Foreign vendors are added to a company's supply chain for a variety of reasons. However, the fundamental motivation forutilising an international provider is because that source is thought to offer better value than a domestic supplier. Explain ANYFOUR reasons for global sourcing and make reference to the attachment Sweden-based Hennes and Mauritz (H&M), one of the leading fast-fashion retailers in the world, was staring at an uncertainfuture in 2018. As of November 2017, the company had unsold stock worth US$ 4.3 billion. While the CEO, Karl-JohanPersson, said that the problem was due to decreasing traffic to the physical stores and the growing impact of onlineretailers, analysts were of the view that it was due to H&M's weak supply chain, which could not keep up with more nimblecompetitors like Zara.H&M designed the clothes in-house, but it did not own any production facilities and outsourced its manufacturing tofactories located in Asia to reduce costs. It took about three weeks for the clothes to be designed, made, and shipped tostores across the world. Competitors like Zara, however, finished this whole process within a span of ten days to two weeks.There were exclusively online retailers like ASOS which had short supply chains. With H&M's products not able to keep upwith customers' expectations, inventory started to pile up. The company did not make any major changes to its supply chainfor over two decades, and continued to produce in Asia without paying any attention to the changing trends in the fastfashion industry.Users said that the offerings from H&M had become dull and unfashionable. This was because H&M designed 80% of itsclothes before the season and only 20% during the season. As the clothes were not attractive, they remained unsold,leading to a build-up of inventory. In the fast-fashion era, these clothes went out of fashion within a few weeks, and H&Mwas unable to sell them. This only added to its inventory. H&M's supply chain was unable to react to the unsold stocks, andit continued to replenish stocks with styles that were not always trendy.It also started facing competition from online retailers who were extremely quick in introducing new styles and fashions.Though H&M went online in the late 1990s itself, it did not do much to develop its e-commerce capabilities. As a result, thecompany's unsold inventory swelled to 20% of its total sales. H&M resorted to markdowns, which adversely impacted itsprofits. The inventory problem-plagued it for seven quarters, and the company appeared to be caught in a vicious circle oflow sales, markdowns, and excess inventory.To address these issues, the company went in for an overhaul of its supply chain. But the new supply chain led to moreproblems as the merchandise could not reach the stores on time. It again went in for a change of the supply chain and alsothe design process to include analytics to understand demand. It also automated the warehouses and logistics centres. Thecompany announced investments in artificial intelligence, RFID, and omnichannel programs.H&M then announced a transformation that was guided by three action areas - be restless around the core; invest inenablers - new technology and ways of working, and drive growth - both traditional and new. It remained to be seenwhether the supply chain transformation would help the company regain the glory it had lost.

Outsourcing is a strategic decision taken when a company uses resources from outside the company due…

Foreign vendors are added to a company's supply chain for a variety of reasons. However, the fundamental motivation for utilising an international provider is because that source is thought to offer better value than a domestic supplier. Explain ANY FOUR reasons for global sourcing and make reference to the attachment

Foreign vendors are added to a company's supply chain for a variety of reasons. However, the fundamental motivation for utilising an international provider is because that source is thought to offer better value than a domestic supplier. Explain ANY FOUR reasons for global sourcing and make reference to the attachment

Principles Of Marketing

17th Edition

ISBN:9780134492513

Author:Kotler, Philip, Armstrong, Gary (gary M.)

Publisher:Kotler, Philip, Armstrong, Gary (gary M.)

Chapter1: Marketing: Creating Customer Value And Engagement

Section: Chapter Questions

Problem 1.1DQ

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