Title: DLMBAEOIM01_Operations and Information Management

Task 2: Fast Fashion

Type Of Assignment: Case Study
Course Name: DLMBAEOIM01_Operations and Information Management
Course Of Study: MASTER OF BUSINESS ADMINISTRATION (90 ECTS)
Date: 29/11/2024
Author’s Name: Manar Elsayed
Matriculation Number: 4242287
Tutor’s Name: Khaled Kais_MJ

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Table of Contents

Introduction 3
1.1 Overview of Fast Fashion 3
1.2 Purpose of the Case Study 3
2. Main Body 5
2.1 Supply Chain Strategies of H&M, Benetton, and Zara 5
2.1.1 Design Process 5
2.1.2 Manufacturing Practices 5
2.1.3 Sourcing Strategies 6
2.1.4 Distribution Mechanisms 7
3. Comparative Analysis 8
3.1 Differences in Supply Chain Approaches 8
3.2 Constraints in Internationalization and Market Development 9
4. Role of Digitalization in Optimizing Supply Chains 10
4.1 Enhancing Efficiency and Responsiveness 10
4.2 Using Big Data and AI for Decision Making 11
Conclusion 11
5.1 Key Insights 11
5.2 Future Development Plans 12
References 13

Introduction
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1.1 Overview of Fast Fashion
Fast fashion as a business concept simply offers consumers the contemporary catwalk
trends as soon as possible and as frequently as possible through efficient cycles of
production and reiteration. This strategy is an attempt to appeal to consumer’s need for
fashionable yet cheap material products for frequent and constant purchasing, as the counts
are limited within a short time. This business model is known for being cheap, prompt in
adapting to the newest tendencies, and possessing supply channels that focus on quick and
versatile responses.
Companies like H&M, Zara, and Benetton are some of the leading organisations who have
adopted this model prominently, the last named operating patented and selective supply
chain strategies to cope up with the purchaser’s needs and demands. Zara has been
admired for having a highly integrated internal structure that enables it to achieve the fashion
industry’s fast fashion strategy and focus on innovation. In contrast, H&M has completely
depended on outsourcing from different sources to keep the expenses low but still offer
various products. This sets Benetton apart, using its own dyeing facilities for the quality point
of view while outsourcing most of the rest of the production to maintain the right combination
of flexibility and efficiency (Hansen, 2012).
The already dynamic nature of this model has offered a new twist which has dramatically
transformed the retail sector so that firms may benefit in a strongly competitive world.
Analyzing the strategies which are specific for these leaders of the industry, we will receive
the insights of the mechanisms which in their turn contribute to the success of fast fashion
and the problems which can be found on the way.

1.2 Purpose of the Case Study

The primary objective of this case study is to examine and compare the supply chain
strategies of Zara, H&M, and Benetton, focusing on four key areas: such as design,
manufacturing, sourcing, and distribution, will need to be adopted by organisations in the
future. These strategies applied by individual firms have created different strategies based
on the firms’ strategic directions, thus enhancing competitiveness in the global fast fashion
market. The company’s model of organization of the supply chain is fully vertically
integrated, which provides the company with the ability to decrease lead times and increase
the responsiveness to trends (Shukor et al., 2020). While H&M has a centralized structure, it
follows a decentralized model of procurement with three principal objectives –
low cost, economies of scale and global sourcing. To have tight control over its operations,
while at the same time reap the rewards of outsourcing, Benetton engages in a combination
approach known as the make or buy decision (Hansen, 2012).

