Analyzing H&M's Supply Chain: Strategies, Practices, and Performance

This report provides a comprehensive analysis of H&M's global supply chain management strategies and practices, evaluating their impact on the organization's performance. It examines key elements such as planning, sourcing, manufacturing, and delivery, highlighting the company's dual integrated supply chain and supplier relationships. The report identifies areas for improvement, suggesting the adoption of an agile supply chain management system, strategic logistic plans, standardized processes, and optimized inventory management. These practices aim to enhance efficiency, reduce costs, minimize errors, and improve customer satisfaction, ultimately contributing to H&M's sustainable growth and competitive advantage in the global market. Desklib provides this report and many other resources to aid students in their studies.

Global Supply Chain
Management

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
critically evaluate the current supply chain management strategies and practices of your
chosen organization and the impact on the performance of the organization.............................3
Identify and justify a number of supply chain management practices that would enable the
organisation to improve its performance.....................................................................................5
Select the most appropriate set of supply chain management practices and demonstrate why
they are the most appropriate for improving overall performance..............................................8
CONCLUSION................................................................................................................................9
REFERNCES:................................................................................................................................10
Books and Journals:...................................................................................................................10

INTRODUCTION
The report aims to conduct an analysis on the global supply chain management activities.
Supply chain is a crucial practice for every business organisation in order to deliver their goods
and services across worldwide market. Due to advanced globalisation and internationalisation,
the business is facing many issues in supply chain practices due to many factors like culture,
mode of distribution, customer segment and improvise the process of supplier relationship,
ordering, receiving and managing inventory. These all are crucial activities of supply chain
management which will be able to make sure that the company will deliver their products
effectively. The crucial practices of this system is mainly the allocation of resources, procuring
materials and managing cost. The current report is based on the supply chain practices of H&M.
The company was established in 1947 which clothing and accessories across many countries at
worldwide area (Cohen, and Lee, 2020). It has been established as a reputed brand in the fashion
industry and sell quality focused products. The company practice the global supply chain
strategy which focus on quality and customer satisfaction. The report is going to analyse the key
positioning factors and critical evaluation of the supply chain management practices. Also, there
will be description information about how these practices impact on H&M performance. An
integral strategy to improve supply chain proficiency revolves around the creation of intrinsic
strategies wherein businesses are capable of optimising growth and achieving a higher degree of
functional efficiency. This report focuses on how and why does the global supply chain influence
the performance of business organisations.
TASK
Critically evaluate the current supply chain management strategies and practices of your
chosen organization and the impact on the performance of the organization.
H&M supply chain
The company is scattered at worldwide level and has global manufacturing and
distribution of the products. The company enables its supply chain in order with the help of
artistic is designers who engage in crafting of designs for products in Stockholm and other
countries. These are known as their White room which enables the supply chain in better
manner. The company has manufacturing success due to its dual integrated supply chain in
which the company assign production for two suppliers. They have effective working in order to

collaborate with the other partners which is their main ability. They have their suppliers divided
as per three areas like Platinum, silver and other. The main suppliers provide the product through
utmost sustainability. The H&M works on the basis of long term targets and maintain close
relations with them. The company has over 602 commercial products which gets supplies from
manufacturer products that the brands are 1519 tier factories in Europe, Asia and Africa. The
suppliers’ factories of H&M have around 1 million people who are employed in which 63% are
the females. 60% of the merchandise are manufactured by the Asian countries which is mainly
the Bangladesh, Vietnam, Cambodia, India and China.
Supply chain management is the process of flows of goods and services from business to
its location. It includes the procedure raw material, work in progress inventory, finished goods
and their end to end supply from the point of origin to the consumption by customers. Supply
managers monitor and develops companies overall supply chain strategy (Delbufalo, 2018).
H&M has sound supply chain management leads them to improve productivity and their
efficiency of cost. H&M has worldwide presence and through this globalisation offer company
the opportunities to attract more customers in new markets. Strategies used for supply
management are:
 Planning – This element refers to the progressive process of coordinating assets
to optimize manufacturing of goods and services to delivery of them from
suppliers to customers. H&M adopts some modules for planning strategy like
demand and inventory of product, production planning and scheduling, supply
planning, vendor managed inventory lastly sales and operation planning. Planning
element of supply helps H&M identifying markets that are large and growing,
leads to generate more revenue. All these terms reflect the growth of the
organisation.
 Sourcing – This step of sourcing strategy can lead the company to biggest cost
saving involved in the supply chain of products and services (Ivanov,
Tsipoulanidis, and Schönberger, 2019). Choosing the right vendor offering ideal
price with the efficiency in delivering goods and services to customers. Sourcing
helps in reducing the direct and indirect cost of H&M products, it also leads to
long term relationships with suppliers. H&M has good sourcing strategy that
helped them in achieving their goals by providing quality of goods and services

