Sustainable Supply Chain Management of H&M
H&M or alternatively Hennes & Mauritz is known all over the world as a Swedish international company, which offers a wide range of retail fashion clothes for ladies, men, and kids of different ages. H&M has 2 800 stores in 49 markets all over the world. The overall “H&M Group comprises of H&M and H&M Home along with COS, Monki, Weekday, Cheap Monday and other stores that include self-governing trademarks that prompt the individual fashion logic”. The territories of the H&M Group Companies include the major markets in Germany, the United Kingdom, France and the United States. They have a great potential for the further growth and development in other markets all over the world. The key areas of concern are the creation of “digital platforms” as well as promotion of the existing ones through the “mobile applications, social networks and digital media channels”. Thus, the markets of the H&M Group Companies are based in the “Asia Pacific, Europe, Middle East & North Africa, North America, and South America” (The H&M Group, 2013).
In addition, the H&M Group comprises of a variety of diverse self-governing brands such as “H&M (fashion clothing for men, women, youth and children), COS (men and women accessories and other trends), Monki (innovative playful and colorful design collections), Weekday (best price offers for MTWTFSS, Carin Wester, Bless and Bruno Pieters brands), Cheap Monday (street fashion and high fashion accessories) and other stores (shoes, bags, accessories, beauty, personal style)” (The H&M Group, 2013).
People and Opportunities
Besides, the H&M Group offers a wide range of employment opportunities in terms of fashion. Today, there are around 104,000 corporate employees of different cultures throughout the countries all over the world. In other words, the potential of the company’s development lies in the deep value of people as well as their beliefs towards the importance of responsibility and sustainable community and working environment (Working for H&M, 2013).
The most important factor that influences people approach as well as generates high results is hidden in the challenges faced by people, including the customer-oriented teamwork. In fact, the fact of hiring people for different markets lies within the ability of people to grow both personally and professionally as well as switch to better job positions throughout the countries.
Based on the perceptions of the H&M Group, “Personality is the most important asset that H&M employees have”. Therefore, the company offers a wide range of opportunities for its employees, including the possibility of training and care. The overall effectiveness of the company lies in the heart of the business conceptions about the spirit of the H&M Group as well as its expansion in a variety of ways (Working for H&M, 2013).
The understanding of diversity differs in any business, however, the top management claims that their sustainability depends on the fact that “people should be allowed to be themselves”. In other words, in case people are not pushed to work hard and in particular, they do the job that they absolutely adore, the company owners would have a lot more benefits than ever. Hence, people could unleash the power within and therefore produce respectable profit margins. In addition, the working atmosphere encounters the most favorable working conditions, including payment options, working shifts, as well as the opportunity to show oneself in the company and be promoted to a higher respected and better paid position (The H&M Group, 2013).
H&M Incentive Program
The idea of the H&M Incentive Program is to inspire people and to guarantee their employment opportunities. In fact, the H&M Incentive Program offers over “4 million shares that equal to about SEK 1 billion for its development”. In other words, this program is about the reward and gratitude of people despite their status in the company. The exception of the funding operations is that it starts only after a person turns 62 years old (Working for H&M, 2013).
The cotton that is used to produce H&M clothes promises to gain sustainability by the end of 2020. In other words, the importance of using cotton is the greatest asset of the company since this is more significant for people as it is a conventional approach to clothing. In fact, it is considered that such an approach to the materials would have less negative impact on the environment and at the same time would generate more opportunities to achieve the desired goals. Besides, the manufacturers of cotton use an organic as well as recycled type of cotton in the manufacturing of clothing. As a matter of fact, it has a great variety of advantages for people. It is good for health and at the same time it does not harm the environment. In addition, all materials that are left are recycled thus creating more opportunities for the production of new clothing as well as protecting the nature (Yafa, 2004).
Better Cotton Initiative (BCI)
The H&M Group is willing to develop the possibilities for farmers to produce more cotton and at the same time decrease the amount of water and chemicals. Such an approach helps in protecting the nature as well as increases the working efficiency. In fact, the necessities for cotton growing are cut down to a minimum. At the same time, there is a great number of non-governmental organizations (NGOs) that take an active part in the development of such cotton growing (Cotton, 2013).
All For Children Project
The project of children support is a great combination of efforts of the H&M Group and UNICEF. As a combined project, they support “around 2 million children around the world from poor countries with 25% sales volume of the H&M Group along with other donations and funding, which equals to about USD 12.5 million” (Community projects, 2013).