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This case study also aims at identifying the shortcomings that are attributable to the use of
these strategies especially in the internationalisation and market expansion processes.
‟Currently, Zara depends mostly on central production locations, particularly within Europe,
which may in this way, limit the company’s opportunities to expand in extensive geographic
zones, including Asia and North America. Unfortunately, resident country-model undertaken
in nearby markets affords this approach
maneuverability, but a harsh experience in the long-distance markets in terms of logistics
and expenses. The company has a centrally located production line which versatility can
help effectively address the needs of different regions across the world (Ninduwezuor-
Ehiobu et al., 2023). However, this increases lead times, meaning it is less likely to harness
the speed and agility a New Economy competitor needs to capitalize on rapidly emerging
trends. Although Benetton had a very effective mix of both the approaches the organization
may find it hard to scale up as effectively and at an affordable price all across the world.
Besides the assessment of supply chain strategies, it also focuses on the supply chain
transformation by digitalization. Big data and analytics, AI and voice, IoT – these are the
innovations of the fast fashion industry today. The application of these tools helps in
improving decision MAK/tree structures making, managing inventory, and meet consumer’s
demand efficiently. For instance, Zara uses latest data from stores in the fashion market to
forecast trends and quickly adapt shifts in production to outcompete other fashion clothing
companies. Sustaining such innovation has placed Zara as the world’s leading fashion store
(Hansen, 2012).
The digitalization of new supply chains also has the capacity of addressing most of the risks
linked to internationalisation and market expansion. Applying predictive analytics and AI, it
helps firms make improved sourcing and distribution decisions, lower lead time, and
inventory control. Besides for example, such technologies as automated warehouses and
the usage of blockchain technologies for increasing supply chain transparency can
contribute to efficiency and provide sustainability.
This work intends to offer a systematic view of how H&M, Zara, and Benetton manage the
challenges of the SCM and how digital solutions may enhance these operations (Grose &
Mansfield, 2023).
However, all three executive summaries have the same problem of responding to
geographic factors while at the same time seeking to scale up to other countries as the world
remains a global village and competition is stiff.
based on the analysis, it has been found that innovation and adjustment are significant key
factors to support the competitiveness of the fast fashion industry. Taken together, the results
stress the utility of navigating the weaknesses and harnessing the strengths relate to
digitalization in global supply chain contexts. From this study, other firms in the fast fashion

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business environment can learn best practices from these industry leaders that can enhance
efficiency of their operations in the increasingly dynamic market.

2. Main Body
2.1 Supply Chain Strategies of H&M, Benetton, and Zara
2.1.1 Design Process
Benchmarking the processes of designing in Zara, H&M and Benetton and establishment of
their strategic approaches in the fast fashion sector. The design strategy that has been
applied in Zara organization is highly active and customer oriented. There is a rapid design
cycle which the company has set up to work based on real time customer feedback and
trends. Zara has design groups operating near its home base in Spain, which collaborates
with store managers to obtain information from customers. This feedback loop makes it
easier for Zara to create, manufacture and release new collection after two weeks to meet
the needs of the market (Hansen, 2012).
H&M is a purely centralized design system that aims at bringing out chic and affordable
clothing. The nominated company’s design department is known to plan for several months
so that the clothing collections that it presents fit into upcoming fashions. As with any generic
strategy, this organizational model guarantees cost leadership or wide Elliott (2013) appeal
at the expense of some of the nimbleness observable in Zara’s processes. A clear example
of H&M affordable design strategy is a recognition of simplicity and scalability as its main
drivers when designing its products.
Benetton incorporates the integrated product and process modularization concept in its
systems. In that way, through using activities, which can be changed or adapted easily
during the manufacturing, Benetton increases its flexibility in the context of a supply chain.
The latter is a beneficial since implementing regional preferences or certain specific
demands in the manufacturing of goods does not interfere with the ongoing production
process.

