Operations and Information Management

Operations and Information Management

Course Code: DLMBAEOIM01

Fast Fashion


Master of Business Administration – 90 ECTS

Date of Submission:

Author Name: Vibha Lakshmi Rai Kukkuvalli

Matriculation Id: 92115244

Tutor Name: Sebastian Stütz

Table of Contents

List of Figures

Figure 1: A Visualization of the Dual-Integrated Supply Chain of Hennes & Mauritz

Figure 2: The manufacture life cycle curve of Zara

Table of Abbreviations


Hennes & Mauritz


Radio-Frequency Identification


Information Technology


Computer-aided design


Artificial Intelligence


Electronic Data Interchange


United Colors of Benetton

1. Introduction

Currently, the fast-fashion industry is one of the most competitive and difficult business sectors. Companies such as Zara, H&M, and Benetton are continuously enhancing their supply chains to make them more efficient and adaptable in response to fluctuating customer demand and other customer-related factors. This case study analyses the fast fashion industry by examining the operations of major corporations such as ZARA, H&M, and BENETTON.

Zara is the flagship store of Inditex Group, which is owned by the Spanish business magnate Amancio Ortega, who also owns Massimo Dutti, Pull and Bear, Oysho, Uterqüe, Stradivarius, and Bershka. Zara tracks fashion trends via fashion shows, magazines, and city streets. It utilizes trend-tracking and forecasting firms. Additionally, customer needs and preferences are gathered in stores. Customer feedback is transmitted instantly to the creative team via a sophisticated IT system. The designers of Zara receive feedback from each store on customer decisions.

In contrast to Zara, H&M was founded in 1947 by a small-town Swedish salesman named Erling Persson. H&M responds quickly to shifting fashion trends by relaunching its product lines. Many have referred to it as the “fashion follower” or the “king of fast fashion” due to its quick turnaround time. The company has a relentless focus on costs that extends from its products to its business model.

Like H&M, Benetton was established in 1965 in Ponzano Veneto, a small town near Treviso, by the initiative of four brothers. Key to the company’s success were product and distribution innovations, as well as an efficient production organization based on the work of a vast network of small local subcontractors specializing in knitting, cutting, and sewing garments. In the 1970s, the company expanded on the Italian market for sweaters and eventually all casual apparel. Benetton accelerated the process of reorganizing its production at the start of the new millennium as a result of the intense competition from Zara and H&M, the two major foreign brands with stores in Italy. In 2003, 48 percent of the volume of production was still manufactured abroad, while 62 percent was produced in Italy. (Benetton and Zara information systems: a comparative analysis, 2010)

2. The supply chain management approaches taken by H&M, Benetton, and Zara

The most common aspect is that all three companies do most of their design themselves. Benetton and Zara practically all make their designs in-house, while H&M uses guest designers. The three firms have reduced design cycle time frames and abandoned industry standards of two collections a year and continual product releases. H&M and Zara have high quality and reasonable prices, whereas Benetton has lower fashion but higher durability.

H&M, the world’s third-largest retailer by revenue, has become a successful force in the global garment market by delivering attractive and competitively priced goods. It promptly adapts to shifting fashion trends by updating its product lines. It is well-known for providing contemporary, trendy clothing and accessories with rapid rotation. It delivers the finest client offering in every market by stocking each shop with the proper items that correspond to customer preferences. It also attempts to provide a diverse selection of items that encourages people to both browse and purchase.

A dual-integrated supply chain has been the cornerstone of H&M’s success. In its simplest form, refers to the presence of two suppliers providing the same items for the company (MUOZ, 2015).




Figure 2.1: A Visualization of Dual-Integrated Supply Chain of Hennes & Mauritz, by Nieto Jesus,2015, H&M Supply Chain Management

In lean production, the client purchases specific products, whereas, in agile production, the customer reserves the capacity that may be required on short notice. H&M meticulously studies the region’s economic environment, the city’s best spots to start network promotion, where and how to sell, and trends, notably in the regulatory framework, before entering new markets. High revenues and loyal consumers compensate for learning opportunities and risks that take years.

