Supply Chain Management of Zara, H&M and Benetton: A Case Study

This report outlines a case study on the supply chain management of Zara, H&M and Benetton. It critically analyses the designing, manufacturing, distribution and retail stages and recommends effective supply chain strategies.

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MANAGEMENT

OPERATION 1
Executive Summary
This report outlines a case study. The focus of this case study is towards the supply
chain of three major garment retailers in the world. The name of these multi-national brands
is Zara, H & M and Benetton. The structure of this report is divided into several phases such
as designing stage, manufacturing stage, distribution stage and so on.
All the respective phases are critically analysed below and recommended effective
supply chain strategies. The strategies of H & M are dissimilar from that of Zara and
Benetton in terms of its supply chain. However, Zara is adopting various significant strategies
in designing of crucial phase of supply chain. All the stages in the supply chain were handled
by highly skilled people and individuals.

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Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
Recommendations......................................................................................................................5
References..................................................................................................................................6

OPERATION 3
Introduction
Supply Chain management is a platform, which involves various sorts of activities
such as planning, designing, maintenance and control of the flow of materials and data in
order to satisfy the needs of customers (Seuring & Muller, 2008).
Zara was established in 1975and now it stores are located in 50 countries. Annually,
the company produces 450 million items. The biggest market of company is the north – west
Spain. Inditex is a team of more than 170000 professionals who drive the company forward
with help of self-made teams (Roll, 2018).
H & M was established in Sweden in 1947. From that time, the company is focused
on selling cloths and cosmetics. They are operating in 62 countries with having 4,500 stores
(Dipannita, 2017). Their business model is based on ‘fashion and quality at the best price’.
Up to 105, the company also employed 132,000 people all over the world. The biggest
market for this company is Germany.
Benetton presents in 120 countries and selling casual garments. The company is well
established in producing 110 million garments annually. The company have more than 6500
stores, which produces revenue of around $ 2 billion (Pendleton, 2017). Their biggest market
is Europe. The company pricing policy is higher than both Zara and H & M.
Discussion
In the designing, all of three companies have reduced the cycle times in respect with
design of supply chain. All the organisations majorly consist of their own designs. Moreover,
Zara and Benetton have their own in-house, while H & M has adopted ‘guest designers’, but
mostly to exploit the status of these designers. On the other hand, H & M involves famous
designers like Balmain, Lagerfield, etc. in their designing process. In case of Zara, there
considered all retail stores with asking of in-store clients reaction. To ease the designing
stage, Benetton includes 300 designers as well as people in the research and development
process.
In manufacturing, there were no suppliers in case of Benetton but in garment –making
process, the company consist some interested suppliers. In terms of manufacturing stage, both

OPERATION 4
in Italy and world, Benetton have set up plants, however, relies mainly on various contractors
who do most of the operative manufacturing. On the other hand, H & M does not consist any
aspect of the supply and manufacturing stages in respect with supply chain; however, they
work with 750 suppliers. Both Zara and Benetton owned manufacturing capability to ensure
making lead-time faster in the industry (supply lead-time is 15 days in case of Zara).
In terms of distribution stage, all the three companies have warehousing facilities.
Both Benetton and Zara handle automated warehouses in close to proximity of production
centre. With the help of these warehouses, both the company can assemble, store, pack single
order for their retail outlets. However, in case of H & M, stock handling is basically managed
internally and physical distribution is subcontracted. Moreover, Benetton also uses RFID
chips for tracking their garments.
In retail stage, the average size of H & M stores is 1300 m2, for Zara it is 800m2 and
in case of Benetton, it is between 1500 to 3000 m2. The focus of H & M retailer stores is to
make client feel at home whereas Zara retail stores specification is related to high turnover
for garments as of batches (Kohan & Daniger, 2018). Moreover, Benetton has mega stores to
highlight whole range of their products to reinforce the shopping experience.
The key aspect here is that all the three organizations are operating in same portion of
the market but they have organized themselves in many ways. Benetton is primarily seen as a
brand braced by nature of its clothes and thus retains control over the design process (Roll,
2018). On the other side, H & M is perceived as a design-led organization that invests in
retail for market growth. Benetton does not finance in retail and design stages of supply
chain. In last, Zara is more interesting in comparison with these three. They have difficult
degree of vertical integration and the lead-time in the supply chain is also less in case of Zara
as they focus on speed through control.
As mentioned earlier, Benetton is not good in terms of cost and lead-time and in fast-
fashion industry, it is necessary to have speed and cost aspect. This makes H & M and Zara to
be more competitive players (here Zara has 14 days of lead-time in comparison of H & M 20
days).

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Recommendations
Various differences can be seen between the companies ad this reflect in the supply
chain strategies adopted by all three organizations. In case of Benetton, all it requirements
effectively control through plant that it does have and franchise agreements as it will have a
positive impact on the stores brand reputation. H & M sells as a low price point and this
makes their margin less. Hence, the company needs to maintain entire retail edge for itself
rather than contribute particular to the franchise holder. In last, Zara needs to focus on speed
through control as they produce huge range of new designs annually.

OPERATION 6
References
Dipannita. (2017). 30 Amazing Things You Didn't Know About H&M. Retrieved from
https://www.boomsbeat.com/articles/280977/20170921/30-amazing-things-you-didnt-
know-about-h-m.htm
Kohan, E., S. & Daniger, P. (2018). Why Zara Wins, H&M Loses in Fast Fashion. Retrieved
from https://www.therobinreport.com/why-zara-wins-hm-loses-in-fast-fashion/
Pendleton, D. (2017). Benetton Wealth Falls $2 Billion After Italy Bridge Collapse. Retrieved
from https://www.bloomberg.com/news/articles/2018-08-20/benetton-fortune-drops-
by-2-billion-after-italy-bridge-collapse
Roll, M. (2018). The Secret of Zara’s Success: A Culture of Customer Co-creation. Retrieved
from https://martinroll.com/resources/articles/strategy/the-secret-of-zaras-success-a-
culture-of-customer-co-creation/
Roll, M. (2018). Uniqlo: The Strategy Behind The Global Japanese Fast Fashion Retail
Brand. Retrieved from https://martinroll.com/resources/articles/strategy/uniqlo-the-
strategy-behind-the-global-japanese-fast-fashion-retail-brand/
Seuring, S., & Muller, M. (2008). From a literature review to a conceptual framework for
sustainable supply chain management. Journal of cleaner production, 16(15), 1699-
1710.