through their trustable vendors who has been working with them from many
years. These suppliers are from different countries and carry out work as per two
supply based process.
 Manufacturing – This factor involves the long range plan to use the resources of
manufacturing system to support business strategy. Manufacturing strategy allows
you to take major decisions of manufacturing with high certainty and to better
prepare your product for market. H&M has many variables effecting their
manufacture of product like inventory of raw materials, market demand of
product, labour cost and production cost. H&M knows what their customer wants
and with more effectiveness and proper utilisation of available resources in
manufacturing of desired products leads to high sales with low cost of production.
The company uses both lean and agile process of manufacturing. It is because the
lean methods take very minimal lead time which gives high volume and values to
the customers.
 Delivery – This element of supply chain management leads to the broad strategy
used forward the development of different methods for delivering the goods and
services to the customers. H&M uses the most effective and efficient way of
delivering the goods through air, water and land transportation. H&M has its
products available in supermarkets, hypermarkets and wholesales through various
channels of distribution among different countries which leads to generate more
revenue.
Returns – It is the process of activities which associates with returns, reverse and
avoidance are managed by the company. As it leads to more profitability and
increased in customer satisfaction too (Omar, and et.al 2022). H&M uses the
return strategy as the base to restudy their product and make relevant changes
according to the need of customers. Every return reflects the failure of product
which leads to more areas of improvement in product.
Identify and justify a number of supply chain management practices that would enable the
organisation to improve its performance.
Supply chain management is an effective practice which make sure the inventories are used
well and procured. In order to analyse the growth and development of the distribution of

company, the organisation needs to use effective measures and strategies for improving their
performance. As supply chain management includes planning, sourcing, manufacturing and
logistics of the company. It is vital to plan the resources to meet with the customer requirements
and maintain the cost effectively (Shen, Xu, and Guo, 2019). Sourcing and manufacturing helps
to gather resources and use it in for producing the goods with utmost quality control. Hence,
some of relevant approaches and strategies are necessary to protect the three pillars of
sustainability such as economic, social and environmental. There is key requirement of the
volatile factors and practices which need to use by H&M that are described below:
Agile supply chain management system: As per this strategy, the company needs to
diversify their network of supply chain. Through this strategy, the H&M can easily adopt the
market changes and trends. Though the company has two source based suppliers so they rapidly
design and craft the products to meet with the regular change of suppliers. Therefore, in order to
promote the effectiveness of the working that will manage the resources, helps in tracking the
progress and take effective decisions. It shows that, the company should start their unit in
different areas and locations through which it will be easier to distribute products and services.
By sourcing networks and manufacturing areas, the H&M will easily deliver their product
categories as well (Ahmed, and et.al 2022). It will be easy way to strengthen the financial and
cost relationships with the partners. In the recent complex business environment, there are many
uncertainties happened around the globe such as Russian wars, natural disasters in Thailand and
others will impact on the shipping agenda across the oversees. With this supply chain system, the
company has better plans and outsourcing of the products in the global market. This shows that
the company has better manufacturing system that has 4968 stores in 61 countries in order to
attract the worldwide customers.
Strategic logistic plan
As per this area, there is requirement of the key considerations to manage the supply chain
of the company. It ensures that, the H&M has the logistic plan which has suppliers from Asia
and Europe. Also, the main warehouse of the company is in Germany and distribution centres in
northern Europe and southern Europe and stores. It demonstrates the key factors which gives
emphasize in shipping the products. All the transported done through ships and has 13
distribution centres of the company. Therefore, it shows the benefits in accomplishing targets to
analyse the key factors of H&M logistics. The H&M has to use the process to achieve the

