H&M and Zara-Global Sourcing

In today’s competitive business world, the best companies have discovered a powerful new source which encompasses on all the integrated activities that bring the product to the market and create satisfied customers and is called “Supply-Chain Management”.

Supply Chain Management: An International Journal, Volume 7, Number 5, 2002, pp. 271 – 282;

The supply chain management is considered as a management concept from past two decades as the customers are concerned about timely and safe delivery. The competitiveness has been increasing among the companies to deliver the products as quickly as possible to the customers all around the world. This has made the supply chain management as a vital tool for the management. This is also measured as a competitive parameter for the companies.

Global sourcing is a technique of strategic sourcing in the global strategy, which is an effective approach as a part of organization’s procurement section. The objective of global sourcing is to develop global efficiencies in the delivery of a product or service for the firms achieving a sustainable competitive advantage and this is an important weapon have been focused in the 21st Century. The well-known organization, Hennes and Mauritz (H&M) is one of the largest international fashion retail and production house with the great deal of businesses all over the world. In the today’s competitive market and

Supply-chain management consists of developing a strategy to organize, control, and motivate the resources involved in the flow of services and materials within the supply chain. A supply chain strategy, an essential aspect of supply chain management, seeks to design a firm’s supply chain to meet the competitive priorities of the firm’s operations strategy.

Mellat-Parast and Spillan (2014) defines supply chain management as the method of handling material and information moves from the beginning, through the organization, and to the end-user. This is a very important factor of organizational strategy.

Chase, R. B., & Jacobs, F. R. (2011). Operations and Supply Chain Management, 13e. Boston: McGraw-Hill Irwin.

A Customized Textbook, Supply Chain Management SCHM2301, ISBN9781308037400 Copies are on reserve in the library

Supply chain is the process of getting a product from point A to point B. With how advanced technology has become, there are more ways than ever to transport the product. The goal of a supply chain managers is to get the product into their hands. The mangers negotiate with the suppliers to purchase the raw materials. Then, they ship those materials as efficiently as possible through trucks, ships, and trains. Then finally, they do everything they can to make the product gets to the store on time so the consumer can enjoy the product. Why is this so important? Well, without it, we as the consumer wouldn’t enjoy that fresh produce that Kroger provide or the convenient drive thru pharmacy. Everything we own is because of a company’s supply chain, and without these supply

Chase, R., & Jacobs, F. R. (2011). Operations and Supply Chain Management (13th ed.). Boston, MA: McGraw-Hill Irwin.

Russell, R. S., & Taylor,B. Operations and Supply Chain Management,8th Edition. Wiley, 2013-12-02. VitalBook file.

To start, Schroeder, R., Goldstein, S., and Rungtusanatham define supply chain as “the set of entities and relationships that cumulatively define materials and information flows both downstream toward the customer and upstream toward the very first supplier.” Schroeder, R., Goldstein, S., and Rungtusanatham goes on to identify supply chain management as “the design and management of seamless, value-added processes across organizational boundaries to meet the real needs of the end customer.” Organizations have to prepare themselves to the best of their ability in order to provide or their customers. Customers expect to receive the upmost service, regardless of the type of organization they make contact with.

Russell, R. S., & Taylor III, B. W. (2014). Operations and Supply Chain Management, 8th edition. Hoboken, New Jersey: John Wiley & Sons, Inc.

In comparison to competitors, Zara’s business strategy, in regards to strategic partnerships and cost of production, provide for a strategic competitive advantage. Zara, unlike its competitors such as Gap, Benetton, and H&M, does not use Asian outsourcing. Eighty percent of Zara’s materials are manufactured in Europe, with 50% made in Zara controlled facilities in the Galicia region of Spain near headquarters. Most of Zara’s competitors have 100% outsourcing to cheap Asian countries. Though the cost of production in Spain is 17-20% more expensive than Asia, Zara does have a competitive advantage over its competitors in regards to operations. The local strategic partnerships that Zara maintains with manufacturers in Europe allow for a product throughput time of 3-4 weeks from conception to distribution. To make this happen, the company designs and cuts its fabric in-house and it acquires fabrics in only four colours to keep costs low. The proximity of these suppliers gives Zara great flexibility in adapting their product lines based on up to date market trends and consumer behaviour. It also decreases costs of holding inventory. Zara’s competitors, through outsourcing to Asian countries such as China, sacrifice the benefits of proximity for low labour and production costs.

(Bowersox, D.J., Closs, D.J., and Cooper, M.B. (2010). Supply Chain Logistics Management. (3rd Edition) New York, NY: McGraw-Hill/Irwin.