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
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
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
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…