H&M Case Study

H&M’s Supply Management Practices

H&M: Company Objectives

- The company strategy is carried out through:

o continuous expansion through the search for most promising markets,

o cost-efficient production of goods, and

o reduction of lead times.

Company Logistics

- Every stage in the logistic chain is controlled by H&M, which acts as the importer, wholesaler, and retailer.

- While the stock management is primarily handled within the H&M company, product transport is contracted to third parties.

- A large part of the flow of goods is routed from production sites by means of a transit terminal in Germany. In every country there is a distribution center, and upon arrival, goods are inspected and allocated either in a store or in the centralized stock room, referred to as call-off warehouse. The function of the warehouse is to replenish item levels in stores according to selling trends.

- Continuous IT development provides support to H&M logistics.

Buying and Production

- H&M does not have any factories of its own, and thus relies on a network of external suppliers managed through two departments: buying and production.

- H&M’s method of production is customer-driven. The company heavily focuses on the research and prediction of emerging trends.

- The production offices operate through the internal buying department and external suppliers, ensuring that buyers’ orders are placed with the right supplier, the goods are produced at the right price and quality, and that the suppliers conform to the company’s code of conduct as for working conditions.

- Production offices also produce sample garments and perform quality-testing procedures on the sample and actual product.

- A crucial factor in reducing lead times relies on the decision of which supplier is appropriate for the company at the particular time. This determination of a supplier depends on factors such as: cost-efficiency, transport times,...