Zara is a vertically integrated retailer. Unlike similar clothing retailers such as H&M and Benetton, it controls most of the process in the supply chain: it designs, produces, and markets itself. The company wanted its clothes to have a relatively short lifespan in stores and customers’ closets. On average, Zara alters its clothing designs every two weeks, whereas its competitors modify theirs

every two or three months. It sells 11,000 items annually in tens of thousands of retail locations, compared to its competitors’ 2,000 to 4,000. The responsiveness of Zara’s supply chain fuels its success. Zara’s huge, automated DC, “The Cube,” serves as its supply chain hub.







Figure 2.2: The manufacture life cycle curve of Zara, by Pirone, Chiara,2010, Benetton and Zara information systems: a comparative analysis

Although Zara’s business model differs from that of typical stores, it has weaknesses that threaten its long-term growth. The strategy of Zara has problems. It is vital to recognize the limitations of their vertical integration. Typically, vertical integration prohibits businesses from reaching economies of scale, limiting them from creating large numbers of inexpensive goods. The Inditex Corporation has higher prices. Inditex must also support their substantial capital investments in their chain stores, as well as “technology and skill beyond what is now available within the organization.” Rapid and frequent product introductions by Zara raise pricing. They spend more on research and development. As a result of their frequent production process modifications, companies incur increased expenses. Staff must be taught the new manufacturing techniques, which adds costs. These expenses are not greater for conventional dealers.

Benetton’s lean vs. agile approach was unique. It decided to produce all garments in a single natural color and dye them in the most popular shade. The Benetton Supply chain breakthrough was known as “Tinto in capo,” or dye on the garment. This enabled Benetton to make vast quantities of clothes to take advantage of manufacturing economies of scale. It is striking that Zara and Benetton shared a similar supply chain vision, but had not achieved comparable results. As a result of Zara’s excellent implementation of product classification for production, the

trendiest items, which are time-sensitive, are located close to the company’s headquarters, but the price-sensitive items are outsourced to labor markets with less expensive wages. In addition, Zara has built a network of subcontractors that specialize in labor-intensive jobs (Sull and Turconi, 2008), allowing them to take use of the company’s financial, technological, and logistical support.

Benetton released two main seasonal collections per year (spring-summer and autumn-winter), which did not effectively satisfy customers by providing the most recent fashion trends, as competitors such as Zara were already doing. Benetton reduced the number of pieces in its standard collections and introduced new “flash” collections based on current fashion trends and consumer preferences. The re-design of the products also included the elimination of some previous brands and the division of collections into four age categories (men, women, children, and expectant mothers). In the case of H&M, designers use long-term planning more than a year in advance and real-time design feedback from a customer-driven product strategy to create season-after-season collections. Demographics and geography require variable assortments to keep stores current on retail trends. Thus, high-end apparel is made in small quantities and shipped to big locations, while essentials are ordered in bulk and distributed worldwide.

Moreover, Benetton’s suppliers are in low-wage countries, while Zara’s are near the company’s headquarters. Zara’s goal is to keep all production steps near to company headquarters to maximize control, whereas Benetton wants to cut costs. Zara rarely outsources, it can adapt production schedules to market demands. Each collection is limited to reduce unsold items whereas the production chain of Benetton is dependent on subcontractors from Eastern Europe, Asia, and Africa. All save the most valuable tasks are outsourced. This strategy cuts staff expenses and eliminates the obligation to optimize production to meet fixed expenditures. This method of maximizing production has facilitated the group’s rapid expansion without requiring a great deal of capital or labor. However, production cannot be rescheduled rapidly in response to market changes.

Like Benetton, H&M relies heavily on outsourcing from design to production. Its most impressive and admirable quality is its ability to communicate successfully and efficiently with its global partners. Despite not having its factories, H&M uses 800+ partner firms in over 30 countries to manufacture 60% of its products, mostly in Bangladesh, Vietnam, Cambodia, India, and China. Thus, European providers make rest (Lu, 2014).

3. Limitations faced by the companies in terms of internationalization and market expansion.

Many firms have been disillusioned with worldwide sales due to the absence of fresh markets.

A company like Zara was founded to meet the requirements of local customers without any plans to expand internationally. Its internationalization rate can be divided into two phases: the cautious expansion period (1988-1996), and the aggressive expansion period (1998-present). Zara’s internationalization appears to adhere to the ‘stage model’ (Johanson and Wiedersheim-Paul, 1975; Bilkey and Tesar, 1977; Cavusgil, 1980) by entering geographically or culturally close regions before pursuing opportunities in more distant markets. Zara has implemented a new marketing approach since its inception, which excludes traditional media advertising. In today’s day of information and technology, there are not many firms operating without marketing. If a business is doing well without marketing, it does not indicate that it has acquired the maximum market share and has exhausted all growth options. If a business is currently doing well, a marketing strategy can help it do even better and increase its market share. The corporation may devote more resources to promoting and expanding its clothing line. Countries with humid climates, such as India, require comfortable clothing; Zara’s European influence can be troublesome. Therefore, a wide selection of apparel is essential.