Social Networking and Social Media
For the H&M Group, social media is an important means of communication with its customers as it makes people visit their public pages all over again. Such communication involves engagement, social learning, and the possibility to use time better, which provides opportunities for personal and professional entertainment. Additionally, social media is about the possibility to encourage the dialogue, reach more people, and help them go ahead as well as to build connections all over the world by means of social media channels (Baran, 2001).
Social Networking is one of the major marketing aspects that is very important for the H&M Group. The reason is that social mediamarketing is a means of transportation for any organization no matter if it is a commercial or non – governmental one. All in all, social networking is about delivering information to the customer on the global market by means of using the Internet resources, such as social and digital media channels, including Facebook, Twitter, YouTube, Blogs, etc. (Entrepreneur, 2012).
Social Media Statistics
Mass media is a great source of power in society! According to the e-Biz MBA Ranking, the estimated unique monthly visitors of the most influential social networks as of 2012 state that Facebook has about 750,000,000 people and Twitter has about 250,000,000 people. In addition, the branding statistics on both Facebook and Twitter address the following details (MIT SMR, 2012):
- 85% of users are on Facebook
- 58% of users have “liked” a brand on Facebook
- 57% of Facebook users have 100+ friends
- 49% of users are on Twitter
- 29% of users follow the brand on Twitter
Facebook vs. Twitter
Since Facebook and Twitter are the most impactful channels of communication with customers, the H&M Group uses them to address Seven Communication Intentions or the goals of communication, which are (Harvard Business, 2012):
- Informing – journalism, education, training;
- Connecting – community, transactions, portals;
- Attracting – hey you, over here, look at me;
- Researching – academic, applied, commercial;
- Persuading – individual, social, commercial;
- Entertaining – diversion, relaxation, recreation;
- Expressing – individual, social, cultural.
Social networks are more sophisticated and challenging from the position of network marketing. For this reason, the H&M Group is willing to have a strong impact on the customers in terms of their choices of branded clothing. The H&M Group uses them simultaneously as a means of spreading information about their products using the World Wide Web along with other social networks (Harvard Business, 2012).
In a case study, it is the most important to address Facebook and Twitter by means of marketing communication that serves as a bias for the successful marketing strategy for any food company around the world. The marketing aspects are very important for any business sphere as a means of transportation for any organization no matter if it is a commercial or non – governmental one. All in all, the social networking is all about delivering information to the customer on the global market by means of using the Internet resources such as Facebook and Twitter (Sammut and Bauer, 2011).
Therefore, the fans of H&M would be able to experience seven communication intentions through the social networks and with the offers of the H&M Group all over the markets. Such an approach helps in increasing the sustainability of the H&M Group with even more effectiveness than ever (H&M in social media, 2013).
Sustainable Supply Chain
The H&M Group’s sustainability strategy is based on the proper supply chain management at all levels of interaction within the production process. It includes the vast majority of suppliers and employees along with other team members that contribute to the sustainable value chain. The management of the company believes that only due to working teams the company is able to sustain effectively on the market while making a positive change in the world of cotton retailing. The complete set of the supply chain management includes different teams of people, including the “buyers (designers and pattern makers), merchandisers (production offices and order control), auditors (sustainability teams, Code of Conduct and development support), suppliers (sufficient training and management, first-tier suppliers, environmental performance and compliance, price, lead-time, capacity, quality and random sample), second-tier suppliers (fabric or yarn manufacturers) and finally employees in the company`s factories (factories working conditions)” (Supply chain, 2013).
Cotton Second Use and / or Recycling Strategy
Since 2012, the H&M Group has concentrated on a new strategy that holds back the competitors and at the same time gives an advantage for growth and development of the H&M Group all over the world. In other words, the overall aim of the strategy is to “reduce, reuse, and recycle” products. Such an approach helps in minimizing the supply of non-essential materials and at the same time offers solutions for the utilization of the already existing materials and not wasting the new ones. Such an approach allows creating new clothing with the economy of cotton sources (Annual Conscience Actions Sustainability Report, 2012)
The idea of recycling today is significant for the reason that it helps produce more and better products at the same price. In other words, cotton is recycled based on the fabrics’ leftovers during the process of the overall production of clothing, which then turned into other fiber and rolled down to the newly produced fabrics. It also gets certified every time before the production process. The reason for such a strategy is that there are many benefits of cotton recycling such as the fact of the abridged use of pure cotton, as well as the utilization of chemicals, ground and water supply etc. In fact, it could be recycled for a second sale in mixtures of about “70% of recovered fibers”. Such an approach serves as a means to improve the market supply of the reused cotton as well as provide more room for further innovations in the clothing industry. Indeed, a long lasting process of cotton production is made as much transparent and easy to control as possible. Such a procedure is made in order to maintain the sustainability of production as well as to check the standards of cotton providers (Cotton, 2013).