2.1.2 Manufacturing Practices

The manufacturing practices of these companies outlined below also reveal the
differentiated supply chain strategies. The highly integrated vertical structure is one of the
biggest strengths of Zara. The control over the production process allows Zara to develop an
immense speed and flexibility in manufacturing since it owns most of the equipment needed.
Other production facilities in Spain can be supplemented by crucial facilities in other
countries of the region what helps Zara to minimize lead times. This integration enables the
company to adopt new trends occasionally maintaining a relevant

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collection (Hansen, 2012).
H&M, on the other hand, relies greatly on outsourcing its production operations, hence
minimizes costs greatly. The firm deals with an assortment of suppliers in different countries
within Asia such as Bangladesh, China, and India. This approach helps to provide benefits
from the scale effect and continue the position in the low-price segments as an affordable
store for clothes. Nevertheless, outsourcing of manufacturing to centres located some
distance away from the markets minimises responsiveness to a market that may be rapidly
changing.
Benetton follow both integrated manufacturing model and outsourcing model. It also owns its
dyeing facilities that help the company to directly control its quality and standardize all
products. The production is concerned, Benetton has managed to maintain flexibility,
besides keeping the costs down through outsourcing many of the other aspects of
production (Savran, 2024). By positioning it as a hybrid. This makes it easier for the
company to balance responsiveness with efficiency.

2.1.3 Sourcing Strategies

Materials sourcing have been established to significantly affect the supply chain
management of Zara, H&M, and Benetton. Zara’s localized sourcing strategy is to get it
close by and do it quickly. Several of its raw materials are procuring from the local suppliers
who are within the radius of the company’s production centers, Spain and Other European
nations. This factor allows for easy accessibility and quick changes of production schedules
a factor that is ideal for Zara’s fast fashion business (Hansen,2012).
H&M does follow a globalization sourcing model that focuses on organizational cost
minimization. Many raw materials are purchased from cheap sources globally and
sometimes the location of the business is not closely considered. However, this effective
means through which the company can offer competitive prices to its customers while at the
same time facing some drawbacks such as struggling to meet customer demand for timely
delivery and quality issues. Their operations also cause some risks including supply chain
risks and insecurities resulting from volatility of raw materials (Wang et al., 2024).
Benetton has adopted international sourcing accompanied by nodes -supply chain divisions
—specific to local economies for a dual approach- cost-effective sourcing alongside
flexibility. Supply chain management strategy of Benetton is workable because it has
positioned its supply chain nodes at different locations to capture raw materials and
distribute finished products in the best way it can. This way also helps the company to meet
the regional market need which gives the company the flexibility it needs for modularity
design.

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2.1.4 Distribution Mechanisms
In the following section, it is possible to identify some features of Chalk supply chain
philosophies given by mechanisms of distribution: Distribution mechanisms Zara, H&M and
Benetton. Zara’s strategic Centre of gravity is made up of highly localized and highly efficient
centres of logistics. The company has established efficient logistics facilities in Spain where
all its business processes start.
These hubs employ technology that sees new collections get to the stores as soon as
possible, within days of production. This concentrates the variety and enables Zara to
sustain its policy of keeping pace with trends as swiftly as possible (Hansen, 2012, p.186).
The distribution chain is also integrated with its cost leadership strategy that H&M has been
undertaking. The business central warehouse depots are generally strategically established
near major production areas to ensure that the company distributes products in voluminous
quantities.
Although avoiding large sums of money on logistics helps to decrease the general costs, this
reduces the possibility to quickly deliver goods that corresponds to the new trends in the
market. Benetton uses regional warehouses in the distribution networks without
compromising with other distribution methods. This strategy enables the company to counter
shortening of lead times for regional markets and at the same time preserve benefits from
the centralization of inventory. The locating its warehouses, Benetton can satisfy a variety of
markets, without having to compromise on quality or speed (Zirpoli, 2024).
The three case studies of Zara, H&M, and Benetton show that there are various strategies
that can be used within fast fashion industry. Zara has a vertically integrated structure which
make it highly responsive authority to confront speed and trend adaption. Although through
emphasizing cost leadership, it results in a low mobilization capacity due to H&M sources
cheap materials through outsourcing, it aims to obtain the large markets by selling dipping-
price products. Benetton’s strategic outsourcing plan is characterized by a good blend of
outsourcing and internal competences (Runfola et al., 2021). The strategies can be
embraced in digitalization to offer chances towards optimizing the activities of digitalization in
areas such as forecasting, inventory, and logistics. For example, using real-time data
analytics may facilitate the process of increasing the level of responsiveness in organizations
such as H&M and automating distribution networks allows Zara to increase the scalability of
the business model. In future years changes in the fast fashion industry will require
increased use of technology in order to operate efficiently within the global economy.
3. Comparative Analysis
3.1 Differences in Supply Chain Approaches

