Comparison of the Supply Chain Activities and Strategies of the three famous Apparel Companies - Case Study Example

Case Study Analysis Comparison of the Supply Chain Activities and Strategies of the three famous Apparel Companies: Fashion industry is now one ofthe top most revenue generating industries of an economy. In the past few decades, there was a slight difference between apparel clothing (ordinary) and fashion clothing (special). Now this gap has almost covered due to the creativity of the designers. Many leading brands are currently running the fashion industry. Some of them are Zara, H & M and Benetton. In this case study, we have made a comparison of all the operational and supply chain activities of the three fashion brands. Zara is Apparel or Clothing Company, head quartered in Spain. It is the world’s largest apparel retail store having chain stores in many countries. It is famous that the production, operations and then the supply chain activities are so well managed at Zara that it takes just two weeks to manufacture a new product and then launch at a display store. Whereas other competitors working in the Apparel industry take minimum of six months for manufacturing and then launching a new product in the market. This developed structure is really a source of competitive advantage for the Company Zara (Bhagwat 2011). Benetton is another Italian based Clothing Company, working globally regardless of the geographical boundaries. Benetton is famous for its dual supply chain system. The production is usually based on the quantity demanded from the stores themselves. This is also sometimes known as pull driven strategy. In addition, the last one, H & M is Swedish based Apparel Company working successfully in the market. The full name of H & M is Hennes and Mauritz. The products are famous for its reasonable prices and the availability of variety of stocks within no time. It is famous that no single item remains on shop shelves more than a month duration. At Zara, the efficient operational activities and the processes are the real cause or the source of gaining competitive advantage as compare to many other competitor firms operating in the industry. The managers at Zara Company continue the research process throughout the whole season and not just in the end. For this reason, they are successful in the provision of new products within no time. The lower prices as compare to many other competitors may also give a positive impact to strengthen the competitive advantage of the company. Anyone can imagine the work efficiency at Zara Company that the product stay at distribution centre is only three days and after that, workers dispatch it to different retail stores. Another innovative thinking of marketing managers at Zara Company is that they do not focus on advertising and marketing campaigns for their company and products rather they like to invest in the opening of new retail outlets at different localities. Benetton is involved in the production of many other product lines like cosmetics, perfumes, Merchandise, Toiletries and watches but the main and core business area is the apparel manufacturing or the clothing industry. The main source of generating revenues is the large area where the Company is serving now. In other words, we can also say that the rapid globalization can be the main source of competitive advantage for Benetton Company as compare to many other competitive companies who are serving a small area (Sull & Turconi 2008). The expansion strategy is also a part of strong supply chain strategy that the company is providing all the product lines in almost every corner of the world within no time (Leonardo 2009). As the globalization context is vast as compare to a local context, a company may have to face many competitors having different specialties and competitive advantage. Therefore, the strategy planning at Benetton Company should be so strong that it may face any type of challenge coming in the way of success. When we talk about the H & M Company then the first word, which may come to our minds, is Trendy. The Company H & M introduced an innovative way of offering products as compare to other competitors working in the industry. The managers offer new clothing twice a year, once in each six-month duration, in addition to these two permanent launches, H & M also offers many midyear collections. These collections are always related to the current fashion and trend requirement. Therefore, people may prefer an H & M product just for the sake of being trendy and up-to-date regarding fashion. The permanent collections are long term oriented whereas the midyear collections are always short term oriented from the market point of view. This midyear collection may create a competitive advantage for the company and thus gain a higher position in the market as compare to many other market players. This may create a level of creativity and innovativeness in the product lines. The managers at H & M Company design their operational activities in such a way that they may aim to accomplish efficiently and effectively (Petro 2012). If we compare the strategic planning of the three companies i.e. Zara, Benetton and H & M then we may come to know that each one of them is aiming to gain maximum share of the industry in its own style. Zara is famous for its efficient working and operations, where Benetton is famous for its expanded area of serving and globalization or we can say internationalization. While the third one Company H & M is famous for its innovativeness and eager towards the emerging fashions in the clothing industry. The focus of all the companies is to meet the market demands with the help of their efficient supply chains. This is most competitive era and only those companies can survive which actually outperform in the industry. The competitive advantage may depend on the characteristics, expertise and capabilities of the Company but the fact remains same that they have to compete efficiently in the market so that they may continue to survive in the industry. 2. SWOT Analysis of each Supply Chain Strategy: At first, we will analyze the operational and supply chain strategy of Zara Group of Apparel industry. Zara Company actually targets those individuals who have medium to high purchasing power (Zhelyazkov 2010). They are not focusing on low price strategy to fully penetrate in the market. All the target segments of the market usually prefer Zara’s products because of brand consciousness. The individuals who are looking for a low price as compare to the market may not find it suitable for them. A large number of retail stores can be a strengthening point for the company because people can easily access these retail outlets. The stock at these outlets is renewed within a month. This actually shows the sales cycle of any retail outlet. It is the world’s biggest chain network and the brand name is well developed in almost all areas of the world. Another strong point is the controlled cost. All the supply chain, marketing, manufacturing and operational costs are extremely efficient, it means that they are working on low cost strategy but still they are charging high prices for their products. Another strong point, which can also be a competitive advantage for the company, is the efficient and fastest delivery systems at the retail