1. What is sustainability?

Sustainability means meeting our own needs without compromising the ability of future generations to meet
their needs. In addition to natural resources, we also need social and economic resources. Sustainability is not
just environmentalism. It is also concerned for social equity and economic development.

a) Three pillars of sustainability

 Environmental Sustainability

Ecological integrity is maintained, all of earth’s environmental systems are kept in balance while natural
resources within them are consumed by humans at a rate where they are able to replenish themselves.

 Economic Sustainability
Human communities across the globe are able to maintain their independence and have access to the resources
that they require, financial and other, to meet their needs. Economic systems are intact and activities are
available to everyone, such as secure sources of livelihood.

 Social Sustainability

Universal human rights and basic necessities are attainable by all people, who have access to enough resources
in order to keep their families and communities healthy and secure. Healthy communities have just leaders who
ensure personal, labour and cultural rights are respected and all people are protected from discrimination

2. Green Transports
One of the challenges faced by H.M is to fulfill their requirements and keep up with the rapid pace of their
growth while making sure their transports have the least possible impact on the environment. They therefore
strive to:

 avoid air and road transports whenever possible

 work with environmentally friendly transport companies
 have more efficient logistics with as little impact as possible on the environment

3. CONSCIOUS MATERIALS FOR A MORE SUSTAINABLE FASHION FUTURE

H & M wants to make conscious choices in fashion desirable and easily accessible for as many people as
possible. The right choice should be an easy and attractive one. Piece by piece this will reduce the impacts that
fashion has on the planet.

Cotton is the raw material used the most by H & M’s .Its aim is by 2020 all of their cotton supplies should come
from more sustainable sources by . The transformation of orange peel and algae into fabric and grape residue
into plant-based leather, are just a few of the great ideas that have been realized. Currently they support new
materials used in all their Conscious garments ,have the green hang tag.

 Cotton
 Recycled wool
 Organic leather
 Recycled Glass

Currently H.M is heavily investing in , AI to make it easier for them to ensure a good match between production
and demand, thus saving energy, transport and resources.

They are switching to renewable electricity and streamlining their use of energy. With the help of innovation,
they are not only able to find new sustainable materials and recover textile fibres in a better way than before,
but they can also make this scalable in the long term.
 a. TEXTILE EXCHANGE PREFERRED FIBER & MATERIALS REPORT 2018

According to the Textile Exchange’s Preferred Fiber & Materials Market Report 2018, H&M group was the
biggest user of preferred Man-made cellulosic fibres and the biggest user of Lyocell, as well as preferred cotton,
and the second biggest user of recycled and organic cotton.

4. Investing in fashion future

H&M COLAB; is a business area which invests in companies that can add value to our business. During the last
few years, we have invested in innovative companies such as

 Worn Again,
 Renewcell,
 TreeToTextile,

Thread, amongst others. In 2018, they have further expanded our portfolio with the following investments:

 Moral Fiber was among the first winners of the Global Change Award in 2016. The American innovation
company focuses on chemical recycling of polyester fabrics. Our investment in Moral Fiber helps us
speed up the acceleration of recycling technologies available at scale.
 Colorifix has developed the first commercial biological dyeing process to help the textile industry reduce
its environmental impact by using fewer chemicals, and less energy and water. The technology is
scalable and does not require existing infrastructure to be rebuilt.

5. H.M Circular & Renewable Model

To become 100% circular, H.M is currently focusing on five key stages within our value chain that are applicable
to both commercial and non-commercial products:

A. Design

B. Material choice

C. Production processes

D. Product use

E. Product reuse and recycling

6. TRANSPARENCY TO DRIVE SUSTAINABILITY IMPACT IN SUPPLY CHAIN

In 2013, H.M was one of the first fashion retailers to make our supplier list public. This list includes tier 1
manufacturing supplier factories for 100% of H&M group products and tier 2 factories, which account for 65% of
our products. Creating greater traceability in their supply chain means knowing exactly where their products
and their materials come from.

One of the biggest challenges in creating greater traceability is collecting trusted data throughout our supply
chain. We see that new emerging technologies such as blockchain can potentially help us tackle this challenge.

Making fashion circular also presents a strong business case. By designing for circularity, maximising resource
use by working with recycled or other sustainably sourced materials, prolonging product lifespan and creating a
climate positive value chain, we will increase the efficiency and the value of

7. What is the connection between AI and sustainability?

Circularity is ultimately about using resources sustainably, where one central aspect is to avoid over-production.
With the help of advanced analytics and AI, H.M can be much sharper in aligning supply and demand. This could
also entail less transport and warehousing, which means less energy is used. It’s really a win-win situation while
creating an even more relevant offering for their customers.

