ROLE OF LOGISTICS IN H&M CLOTHING COMPANY

1. INTRODUCTION ABOUT H M. Hennes and mauritz functioning as H&M. Which is world third largest clothing retailers operating with 2300 stores in 43 countries over 90000 employees directly and indirectly. Its Sweden based clothing company known for its fast fashion; in 1948 the founder Erling persson started the company in Vasteras, Sweden. Initially when the company was commenced Erling were selling only womens clothes and the company was called as Sweden for Hers only. Since 1948 the company started selling kids, mens apparels and the company was abbreviated to H&M. H&M basically operated from Stockholm headquarters; the designs were made at headquarters and supplied to 800 manufacturing units in China, India, Pakistan, Bangladesh and Turkey. The designs for all the garments are made in headquarters and send to the manufacturers, to avoid any damages, lead times, slow shipping process the company setup the buyer office at capitals in addition respond to competition and demand. The interbrand the branding consultancy graded the company as 21st most valuable global brand in the year 2009-10 by the worth of 19$ million estimated*. Since 2009 H&M stepped into home furnishing but the orders were done only on online catalogues and home furnishing stores was launched only in Germany, Denmark, Sweden, Norway, Finland and the UK. The company was highlighted among the competitors like Zara, Inditex, and Primark. When they made collaborations with Guest Designers like Karl Lagerfeld, Avant-garde, Mathew Williamson and Madonna for their promotion. In 2011 February the made a collaboration with Versace and D&G. The details about logistics organization of H&M and problems will be discussed in empirical backdrop.

1.2 EMPIRICAL BACKGROUND

The theoretical contextual towards this research outlook the attitude in logistics models on logistics strategy, logistics functions. The empirical backdrop of the research is carried on sightings of companies that physical exercise their logistics in developing under upheld profitability. H&M, Primark, Inditex, Wal-Mart, Dell, Zara are the companies with high level of logistics contents in their elements of approach (strategy). In this dissertation we use Hennes and Mauritz, which is functioning as H&M. The abovementioned companies are also good examples companies with logistics strategy as element of approach, H&M Company use their competency in logistics to endow long-run development and profitability, in very distinct ways. After analyzing the CSR reports of H&M clothing for the last five years, the company has brandished development under steady profitability throughout the years (H&M annual report, 2001; 5006; 2007; 2008; 2009; 2010). The main strategy of the company is to increase the profitability along with the growth of company; the main target of the company was to increase the number of stores across the globe nearly 20-25 percentages with an increase in sales (H&M annual report, 2010). Basically the company operates from its headquarters at Stockholm the major decisions related to Human resource, marketing, shop designs, procurement, designs, finance, and logistics (hm.se). Even though there are headquarters in most nations where the anxiety is present.

ROLE OF LOGISTICS IN H&M CLOTHING COMPANY

Figure 1. profit graph of HM

Share price Profit after tax The figures are express in . (Source: hm.com, annual reports, 2010) The logistics management of H&M is vast and uses roughly 5,600 employees directly, while H&M deals with cross docking and inventory management and transportations and 3rd party logistics (3PL) are carried out through TNT 3rd party logistics providers, this can be predetermined within relation towards the gross numbers of 32000 employees. Correspondingly, the cross docking terminal at Hamburg receives the goods sent from suppliers and store it in the Hamburg hub which is operated by company itself the goods are delivered on the demand basis to the stores and the online ordered goods are delivered to the customers by Hamburg terminal in the European regions. The inbound logistics ensue from 890 distinct suppliers from Southeast Asian countries. The company uses the formula introduced by Nissan-cogent, codevelopment. Mostly production is intensified to Southeast Asian and European countries. Here H&M implies early suppliers participation where the 32 buying offices are established in different production place to avoid damages and get benefitted of shortened lead-time, the main intension of setting up buyers office

at production place is to reduce lean at every stage at earliest possible. With decentralization the decisions related to productions are decided and executed easily, by this system the company has prcised the lead-time unto 20-25 percentages. The garments markets are always sensitive with its demand and supply and alters according to the con-temporary fashions, with shortened leadtime the garments of H&M clothing rules the garments market prior to other competitors. The lead was adjusted according to the orders and demand trendez garments are manufactured in short time period and transported with more expenses, the seasonal garments orders are designed at headquarters and placed to production units with longer lead-time which brings downs the logistics cost and distribution cost. See appendix for customs clearance and logistics operational cost. Here the interesting part is strategy of H&M clothing, the company remain the world 3rd largest retailing stores, and the companies turnovers has increased more than 60 percentages. Correspondingly, profit after tax (PAT) is averagely increased around 170 percentages in last 3 years and expansion of stores was increased up to 48 percentages in last 3 years, this expansion growth is possible without any monetary support for an enterprises, but it wouldnt be possible without of role of logistics. Here logistics plays a vital role in covering the vast geographical area. In increasing to novel geographical markets, H&M follows an approach of moving into one market at time. In a high speed step the density of outlet in a territory is broadened in order that economic procedures of scale can be arrived at in environs for instance logistics and marketing. Instead of first initiating a logistics quintessence the new markets demand are always measured for intended efficiency. In their fresh store developments in Germany, Poland, Czech Republic, Italy, Spain, and Austria. The above examples shall be seen the company share the

ROLE OF LOGISTICS IN H&M CLOTHING COMPANY

distribution center and transportation with neighbor countries headquarters which bring down the operational cost and logistics cost.

The strategy of H&M, theory used by H&M shall be discussed in other sections. In addition to that additional logistics models would be recommended for H&M clothing with their advantages and disadvantages. 1.2 SCOPE AND LIMITATIONS The backdrop of this study is founded on functional and theoretical fact of H&M Apparel Company or any production and trading business units that is in charge to achieve long-term growth under strengthened profitability by means of logistics. In this research aside from achieving long-term growth under strengthened profitability, role of logistics and logistics operations in the firm is widely outspoken in the research. Here businesses with high grade of logistics content like H&M apparel retailing business would be a broader focus. But although, I powerfully accept as factual that the recommendations and outcomes of this study would advantage the logistics content apparel business to the bigger extent. Its in the scope of the research to analyze and describe the logistics roles and operation in the case of H&M clothing company. The research covers only logistics strategy and logistics operations with it IT uses, it doesnt cover company strategy formation.

