ZARA and H & M front desk behind the secret

H & M dual supply chain balance efficiency and cost, ZARA is based on the speed supply chain hit the world. This is the fashion industry bigwigs, spell debut, but have their own way after the stage. H & M tries its best to find a profit balance between efficiency and cost H & M's huge poster attracts the attention of every passerby on the façade of the Garrett Mall in Huai Hai Zhong Road. The giants from Sweden's fashion retail industry will open the first flagship store in the Mainland here. A few stops away on Nanjing Road West, H & M's rival - ZARA, the flagship brand under Spain's Inditex group, is on the hot front. ZARA this area of ​​about 1,500 square meters, this year's Spring Festival has hit a one-day sales of more than one million yuan success. Opened in prime locations, and luxury neighbors, fresh store, the use of "a small amount, variety, parity" concept, to make rapid response to fashion, is ZARA and H & M's common ground. With these tactics, they have grown rapidly over the past few years: ZARA became the third-ranked apparel retailer in the world in 2003 with worldwide revenues of 4.6 billion euros in fiscal year 2004 and 9.7% interest rate, surpassing the number one apparel in the United States The profit margin of the chain brand GAP6.4%. As Europe's largest apparel retailer, H & M has seen a 100% increase in turnover over the past five years, an increase of 75% in store numbers, an increase of 262% in earnings per share and a pretax profit of FY05 of 13.5353 billion SEK (About 118,859 million euros). "Being a fashion follower, not a creator" means having effective control over the leadtime (the time it takes for a product to go from design to sales). Data show that, ZARA's lead time is 15 days, H & M's lead time as fast as 20 days, while the domestic garment enterprises usually lead time of 90 days to 120 days. ZARA and H & M, which is often a pair of rivals are often filed by the fashion industry, the front of their fight is bright, but it is the supply chain after the fight. ZARA is proud of the supply chain speed, even in stores away from Spain in China, it also miraculously maintained a 15-day speed; and faith "time, quality and price" triple play H & M is used Two supply chains are struggling to find a profit-balancing point between efficiency and cost. Dual supply chain and ZARA compared to H & M's fastest lead time of 5 days late. However, the cost of these five days gives H & M a cost advantage - "It costs 30-50% less than ZARA." ZARA uses the "speed" supply chain to fight the world H & M respected the "three in one" concept, the highest cost of the highest, so its production is always to have a good labor, low wages and high-quality production of the transfer area. From the mid-1960s to the 1970s, H & M successively set up production bases in Northern Europe, Southern Europe and East Asia. It does not own its own factories but outsources production to 700 independent suppliers in 22 countries in Europe and Asia Business How to establish close contact with these suppliers all over the world? H & M has taken a strategy of setting up production offices in its manufacturing locations to coordinate the relationship between internal purchasing departments and suppliers and open up new suppliers. "The production office wants to make sure that the right supplier is available and that the product is produced at a good price and at a low price," said a H & M staff member in Shanghai. Based on purchasing costs, H & M placed 60% of its production in Asia and the rest in Europe. In general, conventional style fashion and children's wear are produced in Asia in small quantities and highly popular clothing, usually to European suppliers. "Not all products lead time as short as possible, our lead time from two or three weeks or even 6 months.In fact, the fast lead time is not necessarily the most favorable, the appropriate lead time will be conducive to our price , Time and quality to find the best balance between points. "When ZARA was committed to creating the myth of speed, HORM Group's CEORolf Eriksen revealed its unique business strategy. This strategy deduces a classic story of time and cost. As a result, H & M designed two supply chains: an efficient supply chain to control production in Asia and a fast-response supply chain to control production in Europe. H & M internally uses an information system called OFS (Follow Follow-up System) to track supply chain production schedules. For Asian suppliers who produce basic models, H & M's efficient supply chain strategy is to meet the supply of the product while keeping the costs to a minimum, so communication with suppliers is often via email. More work in this supply chain is monitored by standardized processes with employees in the production offices. "H & M to our foundry prices low pressure, but the volume is very large!" Shanghai Huayuan Knitting Fashion Company General Manager Hu Hongxia said. Huayuan company since 1994 joined the H & M supplier directory. And to other foreign brand OEM different, H & M only joined the list of suppliers, the threshold set up is conducive to ensuring quality and coordination of cooperation. Huayuan mainly provides OEM sweaters for H & M. According to Hu Hongxia introduction, H & M gave them a single business volume is at least 10 tens of thousands. In general, 10 tens of thousands of orders, from proofing clothes to take the goods, at least two months. "H & M sent the design drawings to us by email. We first need to make a sample to confirm it. After the amendment comments are returned, we start to produce the sales samples, usually more than 20 pieces, which will be mass-produced only after they are confirmed again. "