outlets. It takes maximum of two weeks i.e. fifteen days that a product may reach retail outlet from its production facility. Zara is not focusing investment opportunities in the marketing and promotional campaigns for the Company and product lines. Advertising is really needed in order to create a good image about the product in the minds of the people (Wright 2011). However, Zara Company managers are ignoring this opportunity they invest all of their revenues and profits in the opening of new outlets but they are not spending it on the advertising. This can be a weak point for the Company and its managers. The companies who are investing a large portion of their revenues in the promotional and marketing campaigns can gain a higher position over the companies who are not investing in it. Another weak point is that customer may not be loyal because of high prices. They may move towards any other option, which is cheap for them. Only a specific class of individuals who are status and brand conscious can stick to this Zara brand. Still there are existing opportunities for Zara Group i.e. if they have a strong and efficient operational and supply chain base then they can expand their limits or boundaries. They may enter into more markets that are global. This will give them a strong sense of competition because the global market may also include a large number of competitors having their own specific competitive advantage. If they are not interested in the traditional advertising methods then they can even avail the opportunity of e marketing. The wide spread use of internet has made it valuable for the companies to use this cyber source for the promotion of their products. Many other strong competitors include Benetton and H & M are creating threats for the company. Benetton Company is also an active player of the Apparel industry. There may be differences in the basis of competitive advantage but still all of them are competing with each other. Benetton is also offering their products for a segment of people having medium to high purchasing power. The clothing lines introduced by the Benetton Group are also famous for their creativity, innovativeness and trendy looks (Paola 2010). People usually prefer this brand when they want to look trendy (Minnelli 2012). Another strong point is the quality products at Benetton. The Company managers are focusing on the Total Quality Management rules and regulations. As compare to other clothing brands, H & M is focusing on the advertising and marketing campaigns, which helps to strengthen the position of the product lines. The diversified portfolio actually represents the strong and developed network of the supply chain activities. Another strong point is the efficient and fastest replenishment and replacement cycle of the products and brands. However, the Company is performing at a very good level but it is traditional that every good company may also bear certain weaknesses (Pichardo 2013). It is the case with Benetton Company also. They have certain controversial issues regarding their advertising promotional campaigns. Just because of these controversial issues, many other suppliers may not want to have a share in their organization. This can be a worst situation for the company managers if it prolongs up to certain time but there are easy solutions for this problem. There are still many global or international markets, which are still undiscovered for the Benetton Company so they focus on expansion of the boundary lines (Jasmine et al. 2010). Almost every company when enter an industry, faces competition among different market players. If we talk about these three companies i.e. Benetton, Zara and H & M then they are also playing policies and tricks against each other in order to get higher position in the market. Zara is new in this industry as compare to H & M, which is now experienced very much. Experience is very important factor if we study anyone’s business strategies. Another strengthening point for H & M is that they are offering a wide range of product lines and thus covering a major portion of the market by their extended product lines. The products are also cheap as compare to Zara Company’s products and brands. This low price is also a good strategy to gather the maximum part of market share. The innovativeness and the creativity is an additional feature to their product lines. The research and development department is continuously working on the emerging fashions and trends of the Apparel or Clothing industry and thus make it available to the public under their brand head. In addition to innovative and up to date products, there is another feature i.e. efficient supply chain cycle of the product. The H & M Company is focusing on direct distribution strategy. This will help them to deliver faster and in relatively low cost as compare to many other competitors of the market. This unique type of distribution method can be very effective for time management at the H & M Company (H & M 2012). A weak point for H & M clothing lines is the low quality they are offering in the form of their products. It is obvious matter that when they are charging a very low price as compare to other market players then it means they are sacrificing on the quality of the product. This is advantageous in many cases but still the Company may have to lose a cream of the target market. The cream includes all those individuals who actually prefer famous and high priced brands. They are very much conscious about the selected brands, which they may use, in their routine life (Stanislovaitis 2012). Still there are many opportunities for the Company H & M, they can expand their operational area and thus serve a larger portion of the market. There should be a revision policy for the quality control of the brands and the product lines. There should be such system that actually maintains the cost of the production but increases or enhances the quality of the product. Reference List Avila, R & Podbielak, R 2012, “H & M”, IMC Project Part 1, Integrated Marketing Campaign, page 1-31. Bhagwat, S 2011, “ZARA: IT for fast Case Analysis”, Zara Case Paper Analysis, University of Houston Victoria. Jasmine, C & Yong, W 2010, “Zara: Case Study”, Case Study Final Report, It For Fast Fashion, page 1-27. Leonardo, B 2009, “Benetton Group, A Fancy Color Diamond”, Underweight, Italian Luxury Goods, Pg 32-128. Minnelli, V 2012, “The Benetton Group”, United Colors of Benetton, Treviso Italia. Paola, A 2010, “Zara and Benetton: Comparison of two Business Models, Volume 1 de 1. Petro, G 2012, “The Future of Fashion Retailing, the H & M Approach”, Lifestyle, Forbes, viewed 22 April 2014 http://www.forbes.com/sites/gregpetro/2012/11/05/the-future-of-fashion-retailing-the-hm-approach-part-3-of-3/ Pichardo, L 2013, “Benetton”, The Marketing environment, viewed 23 April 2014 http://benettonblog.blogspot.com/2013_02_01_archive.html Stanislovaitis, I 2012, “H & M Expansion in Lithuania”, University College of Nordjyland. Pg 1-67. Sull, D & Turconi, S 2008, “Fast Fashion Lessons”, Business Strategy Review, Journal Compilation, page 5-11. Wright, T 2009, “Zara.com SWOT Analysis”, SWOT Analysis, pg 1-4. Zhelyazkov, G 2010, “Agile Supply Chain: Zara’s Case Study Analysis”, Design, Manufacture and Engineering Department, Strathclyde University Glasgow. Read More