1. LOGISTICS The term logistics was derived from Greek word logistiki (). Initially logistics was used in military forces to logistics weapons and arms during the

war time later on it was used for business logistics purpose, Its a part of supply chain management, which deals with procuring raw materials, stocking finished goods, transporting, and delivering goods to the customers, it comprises of all materials flow and information for organization (Pollitt, 1998). In short logistics puts right things at the right location at the right time. Some times material management, channel management, supply chain management, physical distribution management shall be known as logistics (ohannessen et al, 2002). The scope and important of logistics have been extended with improved new technologies and companies multinational operations in cross boundaries. According to Bowersox in todays highly competitive market every company is trying to accelerate their product and efficiencies by means of logistics. In recent days Logistics is considered to be most important competitive advantage (Christopher, 1992). Logistics has advanced from single-party (self managed) to 3rd party logistics (3PL) is used for storing inventories and physical distribution; 5PL (multi-party) is used for multinational operations e-logistics networking. The main purpose of using 3rd party and 5PL is to bring down the operational cost, maintain inventory level, to meet demand fluctuation and bring down the capital investment. According to Christopher and Richardson, The corporate logistics faces some problems like inability to provide service, improper and delayed informations, slow operations, high rate of operational cost and unable to meet the demand when there is a fluctuation. The researchers have inspected the problems and suggest integration of logistics, 3PL and 5PL would be better solutions to meet the required demand in fluctuation, bring down the operational cost and to provide good service (Fawcett et al, 1993) (Richardson, 1995). The main functions of logistics are procurement, production, warehousing, distribution, after sales logistics and disposal logistics. Procurement logistics - It comprises of buying raw materials, market research, requirement planning and order planning. Some time the procurement targets might be inconsistent, procurement logistics always 6

ROLE OF LOGISTICS IN H&M CLOTHING COMPANY

concentrate on core competency to maintain the autonomy of the company that reduces lean in procurement with adequate inventory level (Pfohl, 2004). Production logistics - The principles of logistics concepts for production is called production logistics, It include all the logistics functions connected to procurement to production to warehouse distribution. Production logistics is always placed centered to procurement and production logistics like purchasing a raw materials converting into product and send to warehouse storage (Pfohl, 2004). Warehousing logistics (3PL) - Inbound logistics or incoming finished products are stored in warehouse (Pfohl, 2004). Warehousing can be also called as 3rd party logistics provider. Distribution logistics it deals with Distributing required amount of goods with right quantity and quality to the retailing stores, customers. It comprises of transportation and warehouses (Pfohl, 2004). After sales logistics It provides good customer service after sales, replacing defective goods. Its otherwise called as reverse logistics (Pfohl, 2004).

1.3 LOGISTICS STRATEGY OF FIRM Chandler characterizes Strategy; strategy is the resoluteness of the absolutely crucial long-run goals of the association and adaptation of main headings and activities and the proposition of assets assigned to convey out the directed goals (chandler, 1962). Meanwhile Porters and Mintzberg argued that strategy is just to attain market growth and market position by set of supported activities, on resource based it can be strengthen competitive advantage in the market (Mintzberg, 1987). However strategy cannot be defined as single actions, so it was classified in to five definitions like perspective, positioning, ploy, pattern, 7

and plan. Even though the word has only one meaning naturally its essentially classified in many ways (Mintzberg, 1987) (Barney, 1991). H&M clothing implies strategies like push and pull strategies, which would be discussed in other section. According to Stalk and persson logistics strategies importance have increased in recent days, as strategies weapons innovative product, quality and time which is equivalent to monetary (Stalk, 1988). According to persson time is the basic problems concerning logistics strategies on competitive differentiation (Persson, 1991). Many authors like (Bowersox and Daugherty; McGinnis and Kohn; Cavinato; Norrman; Christopher; Abrahamsson; Stock et el) have argued on classification of logistics strategies and logistics relationship to organization structure. Here the classification of logistics strategies states the importance of logistics role in the organization that can alter the strategy of the firm. CLASSIFICATION OF LOGISTICS STRATEGY Lots of research has been done on classifying logistics and strategy authors like Kohn, Bowersox, Daugherty have done large numbers of research on logistics strategies to get noticed of important aspects of logistics strategy in the company (Bowersox, 1987) (Kohn, 1990). Bowersox have classified strategy in three general types like information, process and market strategy are discussed below in detail. Information strategy - Information strategy, which can be termed channel strategy. It analyzes the flow of information inside the organization and converts its available informations into business strategy. Informations strategy comprises of coordination in organization and uses logistics to work together with good assistance (Bowersox, 1987). Process strategy - It comprises set of early 20th centuries logistics activities, as value added system (Daugherty, 1987). Market strategy - Its similar to process strategy functions, which are 8

ROLE OF LOGISTICS IN H&M CLOTHING COMPANY established over enterprise hubs (Bowersox and Daugherty, 1987).

Based on the strategic management and boarder notion of strategy Mintzberg have five classifications strategies as Plan - Plan as strategy, which means the strategy is made in advance to action Ploy ploy as strategy, which is nearly similar to plan c Pattern Positioning Perspective -

Kohn and McGinnis have given the other classifications of logistics strategies like intense, balanced, unfocused, low integration logistics strategies, low effectiveness logistics strategies, integrated and intensive logistics strategies in 1990s. This classification of strategies will be discussed in literature section.

DISPOSITION

In alignment to present the general of thesiss structure, here pattern of journal from the first section to the last part of the conclusion been outlined.

Introduction and scope of the dissertation

Research methodology

Analysis of Empirical study

Conclusion and Recommendations

List of References

Chapter 1. Introduction and scope of the dissertation, this section presents backdrop of logistics, logistics strategy, and Hennes and Mauritz logistics organization and importance of logistics in multinational operations. In addition to that empirical data are provided. Chapter 2. Research methodology this section presents how the research was

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ROLE OF LOGISTICS IN H&M CLOTHING COMPANY

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conducted and how methodology was chosen and how the interviews were carried out. Followed by frames of references. Chapter3. Empirical analysis this section presents empirical analysis, the business strategic tools are used to identify the H&M internal strengths and external weakness. According to analysis suitable organizational theories are applied to strengthen the company. The organizational theories are widely concentrated eliminating waste in H&M productions, logistics and marketing. And sustaining long- term profitability by means of logistics.

2. METHODOLOGY According to (Li and Cavusgil, 1995) when carrying out an investigation on any subject or topic or state of knowledge in the field. The authors can take up three advances the first set about is Delphi procedure, where the professionals who are experts in the specific subject are surveyed. Second set about is Metainvestigation in which preceding forms on specific topics are assembled and statically analyzed. In addition this approach was given by (Ashenbaum et al, 2005) to calculate the 3rd party logistics growth rate in European countries and US. The third approach is the content analysis, which we ultimately use in this dissertation. Normally content analysis can be done with two levels the first level is definition of sources and analysis of articles, the second level is classifying the collected articles. In the beginning 25 journals in the field of logistics, reverse logistics, 3rd party logistics (3PL) covering time period 1960- 2011 the articles was searched dealing with any facet of logistics strategies and logistics operations. The area of this research is divided into two parts: logistics strategy and logistics operations. Most of the theories from logistics strategy and operations perspective have specified beginning in literature review, based on articles in 11

supply chain management and logistics journals that are available in online database from Coventry University library, National University of Singapore (NUS), Brunel university. The journals are selected and studied in qualitative method.

