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.

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

23. PACKAGING

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
http://www.youtube.com/watch?v=ZLUX5EdlIDo
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