process which enlarge the key safety partners and closely work with them. This demonstrates
that they mainly consist the 2 to 6 weeks lead time to closely analyse the cost and minimise the
efficiency. Though H&M does not own any manufacturing units, but owns the production of
offices and closely with its partners to ensure the safety and quality of the product. As H&M
outsources most its supplies from Asia to achieve the advantage of leanness the lead time varies
2 weeks to 6 months. Asian Manufacturers procure fabric in advance as per the forecast in order
to minimize the cost and increase the efficiency.
Standardise process: It is to show that the company should follow the standardise process
in order to attain sustainable supply chain management. It is all about improving the performance
through reducing cost, eliminating mistakes and improvise the key activities to promote
facilitation of the operational process. Through getting standards of production and
manufacturing, there is key role and activities to evaluate the performance of the organisation.
This describes as an important practice of supply chain for H&M which they should adopt in the
current business environment. This will reduce down the mistakes and errors to create the
production process necessary (Thürer, and et.al 2020). Therefore, the H&M should focus on
economic and social pillar of suitability through this context. The more company would
maximise their mistakes and errors, the more products will be of better use. It will give relevant
and fine experience to the customer and maintain quality as well. In the standardisation of the
supply chain management, the H&M could research about the market include qualities, features
and design as per the customer requirement. Also, regular monitoring and controlling will be
helpful to ensure quality and efficiency. The company has inventory around $4.3 billion which
has the believes in digitalisation process that accomplish the targets off serving global customers.
Optimise inventory management: As per this practice, the company needs to analyse the
demand at initial level. Once the demand gets analysed, the company needs to prepare and
calculate the budget on inventory levels in order to make it future use. Also, in order to attempt
the replenishment of the product that includes vital practices of supply restocking, one-time
blanket purchase and one time standing (Tien, Anh, and Thuc, 2019). This makes sure that the
inventory forecast will be helpful for forecasting the company operations accurately. It is the
another important practice of inventory management which will helps in achieving objectives. It
is the demand planning of company which the H&M will try to manage their inventory as per the
demand in market. It regarded as the company manufacturer to fix the inventory demand and

operation. The H&M should make sure about the ongoing use of inventory to lower down the
cost and provide more durable and affordable product.
Improve order to pay process: as per this strategy, the company needs to be make
change in supply chain management in which they need to improvise the order pay process. It
shows that the payment of the final inventory must be done at the time of procuring and
delivering. All the departments like finances, sales, logistics and warehousing are covered in this
pay process. it is the automatic pay deliveries which will simplify the process of payments by
working on each step from requisition to final payment. In the era of digital technology, the
H&M must use an automated platform to make the payment simple and authentic which will be
kept recorded. The delivery and final payment will be made securely by addressing all each step
necessary in making payments (Vidrova, 2020). With this strategy, the H&M can improve its
visibility of the inventory and product supply across the market. It will address the economic
factor of the country through which the organisation can make positive impact in maintaining
demand and supply, money flow in the country. When the payments will be processed at the
right time with utmost security and automated software. The final delivery of the products will
not get delayed. This strategy will be able to secure the effective position in the market for the
H&M for the post pandemic situation.
Select the most appropriate set of supply chain management practices and demonstrate why they
are the most appropriate for improving overall performance
Supply chain management practices are the crucial for the organisation which will helps in
planning for manufacturing, inventory control and logistics. It shows that the company needs to
enable the key operations during the SCM which can be applied through some models that are
discussed below:
The continuous flow model: this model is beneficial for those manufactures who only
makes single kind of product (Vu, and et.al 2022). The inventory becomes constant for these
kind of product due to which the profits can be made by the company by selling low cost
products. It gives stability to the products in the market. Therefore, the H&M could use this
model to efficiently enable the strategy of standardise process. the company could use this
strategy in their departments of one particular product. It will show that there is requirement of
the control and monitoring to involve standardisation which will helps in eliminating mistakes
and errors.