1. American society of transportation and logistics 2. European journal of purchasing and supply chain management 3. Journal of business logistics 4. Supply chain management (Scm) 5. International journal of logistics 6. International journal of physical distribution and logistics management 7. International journal of logistics system and management 8. International journal of logistics research and applications 9. The logistics manager 10. Transport research 11.Transport logistics 12. Others,

In searching appropriate articles I used logistics strategy and logistics operations in keywords, nearly 119 articles were found, each articles contents and text were reviewed in ordered to omit the articles that were not related to logistics. At the end of eliminations 42 articles related logistics, 3PL, reverse logistics were identified. An ancillary search was conducted using Business Source Premiere, EBSCO, Proquest, ScienceDirect, Emerald, GMID, Mintel, using these online database 28 paper was found related to logistics key articles and citation were scanned for references purposes importance of logistics strategy and logistics operations in organization is handled in logistics research. DATA COLLECTION

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ROLE OF LOGISTICS IN H&M CLOTHING COMPANY

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The written knowledge (data) collections for this dissertation were carried out in the time interval of 10th day of June 2011 to 26th day of July 2011. Phone interview was conducted to Mr. Sampath Kumar the managing director of TEXFIELD & TANTEX TEXTILE PVT LTD, INDIA. Who were garments manufactures and supplier for H&M clothing company since 1993; and Mr. Abhimanyu Thilak Senthil the Manager of BLUEDHART PACKERS & MOVERS. Interviews were pursued in the type of semi structured one suppose interview manoeuver in appendix, the phone interviews was held come seal 50 minutes. All the companies details and interviews position in the companies are clearly mentioned with contact numbers to avoid any misinterpretations but the interviewees are not cited though they materials are used in analysis cases. Aside from prime facts and numbers assembled through telephone meetings, Lots of secondary datas from journals, articles, online database, case studies, and companies informations from brouchers, annual reports, websites were used in this dissertation. All the works are cited and referenced properly in Harvard referencing style. (Creswell, 1994) describe his three approaches to exert literature in a qualitative research method. (i) To structure the difficulty impersonated in the study. (ii) To revaluate the publications and literatures through out the area of study. (iii) To evaluate and incongruity the publications to the outcome in the study. In our empirical background we found that the models is lacking to gain an accurate strategy that how these company uses logistics and 3PL. Ergo, structuring the problems in this case is impossible in unequivocal perception. Consequently, the publications used in this dissertation are compared to the present and previous studies, the strategy that are not provided in literature are met in matching pattern.

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VALIDITY AND RELIABILITY According to (Yin, 1994) the use of validity and reliability is widespread in qualitative research study. Since, they are fixed within positivism viewpoint then they should be defined again for their exercise in realistic model. (Yin, 1994) describes four pilot studies to be carried out in measuring the eminence in the area of study. (i) Fabricate validity, formation of appropriate operational pit against the company empirical observation (Yin, 1994). (ii) Inner validity, (which is valid only for larger study). (iii) Outer validity, which is inception of realm where the output of study is available. (iv) Reliability, displaying that study can be replicated with identical outputs (Yin, 1994). To fabricate validity, (Yin, 1994) describes three methods. The first one is to use several genesis of proof by using the similar questions to various management authorities from the same organizations for a matching pattern. The second approach is building a sequence of proof to the breath and depth of contents throughout area the study, data collection and empirical study. Third approach is matching pattern, ensuring the primary data and secondary data to the exactitude. Here in our case we have conducted only phone interviews so its not to possible to ensure the exactitude but matching pattern is done with available sources (Yin, 1994). Inner validity, generally this approach normally is used to larger research like PhD, where the research is conducted more than years, in our research its been used to ensure that no internal and external factor affecting this research, in addition its used for benchmarking with Inditex company. Outer validity, is analyzing the outcome of the research from the introduction to recommendations (Yin, 1994).

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Reliability, when different methodology is not used there is a problem of same findings repeatedly occurring (Yin, 1994). In our case vast primary and secondary datas are collected using various database system, interviews, and journals, all the datas are ensured to exactitude to avoid any misinterpretation.

2. LITERATURE REVIEW This section broadly examines literatures associated with logistics and its strategies, reverse logistics, 3rd party logistics (3PL), and literature related to packing, roles of transportation and procurement process. The literature reviews are classified into 3RD PARTY LOGISTICS (3PL) According to (Bowersox et al, 1997) The pursuit of advanced effectiveness improving virtue of logistics operations is still a business challenges. One start that is verifying creative and permits enterprises to focus on their centre competencies is the out- sourcing of the logistics operations to partners, renowned as third-party logistics (3PL) providers (lieb and Bentz, 2005a; Hong et al, 2004). The 3PL is an opening for enterprises to advance the clientele services and to retort the competition and reduce inventory level (Handfield and Nicholas, 1999) the 3PL providers have increased their services in manufacturing, warehousing, shipping, and distribution and freight forwarding (Randall and Lieb, 1999).

GREEN SUPPLY CHAIN (G-SCM)

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According to (Stock, 1998), Integration of logistics is wholeheartedly essential for the flows of green supply chain management (G - Scm) the preceding procedures was restricted to accurate submissions for the firm, than preferably seeking for the best methodical supply chain management. Similarly, the comprehensive model involving reverse logistics strategy across green supply chain is rare (Stock, 1998). Many authors have given supportive deterministic models in the series (Mabini and Gelders, 1999; Richter, 1996a,b; Schrady, 1967). And stochastic models (Cohen et al, 1980; Cho and Parlar, 1991; Kelly and Silver, 1989; Simpson, 1978; Heyman, 1997; Inderfurth, 1996, 1997). These models differ typically according to the demand, supply and recovery activities of logistics movement. Thinking about continual product demand and returns rate connected to supply chain chambers (Schrady, 1967) have given deterministic model to handle damaged items or reparable inventories under the status of fixed lead-time for outward orders and recovery. (Schrady, 1967) Models has been extended and used in (Mabini and Gelders, 1991) when multi-repairing system was established stock service problem and repaired items were optimized. (Richter 1996a, b) proposed similar model of (Schrady, 1967) with different stock controlling policy, where optimum parameter results are searched with return rates, in spite (Fleischmann et al, 2002) deterministic model argued that using optimum parameter is impracticability when supply and demand in market are different and uncertain. In complement to aforementioned models, similar stochastic models was concentrated mainly on obtaining optimal control polices by various supposition and brining down the presumed cost by fixed planning horizon. (Muckstadt and Issac, 1981) concentrated on concocting single item inventory control in the status of zero lead-time with continuous model. In (Muckstadt and Issac, 1981) research return occurrences and demand occurrences were considered to be the units of Poisson distribution. Correspondingly, (Heyman, 1997) in targeting at single stock system, the author assumed trade off relationship to the production and stock holding savings, where the demands of product and returns frequencies