On the other hand, the core concept of H&M is to provide combined quality and fashion at the lowest possible price. Even though Zara and H&M are two of the top fashion shops in Europe and are both engaged in the fast fashion industry, their business methods are vastly different. Unlike Zara, which bases its competitive advantage on efficient and continual engagement with customers and, consequently, on a quicker response to customer demand through continuous communication with the market, H&M bases its annual offer on two key collections.

In the last ten to fifteen years, H&M and other fast-fashion brands like Zara have had tremendous success in the fashion industry due to their trend-driven items, rapid production processes, and extensive retail networks. Now that the disruption is occurring online, H&M has adapted somewhat slowly. Currently and for the foreseeable future, physical retail will continue to be the largest market, but the trend toward online sales is irreversible. For brands like H&M to preserve or increase their market share, they must improve their online performance.

Given the brand’s success, it is logical that H&M’s strategy has placed a significant emphasis on its retail locations. However, it may be argued that H&M was too slow to recognize the possibilities of e-commerce due to this focus. To be competitive online, H&M must match or perhaps surpass its competitors in terms of customer experience. Mobile is particularly significant because H&M’s target demographic of those under 25 are heavy mobile users. The mobile site of H&M is acceptable, but there are a few areas for improvement, such as the navigation, which is occasionally unclear. For example, on H&M’s previous landing pages, if a user selected ‘men’ from the homepage, they would expect to see further navigational options for product categories, such as shirts, jeans, and so on. Instead, he or she would find a page with no readily apparent means of locating products. Therefore, H&M should prioritize its online shopping approach to advance its internationalization and marketing.

Benetton has replaced its vertical strategy with a retail strategy that heavily relies on franchisees. Subsequently, Benetton implemented an operation strategy that prioritized the speed and quality of placing the assortment on the market. Only a few percent of Benetton products are manufactured in Italy in recent years. The remainder is comprised of nations in Eastern Europe, Asia, and Africa (Tunis). This decision is the result of flexibility, lower labour costs, and access to skilled labour (Which of the Three Supply Chain Strategies is The Most Competitive Business Essay, 2013).

Benetton’s strategy focuses more on product differentiation, as its prices are higher than those of its competitors, and on targeting the upper classes (Which of the Three Supply Chain Strategies is The Most Competitive Business Essay, 2013). However, the manufacturing of knitted clothes has remained a highly fragmented sector. Global players would rather get their whole requirements from only two or three suppliers.  UCB should launch an internet portal, as online sales are flourishing now and it contributes significantly to a company’s profitability. The company should expand its digital presence to foster brand loyalty through the development of a community. Additionally, detailed information about the brand and its products must be provided. To generate a stronger and more favourable perception of the brand, the business must effectively promote and distribute its goods. Since the offered services are the most prevalent reason for not purchasing this product, UCB must implement new after-sales services to leave a lasting impression. Benetton should also improve its channels of contact with its consumers and others to keep them aware of its newest collections and to attract clients even during the off-season and on ordinary days by offering frequent discounts or coupons. Benetton should also cater to those beyond the age of 50 and present a more subdued range. As a global company, the company should produce more television advertisements, as this will help them reach a larger audience and keep its customers informed of its current news/collection. Benetton should increase their Sisley and Playlife apparel lines to increase sales of these brands. Research should be conducted to produce superior designer accessories.

4. Contribution of digitalization towards optimization of their supply chain operations

Supply chain digitization (or digital transformation) is the creation of dedicated master data that incorporates information from your whole supply chain and certain external sources to digitalize analog processes. In a world that is becoming increasingly digitalized and interconnected, fashion trends are spreading and changing faster than ever, and consumers want to update their wardrobes more quickly and for less money.

Inditex, the parent company of Zara, is one of the world’s most successful fast fashion companies. Inditex’s success is largely attributable to its ability to forecast demand and match data with supply using digitalization, thereby catering to consumer demand for rapid introductions of inexpensive, trendy clothing.

