Supply chain practices for the three European apparel companies seem unique because of their objective and goals that differ widely. Though these companies are dealing in the same line of goods the business environment is pushing them to provide garment products under diverse circumstances. Zara is a Spain owned Garment Company which deals in manufacturing and selling garment products across the world. This company has grown over time as it handles all the manufacturing components of its products. Zara began its design processes by spotting several trends across the world. Details of requirements that agents spotted were then passed over to designers at Zara’s headquarters in Spain (Zara, 2010).
This company centralized its productions so that it would refine its output in a closer environment. Ideas for various designs came majorly from the stores of Zara. Sales staff and store managers constantly updated the head office on moving stocks; they additionally provided input on new lines, styles, colours and fabrics that customers demanded. Design and production centre had a team of about 200 designers that churned out around 60 styles each. Zara had three different units namely children’s, women’s and men’s clothing lines. In the production centre, fabrics were transformed into garments and clothes that suit a particular group among the three distinct units. Zara sourced for unprocessed and un-dyed fabric from Far East, India and Morocco. Below is an illustration showing the flow of operations in Zara.
Zara’s Supply Chain
Design stages and the involvement of the three companies vary greatly based on their objective and goals. Management for these three companies also have varied types of organization structures a condition which makes them design the flows of operation in different ways. Supply chain management is one aspect which will affect the distribution and overall sale of the product. In economics demand and supply functions should balance to bring about equilibrium conditions.
During design stages, Zara uses a process that spots trends across the world. Details that have been spotted are then transferred over to production centres located at the company’s headquarters in Spain. Zara maintained a well coordinated design team in Arteixo, in Northern Spain. Mainly, ideas for new and existing brands came from Zara’s stores. Store managers and other sales staff updated the head office on daily basis about moving stocks and also provided useful inputs on colours, new lines, styles and fabrics that customers demanded urgently. Zara’s employees had a great task of checking on latest trends. Employees would attend all the shows in order to spot new trends.
On the other hand, design stages for a Sweden based company Hennes & Mauritz (H&M) varied greatly from that of Zara. H&M initially sourced products from its agents in Asia and sold them through their stores. During the late 1980’s, H&M started to build production offices which had a task of coming up with products that met the consumers needs and tastes. This was not even enough; this company went ahead to plan and design its products centrally in Sweden. H&M developed its purchase and design department; the department had over 100 in-house designers and also cooperation from around one hundred buyers all over the world. The Zara Company had almost twice the number of designers who each of them churned out about 60 styles each. The company concentrated on three factors namely quality, fashion and price.
In contrast to Zara, H&M used highly sophisticated design software programs and other colour matching tools that Zara did not employed. These tools enabled the company to bring out the best combination of themes, colours, designs and fabrics demanded by customers. Similarly H&M had divisions of clothe production namely men, kids, women, divided and denim. Each of these divisions had special team of designers, pattern makers, assistants, buyers and controllers who produced garments based on consumer demands. Even though, Zara had divisions, these one for H&M were many and far more complex and specific to a given group of consumers. On spotting new trends, both Zara and H&M consider using their own employees to get trends from the market. Inputs from operational managers and staff were considered by H&M a scenario similar to Zara.
Benetton is an Italian company which deals in clothes and clothing just like Zara and H&M. Issues of designing and innovation remained in the company headquarters of Benetton. This company had one design centre in Italy similar to Zara which had its design services done from the head quarters. Unlike the other two companies, Benetton had several designers who came from different backgrounds and therefore had different cultures. Additionally, designers worked in three groups a condition that seemed similar to the other two companies. In Zara and H&M, divisions were based directly on the consumer needs but Benetton had totally different divisions. The divisions or groups worked on products’ commercial aspects, research on fabrics and finally on graphics (United Colours of Benetton, n.d).
The other companies only spotted trends using other means unlike Benetton that used in-store surveys and tests to evaluate consumer demands and tastes together with spotting of trends. Benetton spotted trends using hired and qualified designers who took time to get more clues from fashion shows and advised on some fashion which were within the price range of the company. All these were done to keep up with fashions in the market. Similar to H&M, Benetton considered the use of computer aided design during garment design. Unstitched fabrics were normally sent to contractors unlike H&M which bought products directly from agents. Zara did not relied on agents or contractors to design and produce its products.
Zara Company relied on design teams for the final design after which a prototype was produced. Production of the prototype was not much of an issue since fabrics were available within Zara. Zara considered mostly un-dyed and unprocessed fabrics; this was done to ensure that adjustments would be possible to suit varying customer needs. After sourcing the fabric from the Far East, India and Morocco, Zara then sent their fabrics for cutting in their own automated faculties. After cutting the fabrics, pieces were then distributed to 350 small workshops in Spain for sewing. However, these workshops were not owned by Zara. Stitched garments were ready in about a week’s time and then sent back to production centres to be checked for quality and other issues.
