[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

Table of Contents

I. Today

II. Challenges

III. Enterprise Business System

IV. Future

History

History - Before 2000

In 1947, The first store opens in Vasteras, Sweden, selling women’s clothing. The store is called Hennes.


In 1952, The first store outside Sweden opens in Norway.


In 1964, Founder Erling Persson buys Mauritz Widforss.

Sales of men’s and children’s clothing begin.

The name is changed to Henne & Mauritz.


In 1974, H&M is listed on the Stockholm Stock Exchange.


In 1980s, Stores open in Germany and the Netherlands.

H&M acquires the mail order company Rowells.


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.


In 2006, A major expansion of online and catalogue sales begin with the Netherlands.

The first store in the Middle East open via franchise.


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.


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.


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.

Current Situation

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

Organisation

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

Internal Factors

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

External Context

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

Major Competitors

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

SWOT Analysis

Why do we need Business Information Systems?

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?

Business Information System

Definition of BIS

A combination of hardware, software, infrastructure and trained personnel organized to facilitate planning, control, coordination and decision-making in organisation.

BIS? BIS!1. BIS = IT ? (X)

2. BIS = Variety (O)

3. BIS = Creativity (O)

4. BIS = Challenging (O)

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)

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

H&M’s SCM Model

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 Relations Management (CRM)

Customer Relationship Management (CRM)

CRM is a model for managing a company’s interaction with current and future customers.

Necessary Data for CRM

Analytical

Operational

Communication

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)

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


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


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


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

After ERP Project

Less staff costs + Forecast

demands = Efficient operation

Current Issues

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

Solutions

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?

Any Questions?

Thank you very much!

For further information,our report will soon be available.

[Business Information System] H&M’s SCM, CRM & ERP Strategies

Leadership & Management