Based on the Conscious Actions Sustainability Report of the H&M Group, it is possible to consider the effectiveness of their supply chain (Sustainability Reports, 2013):
- The H&M Group is considered to be one of the top leading fashion industry retailing companies in the world;
- the H&M Group is the number one global retailer of fashion clothes, which managed to recycle the timeworn clothes and reuse them for the production of new clothes;
- the H&M Group is known as the first global company, which uses organic cotton;
- the H&M Group has launched the employees` support program with an opportunity to increase their salaries after a meeting with the management of the company;
- the H&M Group also created a progressive international water supply mechanism for the whole industry of fashion clothing.
Conscious Actions Sustainability Report 2012
The statistics and data below are taken from the Sustainability Report as of 2013 (Annual Conscience Actions Sustainability Report, 2012):
- 11.4% of cotton is considered to be sustainable with only 7.8% of certified organic cotton and 3.6% of improved cotton;
- About 150.000 farmers, who produce cotton are annually trained for professional effectiveness in the cotton industry;
- 450 million liters of water are saved during the production of cotton clothing;
- 74% of the top managers as well as 50% of the board members are women;
- Consumption of electricity was reduced by 15% since 2007 and is aimed at 20% by 2020;
- 570,821 clothing employees were educated with the help of short movies since 2008;
- Over 100,000 employees as well as medium managers of the H&M Group and suppliers were also educated about safety when working with fire;
- The agreement with the H&M Code of Conduct between suppliers have expanded the sustainability presentation from 79.3% in December 2011 to 81.7% in November 2012;
- the H&M Group invested around SEK 42 million or about $6.3 million or 5 million Euro into communities in India and Bangladesh.
Vision for Fashion
Today the high fashion trends are beating the street-wear clothing and this is due to the reason that the vast majority of people care about their style. Some people are more stylish, others are not that fashion-oriented. Both categories of people do care about what fits them better, especially if there are no restrictions. Besides, the overall idea of high fashion is to determine the nature of people and help them show their individuality.
The most important reason for such trends is the place of birth as well as the process of upbringing along with appropriate education. These aspects play a major role in the development of personal style that is different for every person. This is important since people are true to themselves as well as to their status in life and career. Therefore, with regard to understanding the key importance of people and their choices of clothing, the H&M Group conducts the process of work in a way to maintain the highest quality of production at all levels of supply chain.
According to Steele, “The key elements that people value in high fashion are quality, manufacturing services, designer, special editions, independence, brand name, and finally communication”. The highest quality of materials along with the greatest manufacturing services makes a complete stylish effect. At times, it is important to know the designer of a particular clothing. This justifies the reasonable price that goes in accordance with skills and education of every designer. Any special editions are also essential for stylish people as it optimizes the brand and its collaboration with collections of different labels and artists in the fashion industry (Steele, 2000).
The independence of specific brand name, for example, the H&M Group, is also a vital factor for people, who care about the stores where they buy clothes. Usually, high fashion brands have private stores. The difference makes perfect for the only reason that it is rather common for people to wear unique clothing that is produced for the elites but not the masses. In addition, communication works better if there is a need to advertise any marketing campaign and draw special attention to what people say about a certain brand and other retailing stores around the globe.
Every single organization in the world needs to consider logistics as well as supply chain management, including the capacity and demand for the production quality, the area of services, and the amount of goods. Competition is always going to be present in the market, and companies have to be sure that in case they are running a business with ease and understanding, they proclaim it for the sake of customers worldwide and will safeguard themselves from every kind of risk connected to cases of hazards (Ambrose, Donna, Fynes and Lynch, 2008).
If companies are responsible for what they do and try to improve their business all the time, it means that they care for consumers and work for their good. People always pay attention to quality and deeply value providers of goods and/or services that are of high quality. That is the reason why they have high purchasing power in response. Today, there are high levels of unpredictability and uncertainty in the marketplace, and if companies are performing with dignity, they will be the top ones with a deep value for quality (Hough and Ashley, 1992).
If a company produces a product or offers a service that consists of several parts that are sold to the customer, then supply chain is one of the main aspects of the business. By managing this supply chain, it is possible to illustrate logistics as well as management practice that directs the flow of services and/or goods to the customer by means of delivering the best quality. Every company that either produces products or offers services has to ensure thorough logistics and supply chain management. Management of all companies all over the world should evaluate the quality of this procedure and constantly improve it to remain afloat in the industry (Kotler, 1997).