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Zara, H&M, United Colors of Benetton: Supplying Fast Fashion Report

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Updated: Jul 11th, 2021

Executive Summary

Supply chain management (SCM) in the garment retailing industry has undergone drastic changes as a response to the emergence of “fast fashion” in the sector. This paper has discussed the inherent differences in the SCM of three leading brands – Zara, H&M, and Benetton. These companies differ from one another in various aspects within their design, manufacturing, distribution, and retailing models. Zara has the best SCM given its vertical integration approach, which has led to the agile supply chain model.

Introduction

Garment retailing has evolved to accommodate ever-changing industry demands, especially the need to sell up-to-the-minute fashionability. Competition has also increased over the years, forcing brands to become creative in the structuring of their prices to ensure affordability while maintaining quality at the same time (Kumar & Saurav, 2018; O’Byrne, 2017; Perry, 2019). Therefore, the concept of “fast fashion” has emerged whereby product development cycles are compressed as much as six times. Consequently, supply chain management strategies have also evolved to accommodate these changes. An ideal fast-fashion supply chain involves designing garments, manufacturing, distribution, and retailing to reach the end user. This paper compares the SCM for Zara, H&M, and United Colors of Benetton (UCB). Recommendations on how these brands could improve their SCM are also given.

Discussion

Differences in Design

H&M and Zara use almost the same approach towards design with designers, buyers, and other specialists (Shen, 2014). For Zara, designing starts at retail stores through feedback from buyers. Benetton’s 300 designers create the clothing brands together with researching new concepts and materials. Benetton offers two traditional collections a year, but both Zara and H&M offer new products continuously throughout the year.

Differences in Manufacturing

Both Zara and Benetton have production factories in Spain and Italy, respectively, where they concentrate on capital-intensive operations like dyeing and cutting. However, Benetton outsources labor-intensive operations, such as sewing, to contractors in Asia, Eastern Europe, and North Africa. H&M does not own any factories, and thus it depends on a network of 750 suppliers in Europe and Asia for its production.

Differences in Distribution

Both Zara and Benetton use automated warehouses located close to manufacturing centers to store, pack, and assemble orders for their retail outlets. At H&M, an in-house team manages stock but physical distribution is handled by third parties. Goods flow from the production site to the countries where retail outlets are located whereby they are inspected and taken to different stores or are put in a central stock store known as “Call-Off warehouses”.

Differences in Retailing

Both H&M and Zara own and run their retail stores. Benetton has been trying to adopt a similar model whereby small shops run by contractors are merged with other company-owned and operated larger stores. Zara’s retailing model stands out because garments stay in stores for less than 14 days as production is done in small batches without repeating designs.

SCM Strategy for Each Brand

Zara uses an agile supply chain management strategy by focusing on its ability to fulfill customers’ changing demands within a short period (Aftab, Yuanjian, & Kabir, 2017). It manages the flow of goods from suppliers through manufacturing to distribution and retailing (Aftab, Yuanjian, Kabir, & Barua, 2018). Benetton has adopted the technology strategy in its distribution by automating its warehouse activities to store, pack, and assemble individual orders for all its retail outlets. H&M employs a collaboration strategy by partnering with over 750 contractors in Europe and Asia for its manufacturing purposes (Wen, Choi, & Chung, 2018).

The Best SCM

Zara has the best SCM of all the other brands. Its designs are customer-driven with the fastest lead times in the industry. The company owns the critical segments of manufacturing – capital-intensive operations, such as dyeing and cutting, and it has automated its warehouses for timely distribution. Zara also owns and runs all its retail outlets, which are smaller compared to other brands. As such, Zara is responsible for its SCM operations and its agile approach to supply chain makes it the best among its competitors.

Recommendations

H&M

H&M needs to change its manufacturing model and own factories to be in control of its production activities. Depending on third parties to run the production entirely might affect lead times (Castelli & Sianesi, 2015; Lopez, 2018), which is a critical factor in the fast fashion industry. Owning its factories will allow the company to automate its warehousing to expedite the fulfilling of individual orders for its network of retailers (Kondracki, 2018; Andrews, 2017).