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ROLE OF LOGISTICS IN H&M CLOTHING COMPANY

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are considered to obtain the appropriate stochastic process. (Cohen et al, 1980) in his research dynamic inventory system, the author considered both serviceable and recoverable inventories but (Kelly and silver, 1989) modified the dynamic system to be random returns system to use the best maintenance and replacement activities. In (Cho and Parlar, 1991) proposal on multi-unit inventory system where serviceable and recoverable inventories are allowed to meet, assuming that the damaged and returned items can be reused directly with zero lead-time. In addition to (Cho and Parlar, 1991) the models were developed to reduce the average cost involved in inventories return and long-term time horizon. Correspondingly, push and pull strategies were introduced in reverse logistics strategies to manufacture and remanufacture goods according to the demand and supply, however (Van der Laan and Solomon, 1996a, b, 1997,1999) in previous literature mention such postulation is practically not true in cases of reverse logistics. Assuming the restraint of applying the present models in green-supply chain, Based on methodology this literatures gives a multi-objective optimization, here integrated logistics theory is proposed in ordered to accelerate the net profit of logistics by means of green supply chain which consist of both product manufacturing and remanufacturing the returned products supply chain and used product reverse logistics supply chain. Similarly the trade off relationship, business logistics and used product reverse logistics flows across the green supply chain G-SCM. The models in this literature review may be more pertinent in the general case of G-SCM than other earlier models of (Van der laan and Solomon, 1997, 1999) the author describe reverse logistics an activities of reusing, recycling, and reducing the quantity of materials by which the companies can be more environmentally efficient (Van der laan and Solomon, 1997, 1999). CLASSFICATION OF LOGISTICS STRATEGY

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McGinnis and Kohn have given score of articles in the year (1991: 1993: 1997b: 1997a: 2002) in the series of articles both authors have discussed classification of logistics strategies from the general types of logistics strategies given by Daugherty and Bowersox (1987), and given concentration on logistics strategies from organization point of view. Daugherty and Bowersox general classification on logistics strategies are information strategy, process strategy and market strategies, which are discussed above in classifications of logistics strategies. From the typology of Daugherty and Bowersox, (McGinnis and Kohn, 1990) have given other classification of logistics strategies those are: Integrated logistics strategy, Low integration logistics strategy, Low effectiveness logistics strategy, Intensive logistics strategy. (i) Integrated logistics strategy is highly concentrated on integrated 1990) . (ii) Low integration logistics strategy is with low level of importance on computer

systems, customer service, and logistics coordination (McGinnis and Kohn,

integrated computer systems, and moderated importance placed for customer services and logistics coordination (McGinnis and Kohn, 1990). (iii) Low effectiveness logistics strategy is with moderate concentration on

integrated computer systems and customer service, and low level of importance for logistics coordination (McGinnis and Kohn, 1990). (iv) Intensive logistics strategy is highly concentrated on customer service and logistics coordination, and integrated computer systems are not given much importance(McGinnis and Kohn, 1990). McGinnis and Kohn (1990) have put forward these logistics strategies to be used according to the requirements, according to the authors low effectiveness logistics strategies is to be used when the company trying to establish superiority

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over other departments than logistics, intensive logistics strategies to be used when the demand level on flexibility is high (McGinnis and Kohn, 1990). Logistics executive made different strategies on basis on clustering results. On basis of cluster analysis many strategies were defined, McGinnis and Kohn in 1993 after surveying 59 logistics managers in his articles author have defined balanced logistics strategy, unfocused logistics strategy, intense logistics strategy. High Intense logistics strategy: --------------Market strategy and process strategy are given importance. Logistics coordination and customer service are given more priorities. Balanced logistics strategy: Market strategy and process strategy at moderate level. Logistics coordination and customer service are moderate priorities. Unfocused logistics strategy: Market strategy and process strategy are placed low level. Logistics coordination is low priority and customer service is low priority. Moderate

High

Figure.2 External environmental challenge and level of competiveness and unpredictability on logistics (McGinnis and Kohn, 1993).

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(i) Balanced logistics strategy comprises of both market and process strategy at moderate level, the market condition for this strategy is always unpredictable and antagonistic. (ii) Unfocused logistics strategy (iii) intense logistics strategy Cavinato (1999) in his articles Matching logistics with strategic management in this articles authors fit development of logistics and strategic management in organization, here authors use Gluck et al (1980) four models of evolutionary stages are; basic financial planning, forecast based planning, externally oriented planning, and strategic management. All the four stages incorporates of companies budget forecasting, performances, and strategic process and decision establishing (cavinato, 1999, pp. 164-166), Cavinato commercials the fifth stage of type called knowledge supported business which initiate a ceaseless estimating on what is probable and how its probable, the intention of Cavinato to bear out a orderly examine conditions logistics has strategic value or uphold upright location entity in the firm. In his research methodology cavinato interviewed 199 organizations logistics and supply chain heads, in (Gluck et al, 1980) models there was fit in logistics and strategic management in general but Cavinato concluded that from strategic management perspective if logistics is ahead of rest of the organization its appreciated for the contributions and activities to the organization nor if logistics in an organization is lagging behind than rest of the organization it means that logistics is not been valued and harming outsourcing or downsizing organization.

STRATEGY ANALYSIS OF H&M COMPANY

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Analysis of strategic position of H&M Company using business strategic tool SWOT Every business is battled with some kind internal and external exertion, some issues would be compensated in ordered to achieve the companies long-term goal and objective. According to (Houben, 1999) the business manager should analysis the companies performance and its hindrance in achieving full caliber, since every company has dynamic strategies. Houben describes to strengthen companies strategic planning; the company should have good internal behavior to operate successfully. Consequently, company should be engrossed in its goal while converting aside weakness to strength. In our case retaliating to H&M weakness and strength, H&M concentrate on opportunities and external threats for the success of strategic planning in external business environment. In accordance to 2010 financial year (FY2010) H&M Companys internal and external environments are discussed below (Houben, 1999).
Figure 3. business strategic tools

Strength This section explains about internal strength of H&M in business environment.

Weakness This section explains about internal weakness like internal company performance and averting its weakness to strength.

Opportunities This section explains about external factor favoring company in external environment.