RFID (radio frequency identification) is one of the primary ways that Inditex has implemented digitalization in its supply chain; it enables the identification of each of its garments through radio waves. The unique identification of its garments enables Inditex’s brands (such as Zara) to immediately order more stock when an item sells out. It also provides them with real-time information on the most popular products and feeds this information to production and fulfillment systems. This enables them to produce more of the items with the highest demand, reducing waste throughout the supply chain.

The introduction of real-time big data and analytics has enabled businesses such as H&M to analyze every aspect of their supply chain, from product design to manufacturing to distribution, via digital communication across the supply chain. Companies collect data across their supply chains using sensors, which, when combined with the Internet of Things, can provide a great deal of transparency. In addition, advancements in robotics have decreased lead times while introducing additional manufacturing data that can be used to gain profound insights into various value chain nodes. In conclusion, the application of 3D printing has decreased labor costs and increased product variety. Ultimately, these factors enable businesses to respond more nimbly to shifting customer demand patterns via digital communication, resulting in reduced costs, improved quality, and shortened lead times.

H&M executes its design process in-house, granting it full control over the earliest stage of its supply chain: product development. It develops its products through both long-term seasonal planning and reactive design in response to emerging fashion trends. 20% of H&M’s inventory is produced in real-time to adapt to shifting market trends. H&M utilizes the power of its efficient supply chain to meet the real-time transitions of fashion movements with products. The innovative IT integration at H&M enables the company to implement this supply chain distribution model, thereby reducing lead times and costs. Notably, there is a robust flow of digital information between the production offices and the national headquarters. The combination of inventory monitoring systems and advanced communication flows enables H&M to quickly identify supply and demand mismatches within its supply chain and adjust. In addition, this fluid digital communication infrastructure enables H&M to determine which of its suppliers possess the necessary raw materials to produce its newly developed orders, enabling direct order placement with its suppliers. These manufacturing efficiencies have allowed H&M to “reduce average lead time by 15 to 20%,” resulting in the company’s increased flexibility and decreased risk.

Benetton’s process begins with in-house garment design utilizing CAD technology. The sophisticated software enables designers to create designs using palettes of literally 250 colors. These designs’ corresponding data can then be transferred to computer-controlled garment cutters and knitting machines. The production of clothing is the ideal combination of high technology and manual labor. Benetton’s supply chain exploits the economies of scale inherent in high-volume production. Eventually, subcontracting labor-intensive tasks transfer high-cost elements to small family-owned companies with lower-cost structures. The software enables designers to create designs using screens containing 250-color palettes. Utilizing subcontractors has also enabled Benetton’s supply chain to expand rapidly without requiring massive capital or labor force investments.

The key to the effectiveness of the supply chain is the rapid exchange of market intelligence between the factory and the customer. This is accomplished by maximizing the benefits of EDI technology, which enables direct communication between the agent networks representing the 5000 retail outlets. Manufacturers of Benetton delay the dyeing process until they have a clear understanding of market requirements. This is made possible by EDI transmission. This eliminates the accumulation of wasteful inventories, which reduces costs, reduces cycle times, and optimizes efficiencies.

5. Conclusion

Supply chain management has emerged as one of the key areas in which businesses can gain a competitive advantage. Due to the current business trends of expanding product variety, short product life cycles, increasing outsourcing, globalization of businesses, and continuous advancements in information technology, supply chain management is a complex and difficult task.

Zara’s international expansion into various regions was motivated by a variety of factors, as determined by a thorough analysis. On European markets, the company concentrated on penetrating developed nations with established fashion history and robust demand. The company desired proximity to customers with strong bargaining power and well-established preferences. However, Benetton’s operations and global supply chain strategy is a notable example of a competitively enhancing operations network. It has developed solutions that deviate from industry norms and sought synergies that have been imitated by some of its principal competitors. This highlights the significance of both exclusive ownership of assets (brand, product design, market knowledge, technology) and knowledge-sharing among all supply chain participants. The model of Benetton could be described as “flexible integration.” It demonstrates some counterintuitive evidence, as the company has had to increase its internal rigidity and find the ideal balance between the two to have the most competitive external flexibility.

