Transforming H&M: From Unsold Stock to Supply Chain Success

Question 1

What are the primary components of supply chain management, and how do they relate to H&M's challenges?

Question 2

What are the reasons for global sourcing, and how did H&M leverage this strategy?

Question 3

What are the various types of inventory costs, and how did they impact H&M's business?

Question 4

What are the external factors affecting direct distribution, and how did they influence H&M's operations?

Question 5

What are the important supply chain processes, and how did H&M implement them to address its challenges?

Answer

Supply Chain Management Components

Integration, operations, purchasing, and distribution are the pillars of supply chain management. H&M faced challenges in each of these areas, from outdated design processes impacting operations to delayed distribution due to supply chain inefficiencies.

Global Sourcing Reasons

H&M utilized global sourcing to access lower-cost production in Asia, diversify its product range, leverage new technologies, and expand its market reach through online channels.

Inventory Costs

Holding costs, ordering costs, shortage costs, and quality costs affected H&M's profitability as unsold inventory piled up due to outdated design strategies and slow supply chain responses.

External Factors on Direct Distribution

Government regulations, infrastructure challenges, competitive pressure, and economic factors all played a role in influencing H&M's direct distribution capabilities and supply chain operations.

Supply Chain Processes

H&M implemented new technology, automated warehouses, and logistics centers to enhance integration, operations, and distribution. However, challenges persisted in timely merchandise delivery and adapting to fast fashion trends.