[Business Information System] H&M’s SCM, CRM & ERP Strategies
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Transcript of [Business Information System] H&M’s SCM, CRM & ERP Strategies
To Bring Fashion & Quality at the Best Price
On H&M’s SCM, CRM & ERP Strategies
Woojin KIM Pauline PROT
Garance COUVRY Charles GUERIN
Class 14 / Year 2013-2014
History - Before 2000
In 1947, The first store opens in Vasteras, Sweden, selling women’s clothing. The store is called Hennes.
History - Before 2000
In 1964, Founder Erling Persson buys Mauritz Widforss.
Sales of men’s and children’s clothing begin.
The name is changed to Henne & Mauritz.
History - Before 2000
In 1980s, Stores open in Germany and the Netherlands.
H&M acquires the mail order company Rowells.
History - Before 2000
In 1998, The first store opens in France.
Outdoor advertising featuring famous models starts.
H&M online shopping begins.
History - After 2000
In 2000, The first US store opens on Fifth Avenue in New York.
Stores open in Spain.
History - After 2000
In 2006, A major expansion of online and catalogue sales begin with the Netherlands.
The first store in the Middle East open via franchise.
History - After 2000
In 2007, The first Asian stores in Hong Kong and Shanghai.
The new concept store COS is launched.
The expansion of online and catalogue sales continues in Germany and Austria.
History - After 2000
In 2013, The first H&M store in the southern hemisphere opens in Chile.
H&M also opens in Estonia, Lithuania and Serbia.
Indonesia becomes a new franchise market.
History - After 2000
In the same year, H&M introduces online shopping in the US.
The & Other Stories brand is launched in several European countries.
COS, Monki, Weekday and Cheap Monday also open in new markets.
Key FactsH&M offers fashion for women, men, teenagers and children
The collections are created centrally by around 100 in-house designers together with buyers and pattern makers
H&M also sells own-brand cosmetics, accessories and footwear
The Store are refreshed daily with new fashion items
Online shopping is currently able
H&M buys its goods from around 900 independent suppliers
H&M has about 16 production officies
H&M Hennes & Mauritz AB comprises six independent brands
The turnover in 2013 was SEK 150 billion
H&M operates in 53 countries and has 3,200 stores with 116,000 employees
Germany is the biggest market, followed by the UK and Sweden
Business Concept
‘’Fashion and Quality at the Best Price’’
Having few middlemen
Buying large volumes
Having a broad, in-depth knowledge of design, fashion and textiles
Buying the right products from the right market
Being cost-conscious at every stage
Having efficient distribution
StrengthsProviding quality fashion at the best price through strong procurement and designing strategy
Wide geographical market presence
Strong marketing: Collaboration with designer
Large target group
Global brand recognition
Centralised management in Stockholm
High number of stores worldwide
Weaknesses
No real guarantee of sales
Wide range of customers
Product recall
No price increase possible by store
Only standard sizes of clothes
Fashion Industry
Ever-changing trends in the market
Shortened lifecycle due to the sophisticated tastes of average consumers
Highly uncertain demand
Increasing demand for affordable price
Comparison with Competitors
Business strategy Enabler 1 Enabler 2 Enabler 3 Enabler 4
H&M Price Leader Low-cost country sourcing
Eliminate middleman along supply chain to consolidate volume
Simplify product design to drive cost
down
Reduce time to market to 2-3 weeks
Benetton Worldwide Brand
Have full control of production facilities to control quality
Outsource retail store operations
Use near-shore sourcing fast moving
products
Use offshore sourcing for standardized products
Zara Time-based Competition
Production small batches and have them tested in pilot
stores
Utilize vertically integrated supply
chain
Automated distribution centers are strategically located between center of demand
Coordinate with airlines to reduce transportation lead-time for both outbound and inbound shipments
Adidas Product Variety
Mass customisation Offer product choices
Use the same suppliers to product
custom
Use air shipment to compensate long
Question: Needs for BIS
Long, complex and inflexible apparel pipelines => How did H&M improve its buying cycle and responsiveness of its supply?
The growing importance of supply chain management => Which competitive advantage does H&M have?
Constantly changing consumers’ trends => How does H&M read the trends?
Definition of BIS
A combination of hardware, software, infrastructure and trained personnel organized to facilitate planning, control, coordination and decision-making in organisation.
Importance of BISOperational excellence
New products, services and business model
Customer and supplier intimacy
Improved decision-making
Competitive advantage
Day-to-day survival
Supply Chain Management (SCM)
SCM involves planning, design, maintenance and control of the flow of materials and information along the chain in order to efficiently satisfy customers’ requirement (Schroeder, 2000).
Key FactsWorld Class Manufactures
Minimising the wasteful costs associated with the ‘Value Chain’
Introducing the AMTs, to ensure strategic cost reduction and improvement of lead time.
Providing the customer with a high quality product
Distribution Recourse Planning (DRP)
Just-in-time (JIT) concept
Continuing good inventory management system
Before SCM Project
Complex and inflexible supply chain in the clothing industry
Stock was bought twice a year
Long lead-time
=> It did not seem to suit the demands for companies like H&M
After SCM Project
Reduce lead-time to the customer by nearly half
Reduce the need to rely on suppliers
Less risk than purchasing from a few suppliers
Benefit financially by reducing administration, labour and delivery costs
Quicker and more reliable distribution
Customer Relationship Management (CRM)
CRM is a model for managing a company’s interaction with current and future customers.
Operational CRM - Mobile Marketing Strategy
A mobile marketing campaign to promote the latest collection
SMS coupons, mobile banner ads
Main goal: to drive membership of the H&M Club
Enterprise Resource Planning (ERP)
An ERP management system integrates area such as planning, purchasing, inventory, sales, marketing, finance, human resources, etc.
Operation Support System (OSS)
H&M embarked on a two-year roll out of an employee-scheduling system designed to improve its use of staff resources and maximises time spent by staff on the shop floor
Operation Support System (OSS)
The system is linked to its Epos applications which forecast demand for products
It is also linked to H&M’s human resources and payroll systems which lets the retailer control staff cost more accurately
Operation Support System (OSS)
This Workfoce Management application from software supplier WorkPlace Systems will be hosted at a data centre in Stockholm
It estimates how many employees are needed throughout the week by tracking an individual store’s sales
Operation Support System (OSS)
This Workfoce Management application from software supplier WorkPlace Systems will be hosted at a data centre in Stockholm
It estimates how many employees are needed throughout the week by tracking an individual store’s sales
Issues with SCM
H&M takes more time to get production from design to the retail store than Zara
Lead-time can vary from 2-3 weeks to 6 months
Since lead-times are often short, the ability to manage the supply chain is crucial
Unpredictable demands due to ever changing trends in fashion
Issues with CRM
Slow development of E-commerce
Relatively unactivated social networking
Lack of features in the mobile app
Strategies for Online Store
Ensuring low cost/free delivery
Providing strong after-sales support and customer care
Offering exclusive online deals on clothing
Ensuring fast efficient delivery
Guaranteeing the customer an easy and inexpensive means of returning unsuitable goods
Making it east to shop online by keeping to date with technology
Self-manufacturing
Perhaps H&M could begin manufacturing their cloths to speed up the design to retail store process
… And what do you think of?