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The case analysis of Zara, H&M, and Benetton demonstrates the differences in plan for
design adaptability, manufacturing flexibility, and supply chain, and distribution as per the
organization structure imposed by each business.
The fast fashion industry is led by Zara, which has shown great design responsiveness. The
company quickly receives information on its sales and the needs of consumers, which can
be instantly passed to its design teams to quickly release new designs. This responsiveness
makes sure that Zara can get new trends to the market within weeks, something that
competitors could not match (Hansen, 2012). On the other hand, H&M has a structured
design procedure with cheap and easily replicable designs made months before. Although
this strategy offers the company the opportunity to meet a wide range of market needs, it
tends to fail to respond to instant trends. Benetton uses modular designs, it means that the
company can incorporate flexibility in production without having to do overhauls so often.
The three companies also have different manufacturing agility. Through a vertically
integrated supply chain, a value is added to the necessities of realizing new designs in and
out of shops for Zara. Hansen, 2012 argues that owing manufacturing and production plants
in-house, Zara can manage quality and timing effectively; ship its stocks faster than H&M
and Benetton. The sourcing network that H&M offices has incorporated makes use of cost-
led advantages whereby the company centers its manufacturing facilities notably in
Bangladesh and China to deliver its products in a more economical manner than with
flexibility (Heinemann, 2022). Even though this supports H&M’s low-price strategy,
we can also observe that its cause is the disadvantages of long production time. Benetton
uses both the vertical integration approach in that the firm carries out dyeing, but also
outsourcing in other manufacturing processes. This approach is both cheaper and more
flexible than the fully vertically integrated system but is not as fast as Zara’s.
Zara pays particular attention to local sourcing from suppliers within the region of its Spanish
manufacturing locations to match the fast-moving production system of the company.
H&M, however, procures goods internationally to reduce costs, from places that offer cheap
production. This is good in that it leads to the minimization of costs; however, it also results
in High risks such as interruption of the supply chain and quality variances. Benetton has
internationally sourced its products but has also created supply chain nodes that can be
termed as regional procurement centers as they retain the capabilities of a localized supply
chain at a global level (Ibrahim et al., 2021).
Distribution networks are not exempted from bearing the test of these strategies’
differentiation. Zara deploys small closely controlled logistics centres, which control the flow
of merchandise swiftly into the shops it supplies. H&M, nevertheless, operate on massive
volumes and low-cost networks though they prefer bundled shipment costs to retain low

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logistics costs. In fashion marketing communication Benetton is more moderate as it uses
regional warehouses to deliver products to many markets without incurring high costs.

