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Análisis de la cadena de valor de la industria de algodón. Caso de estudio de H&M
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Análisis de la cadena de valor de la industria de algodón. Caso de estudio de H&M


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Estudio de la cadena de valor de la industria de algodón a nivel mundial, centrado en la cadena textil H&M y su estrategia de sostenibilidad.

Estudio de la cadena de valor de la industria de algodón a nivel mundial, centrado en la cadena textil H&M y su estrategia de sostenibilidad.

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  • 1. ´SUPPLY CHAIN MANAGEMENT Through its organic cotton collection
  • 2. PART I: INTRODUCTION  H&M in few words…  Description of the supply chain  Conventional vs Organic  Organic label certification  H&M main competitors
  • 3. H&M IN FEW WORDS…  Established in Västerås (Sweden) in 1947 by Erling Persson  Today: huge multinational that sells clothes, cosmetics, accessories and footwear  1.700 stores worldwide. Rate of expansion: 10-15% stores per year  Approximately 800 independent suppliers and around 2700 production units, mainly in Asia and Europe. “H&M offers fashion and quality at the best price” – Slogan
  • 4. H&M´ SUPPLY CHAIN  1- Raw material harvesting  2- Manufacturing  3- Packaging  4 -Transportation  6 - Sales  7- Marketing  8 - Final disposal  9- R&D
  • 5. CONVENTIONAL VS ORGANIC  Pesticide dependent crop (25% of all pesticide use)  Seeds - GMO (pest resistant)  Soil - mono crop culture intensively cultivated  Weed - chemical removal (treating soil with herbicides use to inhibit germination)  Pest control-insecticides use  Defoliation- toxic chemicals  Natural materials & methods, pesticide free(organic ferilizers, manual crop)  Seeds - natural ingredients  Soil- annual crop rotation stable fertlity.  Weed- through cultivation and hand hoeing  Pest control- beneficial insects  Defoliation – seasonal freeze leaf removal CONVENTIONAL ORGANIC
  • 6. ORGANIC LABEL CERTIFICATION  Ensure organic status of farms & cotton Encourages payment of premium prices to support farmers  Ensure fibers are grown naturally & production processes follow criteria of environmental responsibility  GOTS – Global Organic Textile Standards for controling textile production  Eco-label (approx. 100 in textiles) - Oeko-Tex standard 100 mark (health standards), European Eco-Label for Textile Products (reduces water pollution)
  • 7. MAIN COMPETITORS  Direct competitors  Big players  Organic clothing varies from moderate to high price
  • 8. PART II: ANALYSIS  The supply chain step by step…  Positive & Negative Impacts  Environmental & Social Impacts
  • 9.  Growth of the sector  Top Ten Organic Cotton producing countries (2007-08): India, Syria, Turkey, China, Tanzania, USA, Uganda, Peru, Egypt and Burkina Faso  Suppliers of H&M: India, China, Pakistan and Paraguay No direct relationship with farmers  Contribute to improve life and labour conditions of farmers through collaborations with 2 NGOs: RAW MATERIAL HARVESTING Increasing demand of large retailers such as H&M Expanding organic agriculture Minimizing cotton cultivation´s impacts
  • 10.  Ensure Fair Labor Conditions - Organic product line 2007 - Code of Conduct (production policies) - Full Audit Program (production conditions) - Member of Better Cotton Initiative - Chemical restrictions (safe use & waste disposal)  Manufacturing stages - Spinning - Weaving - Dyeing - Cutting& sewing - Quality inspection - Finishing MANUFACTURING
  • 11. PACKAGING To understand the next steps Description of the travel of a garment from the external factories to the shops
  • 12. PACKAGING  Packaging produced by the suppliers  Protection transportation from production plants to distribution center  Code of conduct – no polyethylene  Packaging produced by H&M  For transportation from the distribution center to the shops  Packaging in the shops  No specific actions to reduce packaging
  • 13. TRANSPORTATION  Climate smart methods of transportation  Monitoring environmental performance of logistics services providers  Clean Cargo Working Group  B2B initiative (shippers of cargo and the companies they are working for)  Clean Shipping project
  • 14.  Central warehouse based Hamburg - Germany  13 distribution centers all over the world DISTRIBUTION
  • 15. SALES  Customer and company interaction POINT OF SALE  Location and Design: crucial  Internet and catalogue sales in several countries: Sweden, Denmark, Norway, Finland, The Netherlands, Germany and Austria  Organic Cotton in store: INTEGRATED  Environmental Impacts  Energy Consumption: lighting, cooling and heating  Waste Generation: hangers, tags, boxes and plastic bags  Water Consumption: staff use
  • 16.  NO campaign to promote Organic Cotton Collection  Special Campaign Fashion against AIDS  Environmental Impacts MARKETING Social Issue  Waste Generation  Water Consumption Energy Consumption
  • 17.  3 principals: reduce, reuse, recycle environmental & economic benefits.  Recycling energy saving (50% less when producing fabrics of recycled fiber) water saving - 15% decreased volume of Aral Sea - irrigation demands - 10.000 L of water needed to grow cotton for 1 t-shirt pollution reduction (coming from transportation, dyeing etc)  Approx. 95% of the land filled textiles each year could be recycled  Textiles that can´t be recycled, cloth scrap Post-industrial waste  Old/used clothes to be reprocessed Post-consumer waste  The most important clothing recycling initiative:  Marks & Spencer and Oxfam – creation of clothes exchange (for raising money for Oxfam´s work to tackle poverty& decreasing the tons of textiles sent to the landfill.)  H&M reduces material & energy consumption in stores FINAL DISPOSAL
