Comprehensive Research on H&M's Information System and Recommendations

This research paper provides a detailed analysis of H&M's information system, covering its critical success factors, primary objectives, and the creation of a mission statement. It presents a formal organizational chart and examines the current ERP system, highlighting its strengths and weaknesses. The paper proposes a new system, detailing its primary features, technology platform, and data attributes within an ER diagram. It also explores user views, potential risks, and accounting controls. The research emphasizes improvements to address limitations in the current system, such as cost, complexity, lack of dynamic discounts, and inadequate material requirement planning and warehouse management, offering a comprehensive overview of H&M's information management.

RESEARCH ON
INFORMATION SYSTEM

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
H&M Success factors and primary objectives and mission statement.......................................3
Formal Organizational chart.......................................................................................................5
Current system and its weakness.................................................................................................6
Primary features of manufacturing execution system applicable in H&M ..............................10
Discuss the advantages of technologies- ..................................................................................11
Description of technology platform of the new system............................................................12
List of attributes for each entry in ER diagram.........................................................................13
Four user view...........................................................................................................................14
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................17

INTRODUCTION
Information system are an organizational system that is used in business for processing,
collection,storing and distribution of the system. These systems are mostly used by
organizational people for interpreting and processing information. At different level of system it
is used by different users for different output. Here for this research on information system H&M
organization system has been chosen. H&M is a manufacturing retail multinational organization
known for its fashionable cloths. It operates in more than 62 countries with more than 4500
stores. It has significant online presence with online presence in more than 33 countries. This
assignment will lay emphasis on H&M's critical success factors in details, its main primary
objectives, all the required helpful information for evaluating objectives and then creation of
appropriate mission statement is done for H&M ( Ptak and Schragenheim, 2016 ). Based on all
the above information formal organizational flow chart is shown. Current system used by them
has been explained and analysed, its weaknesses are also explained that will be addressed by the
new system and based on this flow chart and data flow diagram are prepared. Then main primary
features of the new improved system are explained that will work as the best solution for H&M
organization. At last technology platform used by the system is explained, list of all the data
attributes in ER diagram, users view management report and finally all the potential risks, data
breech and appropriate accounting controls for the new systems have been explained.
MAIN BODY
H&M Success factors and primary objectives and mission statement
Critical Success factors
There are few factors that make H&M successful are:
 One of the main factors of H&M success is its constant level of new products. They try to
bring fashionable new, designer products to their showroom for their customers every
year. They always try to bring newness to their products for their customers. For this
they always try to bring necessary, required changes into their system.
 They make different strategies for discount i.e. they offer discount to their customers in a
noticeably different manner. They offer exceptionally low level of discounts for at least
10 months a year but for other two months they offer at least or more than 50% discount
when their products become common. They do not offer any discount on their website.

 H&M mainly focus on their main core customers i.e. on their female shoppers. So they
offer more than 60% products for their female customers only, 30% for men and other
10% for children. This is one of the main success factor of H&M as their core customers
are females only.
 They constantly change their pricing architecture according to the season, it is also one of
their success factor as when an on-season then they increase their price according tot their
products and they have an off-season, they either reduce price of their products r offers
discounts.
 They have a different marketing strategy to attract their customers. They have created
their own YouTube channel of promotion of their products, they also do social media
marketing to convert their potential buyers into consumers. They also offer promo code
discounts to their online customers mostly during their end of the season sale that are
applicable both for their retail stores and on their websites ( Arrigo, 2018 ).
 At last their communication system is also one of their success factor. They have
successfully built a communication system to communicate their brand's identity to their
customers. They have adopted a much more editorial style of emails newsletters rather
than the formal one. They use magazine style product featuring rather than instant
clickable product images.
Primary Objectives
 To provide sustainable design and fashionable products to everyone.
 To lead changes towards renewable and circular fashion industry without changing their
morals and being fair and equal company.
 To manufacture sustainable products of different size and shapes in different categories to
many generations and be a wider industry to create fashion sustainably.
 Every brand within H&M group to provide products in their particular shape and size for
their customers i.e. which do not vary from brand to brand.
 To provide products to their customers in the best price they can to benefit their buyers.
 To share same morals, values, believe in fairness, equality, diversity and same ambition
for bringing changes towards sustainable fashion and design in this industry according to
today's generation and their taste.
 To build a brand image recognized by all of their customers worldwide.

