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    Causes:: Background of H&M Issue 1: Inventory Problem Solution & Recommendation 1

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    Hannah Van Geerestein
    H&M has been struggling with large amounts of unsold inventory which led them to destroy stock to create energy. This is due to inaccurate forecasts and overexpansion. They are recommended to shorten lead times to enable full-price sales and improve financial performance. Additionally, they should set strict codes of conduct for suppliers and potentially move some production to Europe to reduce lead times and address issues of unethical behavior from Asian suppliers. Investing in analytics can also help them better respond to demand changes.

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    Causes:: Background of H&M Issue 1: Inventory Problem Solution & Recommendation 1

    Uploaded by

    Hannah Van Geerestein
    143 views1 page
    H&M has been struggling with large amounts of unsold inventory which led them to destroy stock to create energy. This is due to inaccurate forecasts and overexpansion. They are recommended to shorten lead times to enable full-price sales and improve financial performance. Additionally, they should set strict codes of conduct for suppliers and potentially move some production to Europe to reduce lead times and address issues of unethical behavior from Asian suppliers. Investing in analytics can also help them better respond to demand changes.

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    H&M has been struggling with large amounts of unsold inventory which led them to destroy stock to create energy. This is due to inaccurate forecasts and overexpansion. They are recommended to shorten lead times to enable full-price sales and improve financial performance. Additionally, they should set strict codes of conduct for suppliers and potentially move some production to Europe to reduce lead times and address issues of unethical behavior from Asian suppliers. Investing in analytics can also help them better respond to demand changes.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    143 views1 page

    Causes:: Background of H&M Issue 1: Inventory Problem Solution & Recommendation 1

    Uploaded by

    Hannah Van Geerestein
    H&M has been struggling with large amounts of unsold inventory which led them to destroy stock to create energy. This is due to inaccurate forecasts and overexpansion. They are recommended to shorten lead times to enable full-price sales and improve financial performance. Additionally, they should set strict codes of conduct for suppliers and potentially move some production to Europe to reduce lead times and address issues of unethical behavior from Asian suppliers. Investing in analytics can also help them better respond to demand changes.

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    Group 7:Hannah van Geerestein, Reference list

    Kashmanian, R. M. 2018, Supplier codes of conduct: Company authorization of subcontractors.

    Monica Jones, Environmental Quality Management, vol.27, no.4, pp. 9-27, Viewed 29 September 2019, <
    https://onlinelibrary-wiley-com.ezproxy.lib.uts.edu.au/doi/full/10.1002/tqem.2155>
    Cano, X. (2018). Winners in fashion retailing need to optimize inventory and boost supply chain agility,
    Siran He, Kui Wang, Litong Dong, Viewed 30 September 2019, https://www.openbravo.com/blog/winners-in-fashion-retailing-need-to-
    optimize-inventory-and-boost-supply-chain-agility/

    Qishan Su Paton, E. (2018). H&M, a Fashion Giant, Has a Problem: $4.3 Billion in Unsold Clothes, Viewed 30

    Background of H&M
    September 2019, <https://www.nytimes.com/2018/03/27/business/hm-clothes-stock-sales.html>

    -H&M is a fast-fashion sector of


    clothing, accessories and footwear for Issue 1: Inventory Problem Solution & Recommendation 1
    women, man and children. -Last year, company has be struggling with large amount -Change the progressing process to short lead time, enable
    unsold inventory and company decide burn these stock to full-price sales that lead to overall financial performance
    -H&M do not owns factories, create energy (Paton 2018). improved (Cano 2018).
    cooperated with more than 800 -Large scape of sales and profits dropped.
    independent suppliers that came from Causes: -H&M should invest in sustaining a better product principle
    21 lowest wage countries. -Opened 220 new stores and expansion on e-commerce that goes hand in hand with agile development.
    under big competitions on fast-fashion market.
    -Provide the last fashion trends with -H&M is transitioning to new logistic systems and
    affordable price in order to track their automation of their warehouses.
    competitors (ZARA, ASOS). -Inaccurate weather and demand forecasts.

    -H&M’s environment is characterized


    by a highly volatile demand and short-
    lived product life-cycles.

    Issue 2:Unethical Behavior From Suppliers Solution & Recommendation 2 Conclusion


    -H&M does not have own manufactures and suppliers are -H&M as a European company can partly move its suppliers - Moving the production closer to
    from developing countries follow with political and legal from Asia to Europe. Because most of European countries has European borders will reduce the
    issues. Its creates negative impact on brand image. (e.g. comprehensive legal system and currently Asian countries company’s lead times.
    suppliers from Bangladesh employed child labor) losing their competitive advantages on low labor cost.
    -Investments in artificial
    -Illegal operation also may cause serious supply delay if the -Company should set up complete and strict codes of conducts intelligence and advanced
    local government takes mandatory measure. to suppliers (Kashmanian 2018). analytic will enable the company
    to respond quicker to its highly
    -The punishment for unqualified suppliers should be more dynamic marketplace.
    serious, for some suppliers which have negatively influenced
    the brand image of H&M, H&M should immediately terminate -Necessary to take actions on
    the cooperation with disqualified suppliers. issue of child labor.

    -Make strict management of


    suppliers, minimize future losses.

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