Threats This section illustrate about threats available for company from external market environment.

STRENGTHS OF H&M 21

Low price, fast fashion, high quality, flexibility Responding to demand H&M provides fast-fashion and trendy garments for men, womens, and kids with zero lead time, this fast-fashion chain would accelerate and entice H&M commodities. Consequently, offering best standard quality with low market price increase the sales and its competitive advantage for H&M Company. H&M functions through E-commerce. It has manifold option for customers, since it offers sales through catalogue, stores and online shopping, almost 1600 retailing shops 24 countries are operated through online shopping and catalogues. In addition the catalogue system initially launched in Denmark and Netherland in 2007, the company produces four catalogues two catalogues are used in spring and other two is used in autumn. Through low price, fastfashion, high quality, flexibility H&M has strengthened its market environments (H&M annual reports, 2005; 2006; 2007; 2008; 2009; 2010) (Datamonitor, 2005; 2006; 2007; 2008; 2009; 2010). Equitable product mix, collaborations with Guest- designers..... H&M offers wide range maquillages, frills and footwears from own trademarks. H&M provides best quality of kids wear, mens wear and womens wear and maquillages for low prices. This company is well known for its fast-fashion and providing clothes from basic fashion to high fashion in the market. This company is managing to sell high-end and lower-end products that can be a competitive advantage for H&M. This company has achieved a big strength joining hands with Guest designers and celebrities; H&M initiated this scheme in 2004 with Karl Lagerfeld followed by many guest designers like Roberto Cavalli, Stella McCartney, Victor and Rolf, and the famous Matthew Williamson. Similarly, H&M made tie-up with famous Versace and Comme des Garons companies in France and US market. The company accelerated the sale ratio with Guest designers fame.

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ROLE OF LOGISTICS IN H&M CLOTHING COMPANY WEAKNESS OF H&M Product recall, Macroeconomics condition, low revenues

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In 2007 H&M garments were recalled due to presence of compass metals in childrens jackets and liquid mineral, which were fitted along wit kids garments for attraction were banned by United States consumer product safety organizations considering that metals in childrens jacket and liquid minerals might be harmful. These product recalls have agitated H&M reputation in US market. In 2010 the company lambasted for launching its branches in Israel and Palestine, by anti paletinis during Gaza war. When UNHRC condemned for violating the rules. When European countries was badly affected by recession most of the teenagers lost their job. Where H&M target customers are teenagers, the company nearly lost 22 percentages of its sales during the recession time, in 2008 South European countries were affected very badly, where again H&M lost its 28 percentages of its sales. Most of the inventories were left unsold and the stock level of H&M was unbalanced. H&M, in the recent survey it was found that premium luxury customer and football lovers in US and European countries prefer only premium brands like D&G, ARMANI, DIESEAL, TOMMY HILFIGURE. Correspondingly, H&M looses its premium customer. OPPORTUNITIES OF H&M Business expansion in new and current market, online arena, Fabric Scandinavians.

H&M has opened averagely 250 retailing stores in a year since FY 2007. And it was planned to increase at the rate of 15-20 percentages at the end of each 23

financial year. The establishment was majorly focused on UK, Spain, Switzerland, Turkey, Egypt, Saudi Arabia, and India. Considering that expansion in existing new market would strength competition despite global economic slowdown. As a result of improved technology E- commerce plays a vital role in every market, in European countries the online shopping sales grew up to 27 percentages to the gross sales of H&M in Europe contributing 4.9 percentages to net sales of H&M, from a customer perspective its brings down unnecessary traveling by delivering at door step with good deals and makes the customer to feel comfortable. H&M New Home furnishing was established recently in Austria, Finland, Denmark, Germany, Switzerland, Netherland, which turned out to be great success. The vision of the company is to integrate fashion with house decors. The company offered bedspreads, curtains, mattress, and household items at best price. In March 2008, H&M took over fabric Scandinavians a Swedish based clothing company that is operating as Fabric MTWTFSS weekend and Sunday sun. The company was operated under the name of H&M Scandinavians with 1200 retailing shops. Acquisition of fabric Scandinavians would improve the efficiency and growth of H&M in other market. THREATS OF H&M Declining consumer confidence, high input cost, intense competition, and rising energy prices

The success of H&M is purely based on economic condition of European countries and US. The slowdown in economic in these regions affects the consumer confidence in procurement. Since the slowdown in economy led to unemployment, the purchase rate consumer is declined to 32 percentages according to GDP and IMF Economic in Europe and US is slowdown to -1.8% and -2.3% and these countries economics are awaited to be enervated as per 2010

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records. H&M makes considerable amount of income from these countries, when consumer procurement rates are declined due to economic crisis it would affect the companies business operations and profitability. Fashion industries always have intense competition in the market; H&M faces severe competition from premium luxury retailers, mall-based retailers, warehouse retailers, departmental store retailers and E-retailers. On festivals occasions to competitive with rivals the company offers garments at discount prices from this the company loses its normal profit margin. As per European Unions Euro Statdata Agency, retailer sales in Germany and Northern European regions were dropped to 2.9 percentages since 2009. H&M revenues were affected as outcome this sales slowdown. In 2007 Uk Government and European countries increased its value added tax (VAT) due to which the selling price of garments, cotton and fiber price have been increased. In 2008 in order to increase the consumer purchasing power Uk government reduced its VAT to 15 percentages, but however once again in 2010 the VAT was increased to 17.5 percentages and further more is presumed. Correspondingly, other industry like house furnishing, automobiles, and demands was increased rapidly to buy before tax increases. Apart from increase in VAT and cotton, price hike in fuels declined the sales of H&M and other industries. Rise in price of H&M apparels would lead to competitive disadvantage from low price retailers. Due to these H&M sales is pressurized. From the following analysis, the company determines its long-term objectives, considering the above collections of internal and external SWOT. The strategy analysis and system expert helps in decisions making of H&M Company.

Market

Finance

Production

People

Environment

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System Expert

Strength

Weakness

Opportunities

Threats

Figure 3. Decision situation diagram

Applying lean and just in time (JIT) strategies on H&M Many authors have discussed about the benefits of lean manufacturing and agile strategies. Here in our case we would compare the benefits of both lean and agile strategies, if both strategies were formulated in H&M Company. The logistics management principles and concepts benefit most of the sectors that are concentrated on production and competitive advantages, low expenses and customer satisfaction. According to (Landis, 1999) the company involved in the multinational operations has to ensure the expectations of consumers, and to be successful the company has to understand the restrain and demands of market environments and then instigate strategies that would provide customer satisfactions and logistics requirements (Landis, 1994). The main goal of logistics to meet customer needs, while reducing cost. According to (Steele, 2001) the typical key example of eliminating waste and reducing cost

Is Lean and Agile to make it easier some ancient manufacturing are described below.