The fast chain model: as per this model, the supply chain goes in chain which tends to take
many repetition, fluctuations and new ideas in developing designs. The H&M could apply this
model in order to make trendy products which will not last for longer. The company will gain
advantage of the strategy for improving the order to pay process. when the H&M will make
sure that all the departments are working great and the payment are made on time by using this
strategy.
The efficient chain model: As per this model, the company can gain high efficiency in
delivery of the logistics for maintaining competitive position. The chain model will be helpful in
engaging labour and equipment’s effectively (Pagano, and Liotine, 2019). This model showcase
that the H&M needs to engage in the tough competition as they are working in the retail sector.
The agile model: The agile methods uses the key potential targets which assures that the
virtual integration, process alignment and network base. The company will be able to share their
responsibility of the supply chain to the other business and maintain collaborative designs and
method. The H&M needs to forecast that demand by using this strategy they will be able to come
with future trends of the customers.
CONCLUSION
The report has concluded that supply chain management is the best practice to achieve
success in the organisation. This shows that, the company needs to analyse the best practices
from finding the planning, manufacturing and logistics process. The report has provided various
strategies which the organisation can use in the current market. This shows that, in order to
secure long term position in the eyes of customers, the company need to make sustainable
decisions on SCM.

REFERNCES:
Books and Journals:
Ahmed, and et.al 2022. An inventory management for global supply chain through reworking of
defective items having positive inventory level under multi-trade-credit-period. Annals of
Operations Research, pp.1-28.
Cohen, M.A. and Lee, H.L., 2020. Designing the right global supply chain
network. Manufacturing & Service Operations Management, 22(1), pp.15-24.
Delbufalo, E., 2018. Agency Theory and Sustainability in Global Supply Chain. In Agency
Theory and Sustainability in the Global Supply Chain (pp. 33-54). Springer, Cham.
Ivanov, D., Tsipoulanidis, A. and Schönberger, J., 2019. Global supply chain and operations
management: A decision-oriented introduction to the creation of value (Vol. 2). Cham,
Switzerland: Springer International Publishing.
Omar, and et.al 2022. Understanding the dynamics of global supply chain sustainability
initiatives: The role of institutional distance from the buyer's perspective. Journal of
Purchasing and Supply Management, p.100792.
Pagano, A.M. and Liotine, M., 2019. Technology in supply chain management and logistics:
Current practice and future applications. Elsevier.
Shen, B., Xu, X. and Guo, S., 2019. The impacts of logistics services on short life cycle products
in a global supply chain. Transportation Research Part E: Logistics and Transportation
Review, 131, pp.153-167.
Srivastava, M. and Rogers, H., 2022. Managing global supply chain risks: effects of the industry
sector. International Journal of Logistics Research and Applications, 25(7), pp.1091-1114.
Thürer, and et.al 2020. A systematic review of China’s belt and road initiative: Implications for
global supply chain management. International Journal of Production Research, 58(8),
pp.2436-2453.
Tien, N.H., Anh, D.B.H. and Thuc, T.D., 2019. Global supply chain and logistics
management. Dehli: Academic Publications.
Vidrova, Z., 2020. Supply chain management in the aspect of globalization. In SHS Web of
Conferences (Vol. 74, p. 04031). EDP Sciences.
Vu, and et.al 2022. The impact of supply chain financing on SMEs performance in Global supply
chain. Uncertain Supply Chain Management, 10(1), pp.255-270.