H&M Flexible Network Attaches Importance To Inventory Cycle And Actively Seeks Transformation

More and more traditional enterprises make the interaction between products and customers become ubiquitous through the mobile Internet. Especially after many enterprises enter the C2B customization domain, whether they have an elastic resource network becomes very important. Resilient network is an important back-end capability of an enterprise. It means that enterprises choose only part of the value chain to enter, acquire the best manufacturing resources in the world, and effectively smooth the supply chain to carry out light asset operation. H&M is the benchmark for this.

As the world leader Clothing enterprise H&M, earning nearly $8 billion a year and maintaining a very high profit level. H&M will manufacture completely outsourced manufacturing enterprises to 25 countries in the world, 60% of which are in Asia and 40% in Europe. In Asia, we usually purchase some basic products and purchase products that need quick response in Europe and America.

H&M is very different from other enterprises in the management of supply chain network.

H&M requires that its manufacturers only make a small amount of pre production, and then increase production according to the analysis of sales data, which is determined by the fast changing fashion trend in the clothing industry. Therefore, as a supplier of H&M, we usually buy a lot of basic fabrics in advance, while the subsequent processes such as dyeing and tailoring are done after further orders. On the one hand, we control costs and maintain flexibility on the one hand.

H&M is better than normal. clothing The frequency of procurement is much higher. Generally speaking, clothing enterprises are seasonal purchases, while H&M adopts twelve strategies a year to facilitate rapid response to fashion trends. In order to support this flexible procurement mode, H&M has set up an information system called ICT, which has established a closed loop information feedback mechanism for H&M, which ensures fast response and cost control from fashion prediction to design, from production to sales stage. All stores can know each other's sales situation on the ICT platform and allocate the goods. The purchasing and logistics department can track the sales and inventory conditions of each commodity so as to facilitate timely replenishment.

In terms of logistics, H&M's entire logistics system is outsourced to professional companies such as DHL. The goods are transported to the logistics centers of various countries and regions by the central logistics center in Hamburg, Germany, and then sent to various sales outlets. In order to ensure low cost control in the logistics process, H&M is mostly transported by sea. From the central warehouse to the shunting Center warehouse, H&M is transported by truck and transported by the whole process of ICT system. The entire H&M logistics system can handle 1 million 640 thousand items per day.

　　 H&M For the whole flexible network management, we pay great attention to the inventory cycle. Clothing products depreciate very fast every day, about 0.7% per day, so as long as it can sell 10 days in advance, it will depreciate less by 7%, and gross profit margin will increase 13% accordingly. To avoid overproduction and backlog, H&M's central logistics system follows the sales process of each product through the ICT system. The products produced by H&M suppliers are usually transported to the central warehouse in Hamburg, Germany for sorting and distribution. But if this product is targeted at a regional market, H&M will respond quickly through ICT, sending products directly to the country's branches, or even shipping them directly to the store.

From above, we can see that H&M is actually a light asset enterprise, which has built up a complete ecosystem. From suppliers, raw materials manufacturers to logistics enterprises, under its unified scheduling. Therefore, although these enterprises are not assets belonging to H&M in terms of ownership, they also maintain H&M's position as the world's leading garment enterprise.

In this process, the core business of the ecosystem plays the role of the coordinator of the whole elastic network. Specifically, it needs to shift its business focus from the company to the whole elastic network. It needs to transform the regulatory management of the enterprise into an authorization for the whole flexible network. It needs to transform the logic of the whole enterprise value creation from large-scale manufacturing to integrated creation. The traditional enterprises in the mobile Internet era need to have the strategic vision and integration ability of flexible networks.