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(i) Craft production craft produced is one of the ancient systems of manufacturing, the products are manufactured without any tools by hand making. This method was used for production before the industrial evolution. Making pots, handlooms, boats were good examples of craft productions (ii) Mass production mass production is called as series of production or score of productions. This production is used for producing goods in huge quantities. Producing fighters plan, fuels, chemicals were a good examples of mass production. (iii) Lean production lean production, the strategy to eliminate waste and reduce operating cost at every stage. Lean production were a recent recognition for all manufacturing sectors, its combination of mass production concept to reduce waste (Gonzalez-Benito, 2002) Slowdown in economic, fuel price hike, stiff competition, value cognizance, and high demand for logistics system, consistently defy the traditional methods to manufacturing. At the first stage of lean production, it keeps only the half the amount of materials needed for the production, as outcome zero defective products. Lean today is used as Toyota production system (TPS), Toyota automobile company stands as solidest testimony of lean enterprises. The success above two epochs created a demand of lean production/ TPS system in Health care, logistics and distribution center, construction and Government services (Womack et al, 1990). Corresponding to Lean/TPS system, agile strategy was developed (Gunasekaren, 1999). Agile manufacturing is dissimilar to lean manufacturing, agile concentrated on producing goods with high technologies like CAD, and CAM with short lead-time and usually the goods are produced in low quantities with high product mix. The below table classifications explains the importance of all production method, the best method would be formulated as H&M production 27

strategy.

Comparison on production strategies. In the above comparison table, lean/TPS manufacturing system have been used Industry objectives Importance of eliminating waste Quantity of production level Degree of organization Communication Perception to customer demands Scale of advertisement Lead time Short Varies Short Short Low Low High High High High Medium Low High High High Low Flexible Low High Medium Agile High Craft Medium Lean/TPS High Mass Low

production production production Production

Demand of skillful workforce Operating cost of SE relative to LE Operating cost of SE relative to LE

Highly

Highly

Depend on Low pattern

Figure 3. Comparison on production strategies production

Similar

Low

Varies slightly

High

Same

Same 28

Medium

High

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in most of the large-scale industries. (Noyel et al, 1999) argues, lean production might not be vigorous enough to match with unstable market condition. According to (Gunasekaren, 1999) lean/TPS production system benefits automobile, textile, construction and health care industries to the large extent. In our case lean/TPS strategies are applied in H&M production strategy to yield best production out of manufacturers. Applying Lean/TPS strategies in H&M Company.. In 1980s the authors Womack, jones and Roos first used the term lean production, in the title of THE MACHINE THAT CHANGED THE WORLD. It consist of total manufacturing chain from the basic product design to product, to development, to product logistics, to product marketing lean system. According to NATIONAL INSTITUTE OF STANDARD AND TECHNOLOGY MANUFACTURING EXTENSION PARTNERSHIP LEAN NETWORK (NISTMEPLN), lean production is used in every business firm to bring down the waste using pull strategies (Cooney, 2002), (Kilpatrick, 2003).

H&M deals with 820 different manufacturers from South-East Asia, and European countries. Lean production is widely used in all H&M productions units. H&M uses 5S and Six Sigma in warehousing and distribution networks, and uses JIT, and PULL strategies in production. The benefits of using JIT and PULL strategies would be discussed below with strong evidence. The lean principles and strategies are given below.

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Seven wastes of lean operations

Source:(Stock et al, 1994)

Seven waste of H&M production

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Seven wastes

Description

Occurring in H&M

production ROLE OF LOGISTICS IN H&M CLOTHING COMPANY 3 Overproduction Producing above the Producing garments with 1 demand level or manufacturing irrelevant to. higher lead-time leads to delay in deliveries, where its becomes competitive advantages for competitors. The garments produced with degree of requirements, result in excess of inventory and remains waste. Defects units The scrap works, making products with similar mistakes. When garments are produced with defects, the customer denies buying it from the company and it creates bad impression on H&M reputation. Obviously it results in sales dropdown. Over processing Un-necessary work elements, non value added When H&M produced garments with liquid minerals and compass like stuffs in childrens garments, the government organization banned those items from US market. Due to which H&M faced severe loss in 2007. H&M should ensure the safety and fashion requirements of buyers, which can add value to the company reputation. Inventory Maintenance of inventory level. The procurement managers of H&M always should measure the market demand 31 level and maintain sufficient inventory level to meet customers

The above table explains about the seven types waste existing in the H&M production, logistics and marketing. Even though its not explained in detailed all the major problems and solution are discussed in the above table according to company profile and sources available in our research. As the first stage of Eliminating waste, the seven major wastes are identified in H&M production, logistics and marketing. Lean ideology seeks to cut the wastage any where in company, elevate core resources and create a corporate culture devoted to continuous enthusiastic buyers satisfaction. Here the five principles of lean mentor reducing wastes and generalization of all manufacturing, logistics and marketing (Petschnig, 2009).

Figure 5. Principles of lean/TPS manufacturing system Perfect Product and customer service.

Production of value

Optimizing the value stream

Converting the batch based flow

Establishing PULL system

Source: (Robert McKee et al, 2004)

Production of value Customer is the king of market always, they decide what to be produced and in what quantity and where to be produced. An integration of best customer service, best quality, reliability, and best price is expressed as customer values. As per value proposition, manufacturing garments to this combination of all those value

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is called value creation. The lean manufactures always concentrate on improving product power and quality while lowering the product cost. But there is a mistake that lean individually cant function as cost cutting strategy. The main objective of implementing lean in production field is to reduce lead-time and reach customers with value (Robert McKee et al, 2004). Optimizing the value stream Values stream, encompasses of product design, product layout, product quality and product deliver. Value stream mapping which act as integral part of production, it establish a relationship between management and suppliers, H&M 820 suppliers are gathered under one roof to discuss about their merits and demerits supplying garments to H&M. its provides opportunities for both suppliers and H&M top management authorities to discuss about their demands and capabilities, this discussion eliminates the waste at every stage at earlier stage. This co-development program was introduced by Nissan-cogent when they were facing problems in supplying materials to Nissan. Value stream inter connects all product design engineers, system experts, logisticians, and companies top management authorities to discuss about their advantages and disadvantages in product design, manufacturing, shipping and marketing (Robert McKee et al, 1994). Converting process into flow Converting process into flow is the value adding activity for H&M customers, the principles of flow highlights the lean management internally. When waste is eliminated in H&M, the company should integrate the value stream and production of value into flow. Here lean 5S explains how lean manufacturing swapped the outdated batch production management operations (Robert McKee et al, 1994).

