Range planning Buying & production Logistics & distribution Warehouses Stores Customer
  • 25. IDEA & DESIGN Central design and buying department 160+ in-house designers, 100+ pattern makers. An additional 400+ people involved in other aspects of product development
  • 26. RANGE PLANNI NG Each concept (women’s, men’s etc.) is allocated a product with right mix between fashion and comfort. Stores and countries are allocated products based on what the customers there ‘want’. Some products are allocated based in limited quantities while rest can be re-ordered.
  • 27. BUYING / PRODU CTION  Focused on a trade-off between price, time and quality  All manufacturing outsourced to 900+ suppliers  Lead time varies:  2 to 3 weeks = high fashion items  6 months = basic products
  • 29. LOGISTI CS & DISTRIB UTION  Outsource transportation needs  Mainly shipping and rail  Transported by sea and rail 90%  Occasionally by road and air.  Uses trucking companies  Trained drivers and no old trucks  CO2 reduction plan  Currently operates more than a dozen DCs and call-off centres Suppliers Transportation Warehouses
  • 30.  Centralised warehouse  Goods that do not go to the stores go to a centralised stockroom.  Goal of centralised stockroom ? To replenish item levels in stores according to selling trends  The ERP system delivers rapid replenishment
  • 31. H&m in Burjman, Dubai. As of Valentine’s day 2019.
  • 46.  Uniform layout  EPOS (Electronic Point Of Sale) system connects store floor to the stockroom.
  • 47.  Customers can hand in unwanted clothing  Program: collect, re-use and turn into something new  20% of their specific clothing line are made entirely from recyclables.  https://www.youtube.com/watch?v=41htZRvz9Gg
  • 49.  Quick response  Effective in the constantly changing industry  Avoid stockouts  Avoid high exposure to excess inventory  Ability to create, manufacture and deliver products in 2 to 6 weeks
  • 50. Ability to do this:- Technology Production offices Vertical integration
  • 51. High focus on sustainabilit y 01 Fashion and design at an outstanding value — but not at any price. 02 consider the needs of present and future generations 03 entire business must be conducted in a way that is economically, socially and environmentally sustainable. 04
  • 52. Transition from a linear production model To one that reuses old products, as the resource for new desirable fashion. Short term = this will help keep textiles from ending up in landfills. Long run = this can change the way fashion is made and used, Benefit = massively reducing the need for extracting natural resources from our planet while promoting conscious resources for our designs.
  • 53. ANNA GEDDA, HEAD OF SUSTAINABILITY
  • 55. 59 % of the cotton used in 2017 was sustainably sourced. Goal is 100% by 2020 In 2017, customers handed in 17,771 tonnes of old textiles to the program for reuse or recycling Supplier factories representing 53% of total production volume have workplace dialogue training 96% renewable electricity in their own operations in 2017 reduced greenhouse gas emissions by 47% in 2016.
  • 57. The Rana Plaza Factory Collapse in Dhaka, Bangladesh, on April 24, 2013. Photo: Zakir Hossain,
  • 58.  One of the worst CSR crisis of corporate history  Deadliest garment factory disaster in world history  1129 workers killed. Around 2500 injured.  birth of the Fashion Revolution movement  The first company to sign up to the Bangladesh accord on fire and building safety  November 2013, announced that 850,000 workers in its supply chain would be paid a fair living wage by 2018.  No increase in salary in the pay slips of the poor workers  most of the factories used by H&M were still unsafe  Clean clothes campaign.  The exploitation of workers in the Third World factories  Misleading