Applying sustainable development on supply chain in apparel industries

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SCHOOL OF INDUSTRIAL AND INFORMATION ENGINEERING

MASTER OF SCIENCE IN MANAGEMENT ENGINEERING

APPLYING SUSTAINABLE DEVELOPMENT ON SUPPLY CHAIN IN

APPAREL INDUSTRIES

SUPERVISOR Prof. ALESSANDRO BRUN

AUTHORS

GOKULA KRISHNAN KUPPUSAMY– 898295 INIYAN SENTHILKUMAR – 898386

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LIST OF FIGURES

Figure 1:Fisher model analysis of H&M, LEVI’S, PRIMARK, ZARA ... 36

Figure 2: Hau- Lee positioning and explanation of drivers, weights and scores of the matrix for H&M ... 37

Figure 3: Hau- Lee positioning and explanation of drivers, weights and scores of the matrix for LEVI’S ... 39

Figure 4: Hau- Lee positioning and explanation of drivers, weights and scores of the matrix for PRIMARK ... 40

Figure 5: Hau- Lee positioning and explanation of drivers, weights and scores of the matrix for ZARA ... 41

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ABSTRACT

Sustainability has become one of the key aspects of development of any company operating nationally as

well as globally. Today’s Competition is not between companies, but it’s between Supply chains. So, in order

to become a leader in any field, there must be a progressive level of Sustainable Supply Chain. Sustainability

improves the development and existing system of the company’s value chain and their efficiency life cycles.

Particularly, we mainly concentrate on the Apparel Industry. The purpose of this work is to evaluate how

particular companies implement the sustainable development by considering the significant changes of

Economic and Social-Cultural value chains and sustainability. Our focus is based on how company works and

how they plan for their future, throughout their value chains to become more sustainable. This is performed

by taking into consideration of the Multiple Case studies of the specific companies. The needed information

of the companies is gathered via Internet or by company website. The analysis of these thesis is done

theoretically which shows how studied companies work effectively with Sustainable Supply Chain

development and how far they are implementing these continuously every year. In order to analyse the

outbound and inbound supply chain of the company, fisher and lee model played the vital role along with

that sustainable tools like circular economy, technological innovation, cleaner production and sustainable

consumption and finally about transparency. The challenges in implementing the changes are described.

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1.INTRODUCTION

This part presents the background information about sustainability. Mainly Focused on sustainability issues

in the apparel industry, and sustainable supply chain development. The problem of the topic is discussed,

and the purpose of the study is described.

1.1 Overview

Basically, textile/apparel supply chains are mainly focusing on the global market, the growing level of

outsourcing to developing countries has noticed the increasing focus on sustainability. Thus, the ultimate

need to understand sustainability integration into the globally divided supply chain is highly important. In

fact, it has been estimated by The World Wildlife Fund (2017) that the production of one kilogram of cotton

lint, which is enough to produce one t-shirt and a pair of jeans, requires 20,000 litres of water. Natural

resources and chemicals used for the production process makes the apparel industry and the textile

companies gives the most polluting and waste generation industries in the world [1]. In the meantime,

apparel production plays the most important role in the world economy. One of the factories breakdowns

in Bangladesh in 2013 deepened the close examination of the industry and highlighted the longstanding

questions of how the gaps between economic viability and social and environmental performance can be

bridged (ibid). In the recent years, sustainability becomes a key to success not only in the apparel industry

but also in all sorts of business [2]. Therefore, sustainability actions are merged into many companies’

strategies, they make their contribution in environmental, social and economic issues. Secondly, retailers

observe an increasing need to produce high quality products with stylish green apparel products with

minimum price. Apparel has a long and complicated life cycle that consists of many phases, and a supply

chain with many dispersed but interrelated activities[3].In order to make the value chains highly sustainable

and stronger in terms of economy, H&M and Patagonia are the large retailers introduced the system for

garment recycling and moving towards the closed loop system where consumers can bring garments back