3.2 Constraints in Internationalization and Market Development

Each of the following companies has certain challenges for its supply chain management
strategies while entering the global markets: Zara, H&M and Benetton. Depending on the
local supply centres, mainly in Europe, is likely to be a weakness in expanding into distant
markets. While this is beneficial since N ISSN can respond quickly and provide fast services
to its core markets, it acts as a weakness when expanding to, say Asia or Americas? This
could however be avoided by developing regional production centers which though could be
a big investment and may dilute Zara’s focus on the central command structure (Hansen,
2012).
H&M chooses the best outsourcing places internationally to gain the lowest costs, there are
serious risks in speedy and competitive environments. It is also realized that if an
organization is sourcing from distant manufacturing locations, then the lead times are much
longer than ideal and no organization can afford a slow response in periods characterized by
emerging trends as is the case with H&M. Thirdly, this model relies greatly on the long-term
supplier networks and supplier product quality, and both have become a rare item due to the
instabilities. Benetton’s hybrid model has its own problems as well. Although the company
has flexibility literally having own regional warehouses and dyeing facilities, it also has
numerous peculiarities. Coordinating the supply chain and global sourcing with the need to
be able to respond to local requirements can often result in problems especially as Benetton
begins to infiltrate new markets with different parameters (Leung, 2021).
The equation between localization and cost optimization is also highly significant in defining
scalability. This kind of strategy suits Zara perfectly in its key markets to swiftly respond to
the changes in customer demand but did not provide the firm with the opportunity to maintain
efficient cost cutting in areas sensitive to the price. In pursuing cost leadership as a key fit
with the low-price target consumer segment, H&M sacrifices its ability to address market
specialness. The shared format provides solidity, and yet it might not be as efficient to create
a strategy to compete in rather saturated worlds markets.
The above limitations can be overcome by digitalization. Chairs AI applications like demand
forecasting or real-time inventory management might bring the scalability factor for Zara ‘s
model, but at the same time remain loyal to its core competitive advantage (Khan et al.,
2023). Likewise, there is vast room for utilizing digital solutions to optimize the outstanding
manufacturing processes outsourced by H&M and minimize the lead time. As for
improvement, the Hy Tek Marisa model may benefit Benetton by integrating E-commerce
into its existing hybrid model to cut down the operational weight and improve decision

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making. Zara, H&M, and Benetton are prominent fast fashion brands that have their own
competitive advantages, their supply chain strategies have unavoidable drawbacks of supply
chain speed, cost, and flexibility. Pulling through the barriers of globalisation and market
development will imply the necessity for these firms to transform and create policies aiming
into the competitiveness of the eye in a dynamic market environment, the use of digital
technologies (Amesho et al., 2022).

4. Role of Digitalization in Optimizing Supply Chains

4.1 Enhancing Efficiency and Responsiveness
Technologization is already a critical success factor in the context of supply chain
management for flax fashion companies such as Zara, H&M, Benetton among others. The
use of technology further improves the design cycles and inventory control, which are
fundamental in satisfying the flexing consumers market trends. Zara is one of the extolled
cases of leaders who have embraced digitization to enhance their agility. Thus, the influence
of the new developments corresponds to the customers’ needs since the company utilizes
technologies for real-time customer feedback. These integrated communication systems,
between the stores and the design and production centres, help Zara give its customers new
products more often than its competitors (Hansen, 2012).
Inventory management also cannot avoid the use of digital technologies. Supply chain
management also allows for tracking the stocks in real-time, avoiding situations when certain
companies are vastly overstocked, or some of their stock items are critically scarce. For
instance, Zara’s strategic central distribution centres that are enhanced by digital
technologies integrate the movement of merchandise from manufacturing to selling outlets.
This responsiveness is important in fast fashion since items that are stocked for long will turn
out to be useless. Nevertheless, although H&M is less integrated with digital technologies
than Zara it is increasingly investing in similar technologies to drive up turnover of inventory
and cut waste (George et al., 2022). Benetton which applies the hybrid company supply
chain incorporates the use of technology to link between its various regional depots to
deliver the products within various markets on time.

