Compare and contrast the supply chain management approaches take by H&M, Benetton and Zara

Topics: Supply chain management, Supply chain, Management Pages: 9 (2712 words) Published: October 25, 2009
The purpose of this essay is to discuss different supply chain management approaches taken by H&M, Benetton and Zara. It is first necessary to explain what a supply chain management means. Supply chain management involves planning, design, maintenance and control of the flow of materials and information along the chain in order to efficiently satisfy customer's requirements (Schroeder, 2000). Such an approach, of looking at the entire supply network helps organisations identify their competitive advantages and parts of their processes that contribute the most to the performance objectives that are of the greatest importance to the customers (Slack et al., 2007). It also helps to develop long-term strategies for the company based on the identified advantages.

H&M, Benetton and Zara are all garment retailers. Key stages in their supply chains that I will discuss are product design, manufacturing, distribution and retail. Zara and H&M are so called "fast fashion" providers. Their clothes do not have to be of an exceptional quality as the most important factor is to quickly deliver catwalk design to high street customers at an affordable price (Slack et al., 2007). Benetton clothes are of better quality and higher prices but they are at the same time less fashionable and not as trendy. Despite these differences in the target markets, all three companies operate in a very similar environment and all offer innovative products with a life cycle that is very short. Therefore, they need a responsive supply chain that will respond with flexibility to the uncertainties of the environment in which the three companies operate (Fisher, 1997). These uncertainties can be avoided by decreasing lead times, increasing a chain's flexibility or allowing excessive inventories and lower capacity utilisation Fisher, 1997). The later, though, require great capital and leads to high costs. How do the companies balance these factors? In order to answer this question I will follow the product life cycle as it moves down the supply chain of each company, starting from the design, production of the garment, its distribution and retail.

In the fashion industry design is one of the most important things. Successful design will have to have the right cut, the right colour and pattern, and be made of the material appropriate to the rest of the design. No wonder that companies spend so much effort on this stage. Benetton staffs 300 designers who create designs for all company's product lines and are involved in researching new materials and trends (www.benettongroup.com, 2007). H&M is similar to Benetton in the approach of keeping the design of all product lines together. The company has 100 designers who work with 50 pattern designers and around 100 buyers and budget controllers creating a team of 500 people working together to balance H&M's components of business concept - quality and fashion at a low price (www.hm.com, 2007). Such design of this very first stage of product creation indicates that design deportments in Benetton and H&M are organised in a cell layout that "allocates dissimilar machines to work on products that have similar processing requirements" (Chase et al., 2001, p. 189). In our case of course the role of machines are taken by different tasks of designing, choosing patterns, colour and material; whereas women, men and children's lines have similar processing requirements.

Zara's design department is organised differently. As with Benetton and H&M, Zara employs number of designers, market specialists and buyers who are then allocated to each of their product areas - women's, men's and children's garments (Slack et al., 2007). Each product line has its own designers, its own buyers and market specialists. Running three product line designs have its advantages and drawbacks. "It is more expensive to operate three channels, but the information flow for each channel is fast, direct, and unencumbered by problems in other channels...
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