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well, by recycling bottles and containers into new bottles and container as well as advances recycled

polyester also [4]. Now the competitiveness is growing much in terms of sustainability. So, firms need to

understand the latest sustainability trends, consumer insights and industry best practices. The movement

towards the sustainability are accelerating, research tells that apparel industry need to become more and

more sustainable. Sustainable Supply chain management is the management of material, information and

capital flows as well as cooperation among companies along the supply chain while integrating goals from

all the three dimensions of sustainable development, i.e., economic, environmental and social, which are

derived from customer and stakeholder requirements [5]. Sustainable integration into the business strategy

and practices has a direct impact on its own business operations, but also influences upstream and

downstream supply chain partners. One single company cannot improve the existing industry paradigms, it’s

a collective and collaborative approach that should be performed globally in Economics of Scale perspective

[5]. Finally, to increase sustainability, firms need to look beyond materials used and consider the entire value

chain and life cycle of their garments. Learning about sustainability in clothing has made this thesis interested

in studying how the clothing companies work with sustainability, and how they can further increase efforts

for sustainable development throughout their supply chains.

1.2 Problem Discussion

Sustainability in global supply chains has been identified as a key objective for sustainable development. The

main purpose of creation of the sustainable business model requires a common understanding towards the

sustainable global supply chains. Many authors conducted a review about the textile and apparel sustainable

supply chain development. They described that these companies should collaborate with suppliers to reduce

the social risks. In this Yang found the most prominent areas are disposable fashion, fast fashion, slow

fashion, green branding, and eco-labelling. By this way they identified the opportunities in retailing of

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e-commerce. Sustainable development in apparel industry should follow the theory of the triple bottom line

approach, which mainly refers to the three pillars of Sustainability which is Profit (economic), People (social),

and Planet (environment). The green supplier examination and selection approach in global manufacturing

was identified by Guo. For that, they initially developed a framework and models to selection of green

suppliers based on the Triple Bottom Line and they proposed some multiple models for decision making as

well for selecting the best material suppliers. A sensitivity analysis was conducted to verify the effectiveness

of the proposed supplier evaluation and selection model [6]. Many business leaders view supply chains only

from an economic point of view and evaluate where to source materials from by balancing risk and costs

with delivery performance and flexibility. But they need to understand how sustainability can be used to

improve business practices and recognize sustainability as an opportunity for business rather than a cost

factor. Embedding sustainability into strategy, making it part of the core business, can decrease firm’s

negative value in environmental and social footprint without scarifying profits, markets and stakeholder

interests. Sustainable supply chains use collaborative relationships between different actors to facilitate

effective information flow and resource allocation to enable rational decision-making. Firms competitive

advantage is dependent on, how well they understand the overall value adding activities [7]. According to

Fearne (2009). Minimizing the environmental impact is more challenging for clothing companies than other

types of apparel retailers. Finding the trade-off between sustainability and quality without compromising

the ability to withstand other requirements. Many apparel companies have adopted sustainability as their

strategy to work effectively in reducing their environmental footprint. Some available research argues that

current systems are not enough for sustainable development, and that simultaneous transitions in

technology, structure and culture are required. However, this study has identified a gap in previously

conducted research concerning more precise insights into what technological, structural and cultural

changes [8] organizations need to make in their efforts to become more sustainable. There is a lack of

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Therefore, moving toward sustainable supply chain development ultimately become a suitable focus for this

thesis.

1.3 Purpose

The purpose of this study is to investigate how clothing companies work with sustainable development in

their supply chains. This analysis seeks to identify what changes they have made, and plan to make, in order

to become more sustainable. Changes that firms need to go through to become more sustainable include

the entire supply chain. Analysis will hence study how involved clothing companies are in sustainable

development across their supply chains, and where they focus their sustainability efforts. The study will

target firms that have an explicit focus on sustainability and investigate what efforts they make to reduce

the footprint of their value chains, as well as challenges faced in implementing changes. The time frame of

these changes and challenges is five years backwards and forwards. Researchers hope to contribute to an

improved understanding of how companies in the apparel industry can work with sustainable value chain

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2.LITERATURE REVIEW

1) In this special issue, Köksal et al. and Yang et al. conducted comprehensive literature reviews to better

understand the problems of sustainability issues, in addition to summarizing the relevant literature on

sustainable textile and apparel supply chains. In the literature review of social issues in textile and apparel

supply chain by Köksal et al. the authors proposed a comprehensive map of the social dimension of

sustainability. They argued that textile and apparel companies need to collaborate with suppliers to reduce

social risks.