Zara and Benetton take distinct approaches to achieve the same objective: satisfying customer demand. ECR is an important supply chain management suggestion that has produced substantial results in other industries and can be implemented in the clothing industry as well. In addition, H&M’s dual integrated supply chain has been a key factor in improving their supply chain operations by integrating “leagile” in their manufacturing processes from continents such as Europe and Asia, thereby bringing out the cost and quantity advantage to respond faster, effectively, and efficiently to their customers’ changing demands. As the second-largest retailer in the apparel industry, they are constantly striving to improve their supply chain performance on the market through technological integration, including the implementation of artificial intelligence, RFID, automated warehouses, and blockchain technology, to improve their customer experience. H&M thinks that for the supply chain to be efficient, the product must be accessible at the right time, in the right place, and at the appropriate price. However, when compared to ZARA’s supply chain management, ZARA has been significantly more successful in its supply chain operations, possessing a distinct competitive advantage over H&M’s supply chain management, as ZARA is purely customer-focused and strives to provide superior customer service, whereas H&M is product-focused and facilitates mass production of a wide variety of goods at affordable prices. Also, mention that ZARA’s lead time is 14 days compared to H&M’s lead time of 21 days, indicating that H&M’s supply chain processes take longer to initiate and complete. This means that the consumer may have to wait for a longer period, and as a result, they tend to seek alternatives. As the second-largest clothes retailer, H&M is consequently performing better in terms of supply chain operations. However, in comparison to ZARA, H&M must seek different supply chain management solutions.

6. Bibliography

de la Cruz Iglesias, C. (2009). An analysis of market-orientated supply chain management in the retail fashion industry with particular reference to the case of Zara. diplom. de.

Ghezzi, D. M. (2009). Entrepreneurial counterintuitive strategies for operations and global supply chain management. A study of the Benetton Group (No. 1). Collana Working Paper del


Manvinder Singh Rathore. (2019). Fast Moving H&M: An Analysis of Supply Chain Management.

Lopez, C., & Fan, Y. (2009). Internationalization of the Spanish fashion brand Zara. Journal of Fashion Marketing and Management: An International Journal.

Marketing Problems And Issues Faced By Zara Marketing Essay.” Accessed October 23, 2022.


Matic, M., & Vabale, V. Understanding internationalization patterns of Zara.

Nieto, Jesus. “SUPPLY CHAIN MANAGEMENT H& MvsZARA.” Accessed October 18, 2022. https://www.academia.edu/25296267/SUPPLY_CHAIN_MANAGEMENT_H_and_MvsZARA.

Palladino, A. P. (2010). Zara and Benetton: Comparison of two business models.

Pirone, C. (2010). Benetton and Zara information systems: a comparative analysis.

Technology and Operations Management. “Efficiencies through Digitialization of Supply Chain at Inditex.” Accessed October 22, 2022. https://d3.harvard.edu/platform-rctom/submission/efficiencies-through-digitialization-of-supply-chain-at-inditex/.

Technology and Operations Management. “Profitization Through Supply Chain Digitization at H&M.” Accessed October 22, 2022. https://d3.harvard.edu/platform-rctom/submission/profitization-through-supply-chain-digitization-at-hm/.

The Economic Times. “How Global Supply Chains Are Falling out of Fashion,” September 30, 2021. https://economictimes.indiatimes.com/news/international/business/how-global-supply-chains-are-falling-out-of-fashion/articleshow/86635863.cms?from=mdr

The Strategy Story. “Benetton Supply Chain: Differentiating the Brand,” March 24, 2021. https://thestrategystory.com/2021/03/24/benetton-supply-chain-strategy/.

Thottath, Ajwad Ali, and Mahesh Rao Reena. “A Study on Effectiveness of Marketing Strategy at United Colors of Benetton, Bangalore.,” May 16, 2018.

What Is Supply Chain Digitization, and Why Does It Matter?” Accessed October 22, 2022. https://www.ddcfpo.com/freight-process-insights/what-is-supply-chain-digitization-and-why-does-it-matter.

What’s the Problem with H&M’s Online Strategy?” Accessed October 23, 2022.


Zara Clothing Company Supply Chain | SCM Globe.” Accessed October 19, 2022. https://www.scmglobe.com/zara-clothing-company-supply-chain/.

Zara vs H&M Supply Chain | Case Study.” Accessed October 18, 2022. https://www.ukessays.com/essays/business/which-of-the-three-supply-chain-strategies-is-the-most-competitive-business-essay.php.