Information that might be helpful for H&M
Today customers not only want fashionable and designer products but they also want a
effective and efficient system that can be used for providing any products' information instantly,
can be used for instant billing or apply any applicable discount on the product purchased by
them. Today many customers are becoming environment friendly so they focus more on products
that do not damage the environment, this will help them to attain their sustainable product
development objective. Buyers also want to pay the least price for the available product as
compare to the brands competitors ( H&M Information System, 2019 ). H&M should also try to
improve their online website and should start giving discounts on products available online also
as today many customers like to do shopping online as well this will also help them to attain
objective of giving best priced products to their customers ( Schütte, 2017 ). So at last they
should focus on their manufacturing of sustainable products and try to offer the best price they
can to their customers.
Mission Statement
Mission statement of H&M that would be appropriate for them to drive their business are:
 To drive a long lasting improvement and changes in themselves by investing in people,
community and various innovative ideas.
 To deal with the present and lead the future. To bring changes in themselves in order to provide their customers with the best quality
sustainable products in the best price they can.
Formal Organizational chart
Formal Organizational chart is an official hierarchical arrangements between different
jobs within the organizational units. It also shows relationships between departments within the
organization. Formal Organizational structure of H&M based on the information given above
can be bifurcated into three in a hierarchical structure. In the first column all the members of
board of directors will be included like CEO, chairman of the board, director, employee
representative director etc. then the second N-1 layer consist of chief Financial officer, Chief
operational officer, assistant CEO, creative head and new business division head. Then in the
third N-2 layer of hierarchical structure consist of head of all the other departments, such as:
Head of global human resource, head of business development, head of IT innovation etc. and
rest of the hierarchy goes on consisting of other employees in their respective departments.

Current system and its weakness
Enterprise resource planning is a business management software that is used to integrate
main core management business processes. It is a information system software that is used by
organizations to collect data and use it. H&M uses an enterprise resource planning system, which
is a complete software package which integrates all the data related to all the organizational
processes ( Laudon and Laudon, 2016 ). This software is designed to integrate all the business
processes across H&M organization. It has become one of the most important competitive tool
for today business organizations. This software uses a single database which allows all the
Illustration 1: Formal Organizational chart

departments to easily communicate with each other. It consists of different components that can
be used in different business areas such as:
 It consists of a retail planning component that can be used by retailers to plan and focus
on strategies to plan activities according to the situation to increase their sales turnover.
 It consists of a store operation functionality to streamline all the operations related to
store management functions. This component also helps in management of workforce and
various other things.
 Its inventory management component enables them to effectively manage and track their
goods or units. It helps them to manage both in and out of their products from inventory.
 Its supply chain management system also helps them to manage their end to end supply
chain for retailers. It helps them to ensure the interconnection of their information system
that can be easily accessed by their related stakeholders.
 Their ERP software also consist of demand forecasting component which track past
trends and predict future demands that are highly accurate and can be used to maintain
customers needs, satisfaction and helps them to maximise their sales.
 Software's vendor management system captures all the required information of their
vendors and compare their performance.
 This software also helps them in customer management with automated process which
captures customers, preferences, data and their activities. It also helps them, to keep their
customers engaged with their current products.
 It also consists of a financial management system that is mostly used by retailers for easy
accountability. It also provides a tool to manage all of their financial aspects.
 At last it consists of data integration component that hep the retailers for management of
processes and provide access to real time reports.
Weaknesses of the system that will be addressed by the new system
There are few weaknesses of the current systems that limits the organization's
functionalities ( Soto-Acosta, Popa and Palacios-Marques, 2016 ). They need a system which is
more robust, flexible and easy to handle. Few limitations of current system are:
 Cost of the software and operational cost of this system is much more than it should be.
 Indirect cost of ERP implementation is also too high like new IT infrastructure, up
gradation of WAN links etc.

 this system is way too complex to be understood, a new user might face difficulties in
operating without any proper training.
 Generation of files is completely manual in this system which are needed to be uploaded.
Due to this H&M organization faces loads of difficulties in integration of such files with
the system.
 Current system cannot create dynamic discounts for H&M promotional needs.
 Current system lacks in material requirement planning i.e. it cannot manage complete
manufacturing process such as planning, scheduling, inventory control etc.
 Due to lack of material requirement planning company cannot track the applications or
locations of parts, materials, products and due to which they fail to create record of
respective applications and locations.
 This software does not provide bin management facility also i.e. it doesn't allow
organization to assign bin numbers to its products to be tracked and monitored due to
which inventory accounts is not managed properly ( Singh and Teng, 2016 ).
 It doesn't consist of warehouse management component, it is one of its main weakness
i.e. it does not allow organization to control storage and movement of materials in the
warehouse. They need to manually manage processes like shipping, receiving, storage
etc.
 H&M have multi-location inventories which they have to manage separately as their
current system doesn't allow them to manage all of their inventories at multiple locations.
 It also fails to create a list of components or parts or materials associated with
manufacturing to ensure sufficient quantity of all the items for production of final
products in order to minimize waste or unused materials or parts.
 Compatibility of this software with new technologies is also low i.e. users faces
compatibility issues while connecting it with mobile phones or other devices.
Flow Chart