4.2 Using Big Data and AI for Decision Making

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The implementation of big data analytics and artificial intelligence (AI) are now affecting the
decision of supply chain. Real time data analysis helps organisations to predict demand
pattern hence avoiding excess production risks. For instance, Zara compiles data from its
stores to realize fresh trends in the market and therefore program production patterns. This
forecast ability enables Zara to benefit from fashionable designs while at the same time
he does not fall for the basic mistake of order luxury as his competitors has (Hansen Et
move, 2009). In terms of procurement and supply chain management, AI increased
efficiency with procurement and logistics. With a large amount of data, AI systems can
suggest correct sourcing approaches and state potential opportunities, cost, quality, and
time. When it comes to PPS, Zara can provide the work to including AI to make the right
decisions regarding the suppliers that are most capable of fulfilling their orders within said
time limitations. Likewise, H&M has introduced AI for improving the company’s
international buying chain as the company targets decreasing lead times while continuing to
achieve efficiencies (Camargo et al., 2020).
In supply chain, AI illuminates route planning and real time re-assignment of resources. For
example, while the organization has centralised its logistic warehouses, it uses artificial
intelligence to sort out its products to the various stores based on what is needed at the time.
Companies like H&M and Benetton while not as dependent on a high centralization of their
supply chain network, can utilize similar technologies to increase the performance of the
distributed-out framework. AI also assists in automation of warehouses to enhance speed, in
getting products processed and dispatched (Zhang et al., 2021).
Sustainability is another area wherein digitalisation provides extra benefit for an industry
which is currently focusing on sustainability in fashion. When supply chain management is
made effective it has been seen that wastes, carbon emissions, and poor resource utilization
can be minimized. Other benefits include also facilitating companies’ being able to track their
environmental performance and, in turn, address customers’ concerns about sustainability.

Conclusion
5.1 Key Insights
The analyses of SCM’s Zara, H&M, and Benetton are also highly contrasted in their
management of design, production, procurement, and delivery. Zara has chosen the
vertically integrated model which makes this company exceptionally quick and flexible when
responding to trends. Strategically located outsourcing facilities and Primaried distribution
centers guarantee short cycle times offering the firm the opportunity to create new
collections with a great frequency during the season. In contrast, H&M’s

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strategy is significant outsourcing as it strives to make products cost-effective, sacrificing
speed of production just a little in the process. The company cooling strategy is to combine
capability of internal production in some sectors as for example dyeing and outsourcing in
other areas for more flexibility as in the case of Benetton.
The digitalisation has appeared as the feature influencing the companies and improving
supply chain of all three businesses. Pioneering the use of real time data analysis and AI
decision making for flow of stocks, demand forecast and supply chain, Zara stands as a
worthy example to follow (Hansen, 2012). Two specific e-business initiatives that are
revealing the strategic significance of digitalization in supply chain management are the
following: H&M and Benetton are implementing a growing number
of similar technologies to overcome difficulties in terms of responsiveness and scalability.

5.2 Future Development Plans

To improve supply chain performance even more, the fast fashion actors should employ
technology in their operations. AI and big data analytics present potential greater accuracy of
demand, of which can help firms to better synchronize the production of goods according to
consumer demand. By including these tools in sourcing decisions, it is possible to determine
the right suppliers to deal with while keeping costs down. For instance, Zara could enhance
its utilization of the predictive analytics approach on how it will adjust its localized sourcing
strategies to provide faster market delivery (Quan Hien, 2023).
Some of these challenges will require rethinking to achieve large-scale, low-cost solutions
that do not compromise speed. While Zara’s vertical integration is performing very well in the
first strategic area, the company may experience difficulties reaching distant markets. Taking
production closer to the customers by decentralizing might solve this shortcoming without
necessarily reducing the firm’s ability to respond to changes quickly. On the similar note, the
overall lead time coupled with better coordination with its international network of suppliers
are issues where H&M could invest in digital supply chain platforms. For Benetton’s
flexible model, there exists digital tools that enhance control on real-time shifting of products
from its regional warehouses to retail stores (Fernandez-Stark et al.,2022).
Recycling and waste reduction should also stay under the spotlight. Digitalization can help
organizations to minimize waste, and optimize resource consumption, in line with increasing
consumer concern with sustainability. By improving their supply chain management using
technology, many companies, including Zara, H&M, and Benetton, can realize more
operational effectiveness, challenge and keep up with the fast-growing markets.

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