Similarly to Zara, H&M production activities were centrally done in Sweden. However, H&M differed slightly with Zara’s centralization of activities by shifting some of its production activities to some European countries and other Far Eastern countries. Unlike Zara, H&M by the 2006 had around 21 production offices. Zara Company did not alter its production centres but rather it maintained them over time. H&M considered buyers to be part of their design process. The production offices in H&M had a lot of responsibilities compared to those of Zara and Benetton. H&M production offices seemed like those coordinating activities to meet the needs of customers by looking for the right suppliers (H&M, n.d). Benetton works in a similar manner to H&M. It ensures there are close relationships between contractors and the company. Benetton offers planning and support to its contractors a move that ensures there is high quality in its production. H&M and Zara stresses on production by getting the right fabrics and contractors for the job.
On distribution the three apparel companies elicit various ways of transporting and delivering goods to the customers and departmental stores. Zara Company transported their garments on ready-to-sell batches. Upon arrival at the store the goods are displayed immediately because they have been coded and arrive in the same form as it was packed. This kind of transportation seems expensive to the company but it keeps quality to required levels. For H&M, distribution was done from the central warehouse in Germany. This central point enabled quality issues to be handled and managed easily. Similar to H&M, Benetton had a distribution centre located in Italy. The centre aided in checking on quality issues after the production process was complete. This company used franchisees unlike the other two companies. However, on issues to do with expansion, the agreements allowed Benetton to set up branches even where other retail stores existed and not owned by them. Benetton had express rights to train staff in order to keep its quality as high as possible during handling up to selling periods.
Incessant development in the Process of Production - Benetton’s system of Production underwent the most important revolution in the 2005. It developed from an organization founded on divisions such as cotton and wool, to a structure based on units of service such as quality control and planning. The novel production system is supple, and integrates each stakeholder in the value chain. Therefore it assists in plummeting product time of delivery and it improve the service and quality levels.
Benetton has three business processes units, which includes quality-checking unit, customer service unit and Logistics unit. The consumer service unit plays a fundamental role in examine customer demands level of satisfaction and Logistics unit. The quality-checking unit maintains a track of confirmation level of requirement of each design. Labeling and tagging of the garments units are also done by them. Logistics team is the most significant team in the firm. Hong Kong is at the present center for Benetton that has turned out to be operational along with the US hub and European hub. The Benetton’s logistic scheme has now distorted from a federal system to satellite control system. The system facilitates entity hubs to focus on their specific regions of delivery and supply the suitable figure of units and the fitting design at the precise time. Ever since 2005 until now the stores have reported low inventory level and high turnover rate of the stock (Ukessays, n.d).
Hiring youthful Employees is a competitive priority of Benetton. The company now aims at hiring youthful persons who will take confront of quick-paced surroundings. In 2005, a new plan referred to as the ‘Wanna Sell?” came to existence as a part of the development and training program. In this project, enthusiastic and young individuals were selected and put into groups to participate in sales workshops. Throughout the 2008 financial meltdown, Benetton remained to offer their staffs with inducements and thereby cheering them to work with bigger passion.
Supply chain plan is the ultimate core capability of an organization, since it involves very significant option of what capabilities, it should expand interior and should assign to external suppliers where to place its process and how to run its overall long-term ability with the system. The Benetton pursue double supply chain to meet with customer needs.
Benetton launch two seasonal compilations per year, which it is not meet with the customer desires by providing fashion, the newest fashion trends that competitor like Zara is already doing. The Benetton abridged the number of parts by 30 percent in the normal collection and implemented new flash collection through the season based on the newest trend of the customer and market preference. Benetton had design their apparels for the four groups such as women, children, men and expectant mother.
In order to defeat its competitors and meet their customer needs, Benetton do a lot of research to establish different type of designs and colors for their merchandise line. Benetton uses the CAM/CAD system to design its style and spends significantly in improved and newer technology that could ease the production process.
Distributions and Logistics are part of the operation of Benetton. Benetton is in the clothing industry where dependability and speed is major issues; the company aimed direct management of distribution and logistics. It has extremely invested in automatic logistic to hold 10,000,000 items per month. In the year 2004, the new Hong Kong hub supplying in Japan, China and other nations in Asia was opened. A study showed that Benetton’s economies of scale were likely in a freight-forwarding purpose. In a mutual venture, it established Worldwide Integrated Distribution Enterprise (WIDE) to run the customs clearance and global forwarding functions. It was initially established to handle the product movements in the North American. This organization deals with space carriers--removing a level of freight-forwarded involvement.
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The Company tracks the hub and beam model for managing distributions. In its key regions, near its manufacturing units, Benetton has central delivery centers. These central distribution headquarters are in partnership with other local distribution centers that distribute straight to retail outlets. Retailing issues does not affect all the companies because of the three companies Benetton is the only one which employs joint ventures and franchising. Zara and H&M prefer to use their own stores to sell the products as they view that this helps in preserving quality.