They are reducing the environmental impact of their operations. AI and advanced analytics are great tools for
reaching our sustainability goals, and it is equally important to have a sustainable and ethical approach when we
work with AI. This is a high priority for us, and our work on sustainable and ethical AI is part of the overall vision
of leading the change towards circular and renewable fashion while being a fair and equal company

8. The Causes of Bullwhip Effect

A. Demand Forecast Updating: Demand forecast updating is a result of the perception of decision makers
in the chain. Decision makers create a mental model of the supply chain functioning and the demand
patterns they observe. This mental picture influences their decision-making. When every downstream
member places an order, the upstream member read justs the demand forecast and then places an
order to the upstream partner in the supply chain. These orders get processed and then finally reach the
manufacturer as overall demand for the product. Here, the final product demand that reaches the
manufacturer is an exaggerated demand and not the actual product demand. Due to this, the
manufacturers’ product scheduling, capacity planning, inventory management, and part procurement
multiplies leading to multiple changes in all the links. This is the major contributor to the Bullwhip Effect.

B. Order Batching: In a supply chain, each supply chain member places orders on an upstream member
using some inventory replenishment mechanism. As demand depletes inventory, a company or a supply
chain entity may not order continuously, but instead will accumulate inventory replenishment
 requirements from its supplier. The wholesaler/ retailer doesn’t place an order with the upstream
member as soon as he gets information about the depleting quantity of product. He follows his own
style of order placing. He might order weekly or monthly, instead of ordering frequently as required to
reduce the cost per order. The reasons for such ordering policies can be due to the supplier's capability
of handling frequent orders, costs and time requirements of order processing or purchase order
generation. As order cycles of disparate customers tend to randomly overlap, the result is a more erratic
demand pattern than the actual demand seen by the customers - hence the Bullwhip Effect.

C. Price Fluctuation: Distributors periodically have various schemes and promotions like rebates and
coupons to increase customer demand for the product. The buying pattern of the customer during such
periods does not reflect buying needs, but is a seasonal condition. This variation in buying pattern is
much higher than the variation in the consumption rate. Promotions can also be an incentive for buying
more than the demand requirements. These promotions result in some form of price fluctuations, which
force the customer to buy more than required or to wait for a favorable price before reordering or
buying. This yields temporary benefits for one player in the supply chain, but creates the Bullwhip Effect
and increased costs upstream
9. Dealing With Bull Whip Effect
The main objective of a supply chain is to synchronize the requirements of the customer with the flow of
material from suppliers in order to get a balance between the conflicting goals of a supply chain such as high
service level, low inventory investment and low unit cost . The prime responsibility of a supply chain is to move
the raw material from the point of procurement to the point of consumption with minimum lead-time.

The main objective of effective supply chain management is to weave each of the supply chain partners with
conflicting objectives and opinions into a seamless fabric with effective information flow.

The retailer observes consumer demand and places orders to the wholesaler. The wholesaler receives product
from the distributor who places orders to the manufacturer. The manufacturer places an order for raw
materials, to the supplier. Thus, the demand information flows from the consumer through various supply chain
links to the supplier. fit of the end customer [9,p1]. The key link in many supply chains is information.

a. Electronic Data Interchange

Introduced in the 1970s and popularized in the 1980s, Electronic Data Interchange (EDI) technology has been
widely used by firms in supply chains to facilitate transactions and information exchanges. EDI is defined as
computer to computer exchange of structured data for automatic processing. EDI is used by supply chain
partners to exchange essential information necessary for the effective running of their businesses. These
structural links are usually set up between organizations that have a long-term trading relationship. For
example, some multiple retailers will supply electronic point of sale (EPOS) data directly to suppliers, which in
turn triggers replenishment of the item sold. Therefore, the consequence of this type of strong link those
suppliers will be able to build a historical sales pattern that will assist their own demand forecasting activities.
Because there is no need for employees to collate the information manually, EDI has many benefits, for
examples, it is providing timely information about its customers’ sales as well as highly accurate and very
efficient. Moreover, it is utilized for sending invoices, bills of lading, confirmation of dispatch, shipping details
and any information that the linked organizations choose to exchange . The main advantages of using EDI are to
enter only informative needs on the computer system once, and then it is able to speed of transaction and to
reduce cost and error rates. Other benefits of EDI are quick process to information, good customer service, less
paper work, increased productivity, improved tracing and expediting, cost efficiency and improved billing.
Through the use of EDI supply chain partners can overcome the distortions and exaggeration in supply and
demand information by improving technologies to facilitate real time sharing of actual demand and supply
information over-production.

b) POSSIBLE REMEDIES
The central idea is that combinations of several activities are necessary to counter the Bullwhip Effect.
The causes for the Bullwhip Effect and the ways to quantify them have been discussed. The following
section discusses in detail the possible remedies for the Bullwhip Effect .