A flow chat is a type of diagram that helps to understand flow of data through a system of
workflow of any process. Here flow chart of the current system has bee shown and explained.
Data flow Diagram
Data flow diagram maps the flow of information in any process or system. Here, context
level data flow diagram of the current enterprise resource planning system has been shown and
explained.
Illustration 2: Flow
chart of the current ERP system

Primary features of manufacturing execution system applicable in H&M
Manufacturing execution system is a type of information system that connects, control
and monitor the complex processing of manufacture. This system is also beneficial for data flow
in the factory. The objective of manufacturing system is to ensure their effective execution in
business operations and improve the production output. Manufacture execution system offering
more services to the vendors and manage their supply chain of H&M. There are important
features of manufacturing execution system that help for decision making to mange the
production effectively. Material requirement planning- These features are important part of manufacturing
execution system that performed different operations such as scheduling, planning and
inventory control etc. Trace-ability- Manufacturing execution system track the location and materials that used
in the application. It also creates record on the basis of application and location. Warehouse management- This management system allows for H&M organization to
control the storage of raw materials within warehouse. It also includes the receiving
storage, processing and picking the product.
I
llustration 3: Context level data flow diagram of Current Enterprise Resource planning
system of H&M organization

 Multi-location inventories- In H&M, The manufactures have various warehouse location
to store their product. This feature allows for manager to distribute the product and
services. It also helpful for maintain the accurate inventory at different locations. Distribution requirements planning- Manufacturing execution system provide for
monitoring the different process or variables regarding inventories. This feature provides
the facility to identify that what requirement is essential for distribution. It also maintains
the distribution level of manufacturing in appropriate manner. Bill material- It allows for manufactures to create different lists of component that
associated with the processing of manufacturing. The manufactures always maintain the
sufficient quantities of the product In H&M. In this way, it will help for reduce the
minimal amount of waste.
 Project life cycle management- This is the important feature in H&M firm that support to
manage and monitor the project from the stage of engineering through distribution or
production. In this way, This organization gain clear view of entire overall quantity of
project.
Manufacturing execution system is used by the many manufacturing firms to control and
manage the activities of production. It is also useful for client to check the details regarding the
work schedule and resource allocation of product development. Manufacturing execution system
always maintain the list of bills that provided to the client. Manufacturing execution is the
suitable for H&M organization to manage the business operations and functions.
Discuss the advantages of technologies-
MRP- It stands for material requirement planning that help for scheduling, planning and control
the entire system in proper manner. This technology helps for H&M to maintain their low level
of inventory. MRP technique is planning to maintain the lowest possible material and
Advantage-
 Availability of time that help for used the right material in production.
 Collecting the enterprise's data and also analysis their planning.
 Reduce the cost of capital and optimal use of production resources.
 Minimum use of manufacturing resources.

MRPII- It stands for manufacturing resources planning technique that address the operational
and financial planning. This technology is based on the modular construction such as bill
materials, order and inventory, cost reporting etc.
Advantage-
 It is based on the overall strategy that support to the manufacture to plan according the
efficiency and resources.
 MRP II system provide the better opportunity to the employee to maintain their clear
visibility of information regarding the business.
 This software allows for controlling the process of transaction and selling the product for
growth or development.
EDI- EDI is an electronic data interchange for the used of business information. It allows H&M
firm to send the information from one place to another. The manufacture firm also exchange the
file and documentation by using EDI technique.
Advantage-
 Increasing the productivity and profitability of organization
 It helps for minimizing the errors Improving the services to the end users.
Description of technology platform of the new system
To overcome all the limitations of current system new information system i.e.
manufacturing execution system is an information system that can be used instead of current
enterprise resource planning system. This system helps in monitoring, connecting and controlling
of all the complex data flow and manufacturing system in the organization. Its main goal is to
ensure effective execution of all the operations of manufacturing to improve output of the
production. It is a simple computerized system used to track and document complete
transformation of finished products from raw materials ( Nguyen and et.al, 2016 ). It also
provides information that can help company to take major manufacturing decisions to
understand how current conditions can be used to optimized in order to obtain improved product
output. It generally works in real time foe enabling the control of various elements in process of
production.
List the financial and non-financial data attributes for each entity in the Entity relationship
diagram.