2) In their systematic review of sustainable retailing in the fashion industry, Yang et al. found that the most

prominent areas of literature include disposable fashion, fast fashion, slow fashion, green branding, and

eco-labelling. They identified research opportunities in retailing of second-hand fashion, reverse logistics in

fashion retailing, and emerging retailing opportunities in e-commerce.

3) Developing a sustainable textile and apparel supply chain should follow the theory of the triple bottom

line, which refers to the three pillars of Profit (economic), People (social), and Planet (environment). Guo et

al. examined the green supplier evaluation and selection approach in global apparel manufacturing. They

first developed a methodological framework for the evaluation and selection of green suppliers based on

the triple bottom line, and then proposed a multi-criteria decision-making model for evaluating and selecting

the best material suppliers. A sensitivity analysis was conducted to verify the effectiveness of the proposed

supplier evaluation and selection model.

4) Kim and Kim analysed data from news articles and firms’ annual reports relating to sustainability in the

textile and apparel industry. They used Leximancer, a computer-based content analysis approach, a

dictionary-based text mining program, for textual and rhetorical analysis. They found the contents of their

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differences between North American and European sources, whereby North American firms show relatively

high commonality, while European firms show relatively high realism.

5) Lee and Ha-Brookshire examined several factors within fashion retail businesses, including the ethical

climate, employees’ attitudes toward their jobs, and employees’ turnover intention, that affect

organizational performance in triple bottom line terms. Data from 278 U.S. fashion retail employees were

analysed using structural equation modelling. They found that an ethical climate can enhance employees’

job attitude as well as all three dimensions of the triple bottom line. The results imply that organizational

sustainability performance can be improved not only by employees’ attitudes toward their jobs but also by

the presence of an ethical working environment.

6) Developing a closed-loop supply chain is an important indicator of sustainability. Norum investigated the

consumer apparel disposal process using a qualitative approach, conducting semi-structured in-depth

interviews with 24 female U.S. consumers. The author identified several important themes: the use of both

“compensatory” and “non-compensatory” choice heuristics in decision-making, a “usable life” and the

“personal nature” of garments as barriers to non-trash disposal options, and the need to “create awareness”

and “provide assurance” to encourage alternative disposal modes.

7) Yang and Dong investigated sustainable apparel product strategy where products are partially produced

using recycled materials. They considered two types of consumers: environmentally conscious and regular

consumers. Their analytical results indicated that if consumers value sustainable products more, the firm will

increase its sustainability level and gain a higher profit. Moreover, if converting regular consumers to be

environmentally conscious is not too costly, firms should provide sufficient sustainability information for

consumers, in order to encourage all consumers to be environmentally conscious.

8) Li and Wu examined how environmental management system (EMS) adoption affects changes of firms’

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22 events of EMS adoption in China and found that EMS adoption decreased firm’s profitability, sales, and

inventory productivity. Losses in operational efficiency and flexibility were found to be due to the

requirements of the EMS adoption.

9) Le and Wang used grey prediction to forecast productivity for the 20 largest enterprises over six years

(2016–2021) based on actual indicators and then adopted a window analysis to detect performance trend

over 12 years (2010–2021) from a large number of inputs and outputs. They predicted that textile companies

will be more stable in terms of supplying materials for the entire industry.

10) Supply chain leadership significantly influences the performance of sustainability. Niu et al. developed

an analytical model to examine the impact of suppliers’ attitudes to loss on the fashion supply chain’s

sustainability and profitability. They evaluated wholesale prices and buyback contracts under various power

structures and found that buyback contracts can reduce the sustainability of the supply chain. Meanwhile,

the sustainability index increases in the buyback price in the supplier-as-leader scenario but decreases in the

retailer-as-leader scenario. When the supplier acts as leader and the buyback price is lower than a certain

threshold, the sustainability level improves.

11) Shi et al. evaluated economic and environmental performance in the fashion supply chain from a power

perspective. Their analytical results implied that the follower with less supply chain power has incentive to

make more sustainable efforts and achieve a higher profit. In most scenarios, the optimal amount of

sustainable investment is greater in the apparel manufacturer case than in the retailer case.