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Figure 6. 5S of lean principles

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5 SSSSS Sort

Description

Used in H&M

Sorting according to the Sorting is similar to ROLE OF LOGISTICS IN H&M CLOTHING COMPANY 3 need and demand of inventory principles. Here 5 work. sorting is use of manpower according to the production in manufacturing area. In retailing stores sorting is stacking the garments according to the measurements size and prices for the convenience of customers.

Set in order

Primary preferences.

In production, shipping and distribution area set in order is widely used. The garments cartons should be palletized according to the dispatch code. All the cartons should be labeled visibly for shipping and distribution purpose. If not its very difficult to recognize the cartons to send it to particular region.

Sweep and shine

Attractive stores, innovations.

When H&M shops are very attractive with good light setups, refreshing stores products everyday its yields the customer attraction that can market the store equivalent to advertisements.

Standardize

Adoption of first three 5S in production, 35 marketing, logistics.

Standardize, which is maintaining the goodwill of the company with standard reputation.

Establishing PULL system in H&M Pull and push system been widely used in H&M supply chain, prior to pull the H&M company were using push, traditional manufacturing system. Which manufactures goods on forecasting, under this system the demands and supplys are not static flow, where H&M resulted in overproduction and market predication were often not constant. Averting traditional system to lean pull system benefitted H&M in reducing lead-time, market predication and customer satisfactions. Finally activating pull system means terminating H&M traditional forecasting production planning. Averting push to pull might be radical risk for some firms, but it brings more awards than risk (Robert McKee et al, 2004). Perfection of all products and services When H&M implements first four lean principles, the company is equipped for perfect product and services. Impetus achieves this momentous corporate cultural change. Lean technologies and its functions in H&M brings interminable production cycle, according to Henry Ford adaption of lean in any business or service organization is easy than anyone think. Lean comprehensible process and creates transparency. In recent days most of the Manufacturing companies like Toyota, Nissan, Primark and Inditex, have implemented Lean/TPS, PULL and JIT system in manufacturing process. When H&M implements these strategies in production it gains more customer value (Naylor, 1999).

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Figure. 7 Five different stages of supply chain management Source: (Roberts McKee et al, 2004)

Figure 9. Comparison between Traditional and Lean/TPS manufacturing system

Traditional manufacturing system Applying Lean/TPS manufacturing of H&M Inventory flow Operating cost Lead-time Scheduling Flexibility Inspection COGS Product quality Required manpower High High High Forecast, PUSH system Medium Sampling, inspection Rising Medium Medium strategies in H&M Constant level Medium Short Customer oriented, PULL system High Workers Decreasing High Low

Figure 8. Benefits of implementing lean/TPS system in H&M supply chain

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Benefits of H&M company

Change rates

Reduction in production cost. Over all revenues without expanding manpower. Increase in sales and profits. Reduction in manual faults and paper works. Reduction in manpower handles with large Production. Producing unique product with standard quality. Reduction in lead-time and logistics. Cost reduction in warehousing and distribution Reduction in advertisements, and marketing.

52 % 61% 48% 42% 39% 50% 50% 28% 30%

Source: (Stock et al., 1994) Figure 6. Comparison table

Using JUST IN TIME (JIT) concepts in H&M lean manufacturing According to (Steve L Hunter, 2004) Just in time (JIT) is one of the tools of lean supply chain. This concept widely used only in production, dealing with 38

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procurement of raw materials and managing inventories. In our case we apply just in time method for H&M production and stock control system. When H&M Company uses JIT in production; the raw materials like fiber, organic cotton, spindles and yarns are procured on the same day and used on same day. The main objectives of using JIT in production are to reduce the inventories to minimum level in some case to zero level, and finished goods are immediately packed and dispatched for sales. According to the name just in time, the raw materials are purchased just in time and manufactured just in time and shipped to retailing shops for sale just in time as soon production is over. In just in time method the manufacturing process is controlled by pull system, where the garments are produced on demand rate not on forecasting rate. Just in time totally reduce the 3PL and warehousing cost, since the goods are produced and dispatch for sale just in time no warehousing required for storing goods. The company can manage storing goods with shops store rooms (Steve L Hunter, 2005).

The productivity dimension of JIT is described as nothing idle which means when the inventories are used to its capacities, raw material waste is eliminated, when the raw materials are procured proposition to production efficiency the machines are operated to full capacities, waste of energies is eliminated. If all the raw materials are converted into finished products, then raw materials, energies, manpower and recycling wastes are eliminated. Implementing JIT in H&M production brings enormous of productivity development, cost cutting and continuous improvement like reductions in scrap work, reduction in overproduction, reduction in material handling. As outcome of this reductions companies shortened the lead-time. The below diagram explains manufacturing process of JIT. The JIT manufacturers use the benefits if mass production and craft production while ignoring its demerits, JIT manufacturer fixes clearly on perfection; continues lowering cost, zero scrap work, zero reworks, Infinite product collections and designs. The new model pioneered by Toyota took over 39

the mass production model, which were used production for more than 71 years.

Process of JIT manufacturing system

Figure. 9 process of JIT manufacturing Source: (Daugherty et al, 1994)

Advantages of using JIT in H&M production

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ROLE OF LOGISTICS IN H&M CLOTHING COMPANY o

4 1

For the domestic distribution around Europe, JIT ignores

warehousing the H&M products are delivered at doorstep of retailing shops. JIT shortened the lead-time for H&M allows taking competitive advantages. o The amount of money or funds invested on over processing shall be used for H&M other purposes, like extension of stores or materials procurements. o o o Scrap works, recycling of garments are eliminated. It avoids Manpowers are used properly with systematic workflow. H&M can produce infinite varieties of garments designs and reworking with garments.

collection. The biggest demerits of JIT are the small scale manufacturing business unit cant implement this system, since it requires lots of capital investment. In our case H&M could use this JIT system only for European markets from domestic manufacturers, the garments ready for sales can be dispatched to stores immediately just in time. Where as it not suitable system for Southeast Asian manufacturers to exports the garments just in time, due to logistics expenses and cross docking requires warehousing. H&M could use JIT manufacturing strategy only for European market, and the research highly recommends only for European markets. JIT production cycle for H&M Company

41

Source:(Daugherty et al, 1994)

Applying Reverse strategies in H&M Company

According to (Stock, 1992) Reverse logistics (RL) is another logistics strategies used widely by all the manufacturing companies. Reverse logistics considered being a process through which the company could recycle or reuse the product in an environmental manner, or it may be defined as process used for returned goods. Reverse logistics functions are just reverse to normal logistics functions, and the flow of entire supply chain is vice-versa in reverse logistics (Stock, 1992). Every company introduced this reverse logistics system to offer best customer service value, When the goods are returned for some specific defects from customers to retailers or dealers or agents the goods are sent back from agents to suppliers again for replacement or recycle or scrap work (Stock, 1994) (Kopicki et al., 1993). In our research we apply reverse logistics strategies in H&M Company for recycling, reusing, of garments when its returned from customers for any defects or any reasons to become more environmentally efficient. We use reverse logistics strategies in H&M clothing company. 42

