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

1. 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

2. Table of Contents
I. Today
II. Challenges
III. Enterprise
Business System
IV. Future

3. History

4. History - Before 2000
In 1947, The first store
opens in Vasteras,
Sweden, selling
women’s clothing. The
store is called Hennes.

5. History - Before 2000
In 1952, The first store
outside Sweden opens
in Norway.

6. History - Before 2000
In 1964, Founder Erling
Persson buys Mauritz
Widforss.
Sales of men’s and
children’s clothing
begin.
The name is changed to
Henne & Mauritz.

7. History - Before 2000
In 1974, H&M is listed
on the Stockholm Stock
Exchange.

8. History - Before 2000
In 1980s, Stores open in
Germany and the
Netherlands.
H&M acquires the mail
order company Rowells.

9. History - Before 2000
In 1998, The first store
opens in France.
Outdoor advertising
featuring famous
models starts.
H&M online shopping
begins.

10. History - After 2000
In 2000, The first US
store opens on Fifth
Avenue in New York.
Stores open in Spain.

11. History - After 2000
In 2006, A major
expansion of online and
catalogue sales begin
with the Netherlands.
The first store in the
Middle East open via
franchise.

12. History - After 2000
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.

13. History - After 2000
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.

14. History - After 2000
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.

15. Current Situation

16. Key Facts
H&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

17. Organisation

18. 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

19. Internal Factors

20. Strengths
Providing 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

21. Weaknesses
No real guarantee of sales
Wide range of customers
Product recall
No price increase possible by store
Only standard sizes of clothes

22. External Context

23. 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

24. Major Competitors

25. 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

26. SWOT Analysis

27. Why do we need
Business Information Systems?

28. 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?

29. Business
Information System

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

31. BIS? BIS!
1. BIS = IT ? (X)
2. BIS =Variety (O)
3. BIS = Creativity (O)
4. BIS = Challenging (O)

32. Importance of BIS
Operational
excellence
New products,
services and
business model
Customer and
supplier intimacy
Improved
decision-making
Competitive
advantage
Day-to-day
survival

33. Supply Chain
Management (SCM)

34. 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).

35. Key Facts
World 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

36. 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

37. H&M’s SCM Model

38. 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

39. Customer Relations
Management (CRM)

40. Customer Relationship
Management (CRM)
CRM is a model for managing a
company’s interaction with current and
future customers.

41. Necessary Data for CRM
Analytical
Operational
Communication

42. 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

43. Enterprise Resource
Planning (ERP)

44. Enterprise Resource
Planning (ERP)
An ERP management system integrates
area such as planning, purchasing,
inventory, sales, marketing, finance,
human resources, etc.

45. 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

46. Operation Support
System (OSS)
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

47. Operation Support
System (OSS)
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

48. Operation Support
System (OSS)
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

49. After ERP Project
Less staff
costs + Forecast
demands =
Efficient
operation

50. Current Issues

51. 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

52. Issues with CRM
Slow development of E-commerce
Relatively unactivated social networking
Lack of features in the mobile app

53. Solutions

54. 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

55. 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?

56. Any Questions?

57. Thank you very much!
For further information,
our report will soon be available.