1. Reducing Uncertainty – Reducing uncertainty is the major step towards reducing the Bullwhip Effect.
Centralizing the demand information can reduce uncertainty to a great extent. This will make the
customer demand and forecasted retailer’s demand visible to all partners of the supply chain. This
reduces forecasting error. But, different buying policies and forecasting methods adopted by different
supply chain partners induces the Bullwhip Effect into the system. It is also true that even if all the
supply chain partners use the same forecasting technique and buying policy the Bullwhip Effect cannot
be eliminated completely. Data needs to be made available to all the links in the chain. This simple
change in demand data transfer allows parallel forecasting and avoids the amplification that results from
a multi-stage forecasting process. It also has the added benefit of eliminating the delays inherent in a
multi-stage system.
2. Reducing Variability- Reducing the variability in the demand can reduce the Bullwhip Effect
considerably. Frequent variation in product prices results in a pseudo increase or decrease in demand
thereby introducing the variation into the system. If a product is offered for a consistent price as in EDLP
(everyday low pricing), the Bullwhip Effect can be reduced to a considerable extent .
3. Lead Time Reduction – Lead-time can be divided into order lead-time and information lead-time.
Reducing both types of lead times will reduce a significant amount of variation in the system. In
forecasting, safety stock levels and reorder points are a function of lead-time; reduction in lead-time
reduces the variation. Systems such as cross docking and EDI (Electronic Date Interchange) can reduce
both the ordering lead-time and the information leadtime .
4. Strategic Partnering and Buying – Strategic partnering reduces the lead-time to a great extent.
Information sharing in strategic partnering reduces variation in the system. This can be achieved by the
use of a concept called VMI (Vendor Managed Inventory). This requires the manufacturer to maintain
the inventory at the point of use thus reducing the variation in the system. The strategic buying policies
adopted by the buyer and the manufacturer reduce the variation caused due to quantity discounts
offered by the manufacturer.
 5. Advanced Information Technology – Advances in information technology has made the concept of
information at your fingertips possible. E-Commerce eliminates the intermediaries such as the retailer
from the system and gives the point-of-sale demand to all the supply chain partners. Elimination of the
intermediaries, called disintermediation reduces the variation in the system to a large extent. This
makes the demand information dynamically available to all the participants of the supply chain. This
enhances the effective integration of supply chain partners having conflicting objectives and opinions.
The intranet, a company internal internet, replaces the sequential information flow within the system
with dynamic information flow, thereby reduces the manufacturing lead-time and in-turn the Bullwhip
Effect. This also imparts flexibility to the system and increases the response speed. A good information
interchange system, like the internet, coupled with a good warehouse management and transportation
management system can significantly reduce the Bullwhip Effect.

10.How To Create A Better Supply Chain

For a fast fashion supply chain to be competitive, it must be

 Flexible
 Agile
 Cost effective
 Responsive

Several of the basic features of an agile supply chain are stated below .The most important feature being

 sensitivity to instantaneous changes from the marketplace and this depends on how quickly and
accurately channel firms can read and capture sales data on customer demands.

 The second feature is efficient sharing of information (regarding immediate market demand and product
supply) among and between all channel members and by various means, such as online technology
 The third feature is process integration , which involves cooperation between buyers and suppliers to
jointly develop new products, as well as in managing production and logistics.
 Last is the formation of a strategic network that enables organizations to better structure, coordinate,
and maintain their relationships with trading partners who are committed to serving customers more
efficiently.

To improve their competitive position, many channel members in the fashion industry consciously develop
agility whenever possible. This enables them to address disruptions and challenges, to ensure uninterrupted
service to customers, and ultimately to enhance their overall performance.

11.OBJECTIVES AND BENEFITS OF INFORMATION TECHNOLOGY IN SUPPLY CHAIN

MANAGEMENT
The objectives of IT in SCM are:

• Reduction of the costs of operational processes (manual work).

• Information quality enhanced by eliminating human errors.

• Rapid transfer of information between organizations

IT is key in supporting companies creating strategic advantage by enabling centralized

strategic-planning with day-to-day centralized operations

Supply chain managers increasingly want to automate all of the supply chain, from forecasting to distribution,
and to link every element of the chain. More and more companies want an integrated solution to enable them
to see the entire supply chain at once. For example, they want to know that if they drill down to forecast, they
can see the demand history, which is a combination of data which have come from sales order processing,
inventory management and the warehousing system.