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In retailing sector, reverse logistics become mandatory service in all multinational companies due to stiff competition. According to (Meyer, 1999) the goods returns in clothing industries have increased to 25-30 percentages. According to council of logistics management executives nearly 70 millions pounds are spend on returning goods, recycling and shipping the products to suppliers. Reverse logistics in clothing industries were recognized recent days. H&M returns goods nearly 20-25 percentages every year due to various reasons like; damaged products, defective products, mismatching pairs, irregular sizes, Vendor errors (wrongs sent destination), product recall and warranty return. When the company uses this strategy it could recycle and reuse the garments rather than disposing it. The process of reverse logistics in H&M is illustrated in below diagram. Figure .11 Reverse logistics (RL) process in H&M Company

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Source: (Nandita Abraham, 2011) When the garments are returned to H&M store, the storekeeper required recording the reasons for goods returns and reasons are documented and sent back to suppliers for altering business behaviors (Nandita Abraham, 2011). In addition to returns of goods the H&M could take advantages unsold garments, which are left unsold due to outdated fashions. From supplier perspective, the H&M charges some financial penalties for providing defective garments and shipping cost involved in packing and return the goods. Due to returns of garments the suppliers are charged small amount of financial penalties and garments are returned to suppliers. When suppliers receives the returned goods, the manufacturing companies send the garments to bleaching company to convert garments like T shirts, shirts, jeans, frogs, kurthas, and womens garments into white fabrications and then send to Dyeing units to make it fresh colors and qualities. The suppliers faces loss only with physically damaged garments, in some case even the physically damaged garments could 44

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be converted like handkerchief, shocks, and inner wears. The main objectives of applying RL in H&M to make use of unsold garments, defective goods to reuse it to become environmentally efficient than just disposing the garments for no values. Implementing these strategies on H&M doesnt require any capitalization. The alternatives of reusing H&M products 1. The company could resell the products at discounted price. 2. The company could return the products to manufacturer and charge some financial penalties for the defectives and acquires the shipping charges. 3. The company could sell the damaged products to the local buyers or local stores. 4. The company could offer the products to the charity for poor people, who dont posses the basic needs. 5. The company could modernize the products, inspect and repacking for sales. 6. The company could scrap it to licensed companies. 7. The company could claim insurance money for defective products. Source:(Author) The H&M Company could use either reuse alternatives or remanufacturing system to make of the defective products. According to authors research, remanufacturing system attracts the company economically and it makes the company environmentally efficient. The general issues faced from supplier are; irregular quantities of product returns, the company returns the defective, damaged and unsold products, in unexpected quantities. Reverse logistics (RL) manufacturing process

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Source: (Dave Meyer, 2009)

Uses of Information Technologies in garments and logistics industries According to (Shen Jin- sheng et al, 2006) with an expeditious development of information technologies, limitless improvement of internationalization and customers life style. The products have become more customized and differentiated. As outcome of these developments it resulted in shorter product life cycle. The companies are facing conflict between large-scale productions techniques and customers fast-fashion demands. In order to respond to market competition and buyers demands, almost all public and private enterprises have to use Hi-tech modern technologies to alter the manufacturing styles, to be more flexible to customers demands. The flexibility in manufacturing bring downs the production cost, shorten production cycle, making the best use of manpower and equipments and product quality to the efficiency of companies. Here logistics

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information system proves that weather the companies have adopted flexible manufacturing system or not. Since logistics system act as central nerve of companies, that ties suppliers, 3pl, and customers. The accuracy of logistics system defines the demand and supply of market environment directly (YE qin et al., 2004). Therefore to construct logistics system that matches with apparels industries are identified from secondary publications and additional suitable advanced softwares for apparels designing and manufacturing are discussed below with suitable snapshots of software and technologies. The different types of information technologies used in apparels manufacturing, designing, packing and shipping are listed and explained below before manufacturing process. o (ABM) o COMPUTER AIDED DESIGNS (CAD) o COMPUTER AIDED MANUFACTURING (CAM) o (CIM) o (CDI) o (EDI) o (ERP) o (EPOS) COMPUTER AIDED DESIGNS (CAD) According to (Stephen Gray, 1998) CAD is abbreviated for computer-aided design while CAM is computer aided manufacturing which is been widely used on many industries like construction, textiles, electronics and automobiles industries. (Karmani, 2010) describes that CAD is widely used on making designs using computers, while CAM is used for manufacturing products. (Karmani, 2010). According to (Stephen Gray, 1998) Mr. Gerber first used the CAD application in 1970s for marking the fabrications, rapidly more than 40 percentage of the US 47

companies used this applications on product designing in manufacturing sector (Stephen Grey, 1998). In the recent days close to 99 percentages of the garments manufacturing companies uses this as designing tool, developments in softwares and technologies have brought down cost of cutting rooms and fabrications involved in fabrications cuttings. According to (Wilson et al., 2001) even the small firms and in-house enterprises uses this application to design and measure the garments, the good other example are fragmented Italian clothing industries (Wilson et al., 2001). In recent days the textile industries have been more modernized and personalized with Information technologies and software developments in large scale (Stephen et al., 1998) CAD/CAM replaced the traditional manual designing and man cutting, which consumes lots of time in designing and cutting fabrication too. According to Mr. Sampath Kumar the managing director of Texfield pvt ltd, Nearly 99 percentages of textile industries both (handloom and powerloom) in India and China, uses computer aided designs and computer aided manufacturing for designing the garments and fabrications cuttings. The basic designs and measurement of T shirts, trousers, frogs, curtains and carpets are a entered in CAD application and CAM performs the automated cutting within a minute, automated cuttings (CAM) could cut around 1000-1500 garments pcs in a single perform where the traditional manual cutting would consume around 5 hours. CAD/CAM eliminates waste involved in manual cutting and provides many benefits in the form of reduction in labors charges, fabrications wastages, and space occupied by labors, and scrap works (Sampath Kumar, 2011).

CAD/CAM IN DESIGNING PROCESS Figure. 12 The snapshot of CAD designing process

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Source: (Lectra Vectra, Company website) According to (Helen Wilson, 2002) the entry of CAD/CAM technologies, with inbuilt modern designs and limitless modern colors to clothes gives attractive looks, the clothing company quickly able to respond to the market change and customers requirements with inbuilt designs and limitless modern colors.

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