- How do they differ in terms of their approach to design stage of the supply chain?
Benetton, H&M, and Zara highly regard the design stage in the fashion industry as they believe it is key to making them successful. However, their designing approaches differ. To start with, H&M designs are created and managed by a team of more than one hundred designers who are based in Stockholm. These designers also work closely with 50 pattern designers, around a hundred buyers, and several budget controllers. The company’s target is to make clothes that are valuable but not exclusive, and in order to do so, H&M’s design department has adopted a concept that balances fashion, price, and quality. On the other hand, Zara’s clothing designs are decided by three groups of professional, which include the designers, market specialists, and buyers. What is more, Zara’s design department is divided into the women’s clothes section, men’s section, and children’s garment, a characteristic that is different from Benetton and H&M. The designers, market analysts, as well as buyers in each section, work together in design halls, which also hold prototype designs workshops. The fascinating thing about Zara’s design department is that it begins, rather than ending in the retail stores. The market specialists often keep in touch with Zara’s retail stores to know how customers react to new designs and then communicate with the rest of the design team members. Benetton’s design stage is simple compared to Zara’s and that of H&M. It consists of about 300 designers who are responsible for designing all of the company’s brands and engaging in research to identify new materials and clothing concepts.
- How do they differ in terms of manufacturing stage of the supply chain?
Most of Benetton’s products are manufactured outside Italy due to the availability of cheap labor. Benetton has factories in North Africa, Eastern Europe, and Asia, which operate in a similar manner. Benetton owns a central company, which tackles some of the manufacturing tasks that require expensive technology and at the same time coordinates the production activities that require intense labor. The company contracts companies to handle the labor-intensive production activities, and these contractors are often run by ex-Benetton employees who can also decide to subcontract. However, all the production activities by non-Italian networks are directed on what to produce in what amounts by Benetton’s central facility based in Italy. Benetton’s production companies specialize in different types of clothes. For instance, companies based in Eastern Europe specialize in jacket production while T-shirts are made in Spain. On the other hand, H&M relies on suppliers who are approximately 750 in number for the production of their clothes, unlike Benetton who own production factories. Nevertheless, these suppliers are not independent as H&M has 21 production offices located in different countries meant to coordinate the suppliers. Most of H&M’s clothes are made in Europe and Asia. Finally, Zara’s manufacturing stage is almost similar to Benetton’s in the sense that most of their products are made in their companies. Zara has a network of Spanish-based factories, which produce about half of their products. What is more, Zara sub-contracts, operations, such as sewing, which is labor intensive while their own companies handle the capital-intensive activities.
- How do they differ in terms of the distribution stage of the supply chain?
H&M’s distribution stage differs from that of Benetton and Zara. Both Benetton and Zara store and pack their products in automated warehouses and then distribute them to their retail networks. Both Benetton and Zara consider those automated warehouses as major investments. On the contrary, H&M does not have automated warehouses but instead, they subcontract the distribution of their products even though they conduct stock management internally. H&M distributes their goods from the area of production to the retail country through their transit terminal in Hamburg. The goods are then inspected and moved to the stores, where they are later sold to retailers.
- How do they differ in terms of the retail stage of the supply chain?
The three companies have different and unique retail stages in their supply chain, which work to their advantage. To start with H&M manage and sell their products through their own retail stores. The stores are often average in size and they are structured and arranged in a way that the customers find it easy and comfortable to find what they are looking for. On the other hand, Zara retail stores are smaller in size than H&M stores, and this suits their small batches. Zara does not produce repeated designs and therefore, their batches are relatively small. As such most of their products barely last for more than 2 weeks. The continuous display of new designs by Zara makes customers not to delay a purchase and encourages them to frequent the store. Currently, Benetton’s retail includes small stores run by third parties, which have conjoined with the company’s larger stores. These stores are bigger than those owned by H&M, and they display many Benetton products at a go, providing a good shopping experience for the customers.
- For each brand, identify and explain an SCM strategy or trend utilized in its supply chain
Putting value over price is the most visible and also the most important strategy that H&M has utilized in its supply chain. H&M design department focuses on the creation if valuable clothes. They produce clothes, which are not expensive but that does not mean that H&M’s clothes are cheap. To create value for their products, H&M balances fashion, price, and quality. As such, this strategy enables H&M to satisfy their customers as well as facilitating the smooth flow of business. On the other hand, Benetton has largely utilized internal and external collaboration strategy in their manufacturing stage of the supply chain. Internal collaboration is seen in the way they have a central manufacturing company in Italy, which coordinates all the production activities while external collaborations include a network of small contractors, who are located outside Italy. This strategy enables Benetton to take advantage of the cheap labor available outside Italy, which minimizes the cost of production. Zara’s SCM strategy in the design stage is adaptive since it relies on the customers’ reactions to new designs to come up with other designs. This works to their advantage since they do not have to manufacture old designs and the few, which they produce does not last long in the stores.
- In your opinion, which of the three companies have the best SCM and why?
Of the three companies, I think that Zara has the best SCM. This is because they utilize customers’ opinion in their supply chain. This enables them to make clothes that meet their clients’ needs, and in the long run, Zara reaps the benefit of not having to sell their products at a throwaway price.