Supply Chain And Retail Management In Zara, H&M, And Benetton

Question:

Discuss about the Supply chain and retail management in Zara, H & M and Benetton.

The three of the companies are in the same industry of retail and in the business for more than 50 years. However, Zara is newer comparing the three. Those companies have organised themselves over the years and established in their respective market. The main criteria three businesses are focusing are building their own brand products. H & M is primarily focused on design and sells at a reasonable rate than that of Benetton. Benetton uses this exclusivity as primary focus. Zara has a different approach to design their material. The company uses the three different stages to design to gain competitive advantage in the industry that includes the market specialist’s designers and buyers (Hines 2014). Therefore, they also have small workshops in their outlets to get the review of their most loyal customers from the industry. Thus, the designing stage of the product is involved in all the stages of supply chain. Out of 40,000 different products only 10,000 gets into production designed by 300 designers. On the other hand, H & M gets better control over their designing system. H & M. The More of a centralised system, traditional approach and better control is exercised over the H & M retail design and lesser variation and customisation, which is very different from that of Benetton. Benetton is most expensive than H & M and Zara. They use more variation keeping in mind about the country’s or local fashion (Goworek and McGoldrick 2015). None of the retailers is involved in high-end fashion or any kind of haute Couture sale but nonetheless has more importance in the fashion industry. Benetton is also focused on the season less fashion in the industry. They are also focused on the small flash collection, which helps them in gauging the customer reaction in the products, where as if the design does not catch attention of their customers it gets replaced (Shen 2014).

Benetton has originated from Italy, have international factories as well as in Italy. The retail outlets have different delivery outlets and franchises all over the world in the area of North Africa, Asia and Europe. However, the operations are more controlled in the headquarter of their office in Italy. The subcontractors are known as to source cheap labour from all over the world as well as sourcing materials from factoriesChan et2017). To cooperate the colour decision based on the market is also done in the assembly line. H & M has no factory of their own and sources from the 750 suppliers from different small brands, which have large retail sections. The most important feature of the country is known of H & M is their efficient supply chain management. Their process consists of the procuring order from the places that have different fashion basics. Volume maximisation is also their target to get a better cost advantage from the company (Chan et al. 2017). Therefore, trendier garments are less available in the H & M. Zara’s lead-time is shorter as they have trendier garments in the industry they operate. There are more focused on the capital-intensive aspects of the industry rather than labour. 50% of the business is sourced from different brands and subcontractors and remaining 50 % is their own brand’s production or somewhere in the assembly line production, though they do not have an advantage of resourcing from the international market like Benetton. They also focus on the volume maximisation production system.

The Benetton and Zara go by the automated services in the warehouse and production centre are highly automated. The capacity of the companies is much more important in deciding the existing stores to increase the efficiency of the system (Huq et al. 2016). The warehouses are enough to bare the capacity of all the stores in country. They are also using the RFID tags to track its garments (Vlachos 2014). H & M is exclusive retailer whereas Benetton and Zara are more production based, efficient in gathering physical labour and cost conscious in distribution process (Caniato et al. 2014). The logistics centres are of utmost importance in their strategy of distribution process. H & M builds up on the green transport and suppliers are from the 90% overseas. In European market truck, shipping is more efficient and less costly. Zara’s delivery is scheduled in to be twice a week and their r approaches are very responsive. The iron folds, bags and tags in garments are very important to be sending in the distribution centres before sending to the retail outlets. Zara is considered to be the fastest growing in the industry (Christopher 2016). The categorising the products in their manufacturing system in Zara  is very efficient in the neighbouring countries from their head quarter, where as H & M has call off warehouses and stocks in a single warehouse according to the level of selling. Thus, they create more efficiency and controls cost in their company. Physical distribution is subcontracted in the company (Huq et al. 2016). As H & M does not own any kind of manufacturing factories in their company, they are more efficient in their supply chain management.

Zara has supply chain management, which is parallel or involved in the retail stage, as the store is designer’s corner in the retail outlets. Thus they have more feedback from their customers and aware of their customer’s taste and preferences. In the retail stage, they have a unique feature of having dynamic fashion clothes in the company. A design hardly stays two weeks in their store. The relatively small batches of clothes are essential feature of the company. This makes the customer’s visits very frequent in the company (Christopher 2016). The third party mostly operates Benetton. Stores are operated by larger outlets like 1500 – 3000 metres squares shopping outlets. These are called megastores where the companies sell whole range of products and alleviate their experience in the company. As H & M have, no control over the company is manufacturing units they are more efficient in controlling their outlets (Beh et al. 2016).

Though through the sales and feedback, Zara has the upper hand, Benetton and H & M has more important part in the retail industry. Zara has made the market scarcer and filled it with dynamic fashion (Christopher 2016). They are also known as to provide good customer service. H & M and Zara are follows similar warehousing patterns. However, three of the company are operating in the same industry and are competing with unique competencies among them (Beh et al. 2016). The fast fashion market is having gained a proper response making it a highly competitive sector. The effective information system and automated warehousing system has provided them with proper strategic advantage in achieving the ultimate market goal increasing profitability

References

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Caniato, F., Caridi, M., Moretto, A., Sianesi, A. and Spina, G., 2014. Integrating international fashion retail into new product development. International Journal of Production Economics, 147, pp.294-306.

Chan, A.T., Ngai, E.W. and Moon, K.K., 2017. The effects of strategic and manufacturing flexibilities and supply chain agility on firm performance in the fashion industry. European Journal of Operational Research, 259(2), pp.486-499.

Christopher, M., 2016. Logistics & supply chain management. Pearson UK.

Fernie, J. and Sparks, L., 2014. Logistics and retail management: emerging issues and new challenges in the retail supply chain. Kogan page publishers.

Goworek, H. and McGoldrick, P., 2015. Retail marketing management: Principles and practice. Pearson Higher Ed.

Hines, T., 2014. Supply chain strategies: demand driven and customer focused. Routledge.

Huq, F.A., Chowdhury, I.N. and Klassen, R.D., 2016. Social management capabilities of multinational buying firms and their emerging market suppliers: An exploratory study of the clothing industry. Journal of Operations Management, 46, pp.19-37.

Li, Y., Zhao, X., Shi, D. and Li, X., 2014. Governance of sustainable supply chains in the fast fashion industry. European Management Journal, 32(5), pp.823-836.

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Turker, D. and Altuntas, C., 2014. Sustainable supply chain management in the fast fashion industry: An analysis of corporate reports. European Management Journal, 32(5), pp.837-849.

Vlachos, I.P., 2014. A hierarchical model of the impact of RFID practices on retail supply chain performance. Expert Systems with Applications, 41(1), pp.5-15.