Benetton

Benetton should change its approach to design and hire specialists to focus on researching new materials and clothing concepts. As such, the available designers will be freed to concentrate on designing and will remain ahead of the competition because the industry is ever-changing at high speed. The company also should complete the merging of all retail outlets and eliminate third parties to ensure that it remains in touch with customer needs for ultimate consumer satisfaction as a competitive edge (Chugh, 2017; Martino, 2015).

Zara

Zara runs a near-perfect SCM, but there is always room for improvement. The company should continue levering technology to sense demand and supply by anticipating what lies upstream in the supply chain (O’Marah, 2016; Aabed, 2017; Schroeder, 2018). This strategy will ensure that the company continues to be a leader in gathering and digesting supply chain data for better decision-making.

References

Aabed, A. (2017). Supply chain in the readymade garments industry (Zara case study). Web.

Aftab, M., Yuanjian, Q., & Kabir, N. (2017). Postponement application in the fast fashion supply chain: A review. International Journal of Business and Management, 12(7), 115-128.

Aftab, A., Yuanjian, Q., Kabir, N., & Barua, Z. (2018). Super responsive supply chain: The case of Spanish fast fashion retailer Inditex-Zara. International Journal of Business and Management, 13(5), 212-227.

Andrews, K. (2017). Web.

Castelli, C. M., & Sianesi, A. (2015). Supply chain strategy for companies in the luxury-fashion market: Aligning the supply chain towards the critical success factors. International Journal of Retail & Distribution Management, 43(10/11), 940-966.

Chugh, S. (2017). Web.

Kondracki, C. (2018). Web.

Kumar, A., & Saurav, S. (2018). Supply chain management strategies and risk assessment in retail environments (advances in logistics, operations, and management science). Hershey, PA: IGI Global.

Lopez, E. (2018). Web.

Martino, G. (2015). Supply chain management in the fashion retail industry: A multi-method approach for the optimization of performances. Web.

O’Byrne, R. (2017). From traditional to fast fashion retail: The supply chain transition. Web.

O’Marah, K. (2016). Forbes. Web.

Perry, P. (2019). Exploring the international fashion supply chain and corporate social responsibility: Cost, responsiveness and ethical implications. Web.

Schroeder, C. (2018). Web.

Shen, B. (2014). Sustainable fashion supply chain: Lessons from H&M. Sustainability, 6(9), 6236-6249.

Wen, X., Choi, T. -M., & Chung, S.-H. (2018). Fashion retail supply chain management: A review of operational models. International Journal of Production Economics, 207, 34-55.

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IvyPanda. (2021, July 11). Zara, H&M, United Colors of Benetton: Supplying Fast Fashion. Retrieved from https://ivypanda.com/essays/zara-hampm-united-colors-of-benetton-supplying-fast-fashion/

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"Zara, H&M, United Colors of Benetton: Supplying Fast Fashion." IvyPanda, 11 July 2021, ivypanda.com/essays/zara-hampm-united-colors-of-benetton-supplying-fast-fashion/.

1. IvyPanda. "Zara, H&M, United Colors of Benetton: Supplying Fast Fashion." July 11, 2021. https://ivypanda.com/essays/zara-hampm-united-colors-of-benetton-supplying-fast-fashion/.


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IvyPanda. "Zara, H&M, United Colors of Benetton: Supplying Fast Fashion." July 11, 2021. https://ivypanda.com/essays/zara-hampm-united-colors-of-benetton-supplying-fast-fashion/.

References

IvyPanda. 2021. "Zara, H&M, United Colors of Benetton: Supplying Fast Fashion." July 11, 2021. https://ivypanda.com/essays/zara-hampm-united-colors-of-benetton-supplying-fast-fashion/.

References

IvyPanda. (2021) 'Zara, H&M, United Colors of Benetton: Supplying Fast Fashion'. 11 July.

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