H&M, Inditex and Nike rated supply chain leaders

25 May 2016 | News | Source: Leonie Barrie

Swedish fast-fashion retailer H&M, Zara brand owner Inditex and sportswear giant Nike are not only among the world's leading brands, they also have some of the best supply chains too, according to a new review.

The latest global supply chain leaders rankings from technology research firm Gartner put H&M at number five for the first time, while 'Movers and Shakers' Inditex and Nike make the number six and number 11 slots respectively.

H&M climbed two spots this year thanks to a combination of "extremely strong" three-year weighted average return on assets (ROA) (25.3%) and revenue growth (16.3%), and a nine out of ten for corporate social responsibility (CSR), reflecting its strong record in sustainability and workers' rights.

Gartner also notes H&M has been on a rapid multi-year expansion path with its brick-and-mortar stores and shows no signs of slowing down, with another 425 planned for 2016. However, its digital efforts are moving less quickly, as it grapples with the added shipping, handling and price deterioration associated with online returns.

H&M operates its supply chains tailored by product type, with 80% of volume built to plan at standard, cost-efficient lead times and the remaining 20% that is agile and can respond to fashion trends by going from design to hanger in as little as 20 days.

Inditex, Spain's leading fashion retail group best known for its Zara brand, posted similar strong performances in three-year weighted average ROA (16.7%) and revenue growth (11.2%) and scored nine of 10 for CSR.

Inditex's culture is "team-oriented and focused on having talented practitioners run the business using best-in-class processes versus the personality-driven cultures often found at fashion houses."

A couple of years ago, it set up a planning and analytics team that sorts through real-time sales trends to inform future design and production. Another team converts customer feedback gathered from the store and district network into prescriptive advice for the design teams.

Inditex has set a goal to run 100% eco-efficient stores by 2020. The new Zara flagship store in Manhattan tracks sustainability measures across all of its processes and will consume 30% less energy and 50% less water compared to a conventional store.

Footwear and apparel leader Nike continues to post strong financial performance, with a three-year weighted average ROA of 14.7% and growth rate of 9.7%.

Nike continues to lead in product innovation, and its supply chain plays a big role in enabling and ramping new technologies. Its self-tying sneakers with power-operated laces, which tighten with the press of a button, will launch later this year; while the company last autumn inked an innovation and manufacturing partnership with outsource provider Flex that is expected to add value in terms of new manufacturing technologies and shorter cycle times.

Nike has invested significantly in supply network design and PLM capabilities. Its supply chain also has extended visibility to outsourced factory production and compliance, as well as to how stores are executing on merchandising, inventory and operations plans.