  • 18. RESEARCH & DEVELOPMENT  Cooperates with customer service & sales  Market source: Shapes the trend (print designers & product developers)  Technical source: Advances technical quality & development (mills, yarn, trim)  Services offered: microbiological testing & fabric and process tests (wash trials etc)  Areas of activity:  Laboratory testing (control water systems, physical garments testing)  Process development & validation (improve hygiene processes & repair systems)  Fabric and component investigation (evaluate new textile components)  Product design (reusable & biodegradable materials for reprocessing)
  • 19. PART III: RECOMMENDATIONS  The supply chain step by step…  How to improve?  Which competitors to look at?
  • 20.  Proximity H&M and farmers  Gaining knowledge to estimate future supply of organic cotton  Building long-term relations with suppliers to assure future supply  Community development with community investment  Minimizing environmental impacts  Ensuring fair conditions for farmers RAW MATERIAL HARVESTING OBJECTIVES ACTIONS Education Educational Programs in the communities (suppliers H&M) Grants for Universities Economic Micro-credit for Indian farmers Grameen Bank Environment  Partnership Soil Association  Partnership Pesticide Action Network International Social  Partnership with FLO 1 2 3 4
  • 21. MANUFACTURING  Objectives  Reduce carbon emissions, become carbon neutral  Assure quality in labor conditions  Reduce waste water  Actions  “Eco-buildings” (materials, paints, insulation, natural lighting, “green roofs” )  Increase use of renewable energies, wind, solar Installed by H&M´s factories or by participating in partnerships, ex BGMA, WWF Used for H&M´s consumption or to be sold Funded by World Bank or International Finance Corporation.  Partnership with Fair Wear Association  Water recycling  Water low flow
  • 22. PACKAGING  Main area of risk = Transit terminal • “Packaging scorecard” • Software – training to reach reduction targets  In shops • 100% recycled hangers • Use of recycled carton for socks and tights • Possibility to dispose packaging in store  “Education tool” • CSR label • Green Rating Index ACTIONSOBJECTIVES
  • 24. TRANSPORTATION  No “airfreight policy  Reduction of business travel  Development of river transportation  Fleet of truck running with natural gas  Partnership with companies to share transportation ACTIONS
  • 25.  Rethink the location of the facilities  “Green” transit terminal DISTRIBUTION ACTIONS
  • 26.  Raise awareness on environmental issues among customer and staff  Gaining consciousness about H&M organic cotton line  Change to sustainable marketing  Differentiate the brand  Increase customer retention and brand loyalty  Mitigating risks and identifying opportunities  Building a bridge between MK and CSR department MARKETING OBJECTIVES ACTIONS 1 2New Policy Paper New Place for the Organic Cotton Collection per section in H&M stores 4 Strengthen the Environmental Message: promote the Organic Cotton Collection 3
  • 27. SALES OBJECTIVES  Reducing waste generation in the shops  Reducing energy consumption  Reducing emissions generated through sales materials (bags)  Changing customers’ attitudes towards a more environmentally friendly behave  Retaining the best staff “Bring your H&M Bag” ACTIONS 1 2 Partnership Cáritas “Give your unwanted clothes to Caritas for people who need them” Help farmers through customer spending: 3 5% out the price of every item certified as 100% organic 6 Extend online shopping Guide to recycling 5 4 Energy Efficient in Stores
  • 28.  Decrease post-industrial waste  Decrease post - consumer waste  Make textile accessories with textile waste  Create outlet stock centers  Locate recycling bins in stores  Recycle stock clothing  Marks & Spencer and Oxfam: created the clothes exchange (raising money for Oxfam´s work to tackle poverty & decreasing the tons of textiles sent to landfills) FINAL DISPOSAL OBJECTIVES ACTIONS
  • 29. RESEARCH & DEVELOPPEMENT  Decrease use of non recyclable/artificial materials (synthetics, nylon)  Increase product durability (reduce water consumption)  Increase use of innovative and recyclable materials (hemp, bamboo, wild silk, linen etc), which are degradable  Increase longevity, promote up-cycling  Redesign and restyle used clothes OBJECTIVES ACTIONS
  • 30. FUTURE…
  • 31. WHY & HOW TO IMPLEMENT THESE RECOMMENDATIONS?  WHY ? - Competition - Risks reduction - Cost  HOW ? - Commitment entire supply chain - CSR department  H&M has all the qualities and strenghts…
  • 32. + - Internal Strengths International brand Successful company Fashion brand – Good designers Excellent logistics process Website good CSR tool Organic cotton line Weaknesses Intermediaries no direct selection raw material Increase transportation by air Increase business travel No actions to reduce or recycle packaging Poor marketing to promote CSR /organic line External Opportunities Fashion industry-Fast pace-Innovation Large audience – Educate people Large demand ethical products Global sales online Organic Exchange Better Cotton Initiative Green Cargo working group Clean Shipping project Threats No direct relationship with farmers Energy consumption : cotton production Pollution: cotton production Human rights manufacturers– Medias - NGOs Asia main production / Europe main market Organic cotton not fair trade Competitors ahead: innovation fibers, packaging “education tool”, promotion of CSR, recycling actions
  • 33. Change in the supply chain could happen only if: - Commitment of the top management - Considered as a strategic topic (reduce risks & costs) - Environmental-social strategy for the whole supply chain BUT…
  • 34. THANK YOU!
  • 35. ANNEX  H&M’s supply chain recommendations map  Detailed SWOT analysis