Question

H&M is a clothing retailer founded in 1947. In the last decade, the company has exploded to $20.3 billion in annual sales. The company has 3,500 stores spread across 55 countries, and a huge warehousing and logistics to manage. While the success of H&M is mainly due to following the latest fashion trends, the secret to its success is low production cost and reduced lead times or how fast they get their products to market. H&M stores are refreshed daily with new fashion items. In addition, in-house designers ask for the opinion of buyers when creating collections. H&M manufactures 80% of its inventory in advance and waits until the last minute to prepare the remaining 20% to take advantage of current trends. It uses an “Inventory Management System” that allows it to manufacture its products in this way. This system is used by the operational managers to follow up the production process details. In addition, this system produces periodical reports (monthly and quarterly) to help middle managers control the production operations. In addition, the “Supply Chain Management System” allows H&M to collaborate with its suppliers to achieve efficiency and reduce manufacturing lead times by 15-20%. Reduced lead times reduce the risk of buying the wrong products. However, a little less than a year ago, H&M was struggling with a number of problems that decreased its revenues. Not only was it suffering from a sales decline, but the company also had unsold inventory worth $4 billion. So, what did H&M do to improve things? H&M introduced a new website and mobile application equipped with capabilities that promise to improve the customer’s experience such as live chat. In addition, they used “Scan & Find” technology at their stores. It is a feature that enables customers to find additional product information (such as available sizes) by scanning an item’s tag using their phone. These e-commerce and mobile enhancements and the new in-store technology seem to be paying off. In February 2019, H&M reported a 22% increase in online sales.

1* What are the 6 strategic objectives for using information systems, and which one applies to the new introduced Website and mobile application? Support your answer. (20 points)

2* Name and explain one main business process used by H&M. (20 points)

3* To which category of systems the “Supply Chain Management System” used by H&M belongs? What are the characteristics of this category of systems? (15 points)

4* What is the type of the “Inventory Management System”, described in this case, according to the different management groups (it could be 1 or more)? Support your answer. (15 points) 5* The last paragraph of the case introducing the new solution adopted by H&M, includes a collaboration tool. Specify this tool and specify to which category of collaboration tools it belongs? (15 points)

6* What is the role of the different information systems used by “H&M”? would the company survive without using these systems? (15 points)

Answer 1

Answer 1
Business firms invest money in information system because they want to achieved six strategic business objectives these are
1.Operational excellence.
2.New products.
3.Customer and supplier intimacy.
4.Improved decision making.
5.Competitive advantage and survival.
6. Services and business models.
Answer 1b.
The strategic objective which the company H&M and uses is operational excellence. In operational excellence the company strives to achieve higher profitability through its business operation. H and M used Website and mobile app which had the option of live chat to enhance customer experience. The company also introduced "scan and find" technology in their stores. By enabling this technology the company was able to send its unsold inventory which was worth dollar 4 billion.
Answer 2.
The main business process which is used by H and M is the production process. The secret of success of H&M is its ability to manufacture latest fashion trends at low cost. It manufactures 80% of the inventory in advance and wait for the last moment to prepare for the 20%. This 20% is used to take advantage of the current trends. The company has mastered its production process and this has given it an edge over its competitors.
Answer 3
The category of system the supply chain management system used by H&M belongs to is inventory management system. This type of system is used for tracking inventory levels order ,sales and delivery of products. Inventory management system is the combination of Technology which has the hardware and software, and processes it helps in managing the company assets, the raw material obtained from the suppliers, the finished products which are ready to be sent to the retail outlet for sales. Inventory control system has a barcode on the item. This barcode is used by a scanning machine. The information gathered is then tracked by the central computer system which is controlling the inventory management.
Answer 4
The type of inventory management system describe in this case is barcode system and periodic inventory system .As per the details discuss in the case study the company produces perodical reports which are monthly and quarterly to help middle managers control operations.It also collaborates with the suppliers to achieve higher efficiency and reduce the manufacturing lead time by 15 to 20%. The barcode technology is used by the company for "scan and find" which enables the customer to find product information of sizes by scanning the item tag used in the phones. This has increased the sale of the product upto 22%.
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