12) Incorporating sustainability into the textile and apparel supply chain is a value-added process. Lo

Monaco-Benzing and Ha-Brookshire examined the personal and corporate moral values in the textile and

apparel supply chain through semi-structured interviews. Three gaps were identified: the nature of the value

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13) Yang et al. evaluated the value creation mechanism based on a case study of Stella McCartney and

parent company Kering. They developed a novel model for sustainable value creation, thus extending

knowledge of value co-creation from co-creation with customers to co-creation with multiple stakeholders.

Sustainable value co-creation mechanisms including the building blocks and specific practices are

systematically and empirically identified.

14) Oelze studied the existence of consensuses in the perception of barriers and enablers of sustainable

supply chain implementation in the textile industry. The author conducted a case study with 23 interviews

across 10 textile companies and showed that collaboration can enable sustainable policy implementation

and reduce barriers. Furthermore, external pressure can support proactive changes and supply chain

visibility.

15) Finally, Chen et al. examined garment workers’ concerns, satisfaction levels, and attitudes towards

decent work in the Chinese garment manufacturing industry, collecting data from both blue-collar and

white-collar workers. Results indicate that age, education level, and service length significantly influence workers’

attitudes towards decent work. Their study provided insights for the development of social responsibility in

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3. THEORETICAL FRAMEWORK

The theoretical framework provides an overview of previously conducted research focusing on sustainability,

value chains and sustainable value chain development. This concerns a value chain perspective on

sustainability in general, and value chain sustainability in the apparel industry in particular. A theoretical

overview aids understanding of relevant topics and enables researchers to answer the research question.

3.1 SUSTAINABILITY

3.1.1 Sustainability Defined

Sustainability is defined as ability to meet the needs of the present without compromising the ability of the

future generations to meet their own needs. The firms that are focusing on the Sustainable medium creates

very good profit and it earns a good confidence on the shareholder’s point of view. Sustainability focus on

the economic growth which helps to generate the wealth and prosperity to all the individual living in the

planet. Corporate Sustainability relates to the company’s view by primarily improving the Economic value

and simultaneously focusing on the environmental and Social Perspective. Triple Bottom Line of

Environmental, Social and Economic dimension is discussed in a more perspective manner. This model

comprises three main categories: Profit, planet and people. All the company must be perfect in this model.

There is an impact on the economy, environment and the society. The goal of the fashion retailers is to

identify the balance between these three factors. In Social view, there is good treatment with people,

providing a proper communication, Sustainability promotes development in social aspects, finding a

connection between cultures and society to improve the standards of health, education etc. In Economic

View, there is a positive financial value which carefully evaluates the process, considering the economic

impact of how the organization has impacted its behaviour. In Environmental View, measures are taken on

the Ecological Footprint, some initiatives are taken on the recycling program, sustainable materials and so

on., more associated with the nature and environment because more efforts are needed to protect these

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This industry has huge impact on the environmental side both in positive and negative effect. They must

have a proper control over the natural resources, emergency impacts if something has undergone not as

planned, need to make the Shareholders, partners comfortable and happy. Moreover, sustainability is the

primary goal for the apparel industry. The apparel industry in the world is more in number and they are

different from one other in terms of processing method, organizational structure, packaging method, target

market and so on. For any apparel company, they need the basic resources like Raw material, Electricity,

Human Resource, etc.[18] Also, there must be enough financial resources to maintain the company if the

result moves in the negative way. The firm focus on many different activities to run it effectively. Proper

selection of the raw materials also makes the firm to perform in a competitive manner. In each and every

line of the supply chain of the production of the clothes to final delivery, there arise some impact on the

Social, Environment and Economic factors. In the Apparel industry, the key value on the sustainability issue

is to get the best raw material, in the perfect manufacturing of the textiles of various varieties, the chemical

elements added to it to get the best from it, careful segregation of the plastic waste, chemical waste, disposal

of the wastes into a allotted area. Production relates to the usage of electricity, water resources and help of

the workers to make the textiles. Chemical which are added to the textile material must be properly

controlled because over usage of the chemicals leads to damage of garments, affects the workers’ health

condition and also the final consumer. A strict rules and regulation must be established, and this must be

implemented in entire working areas of the apparel firm. To make the garments to reach to final customer

or to some stores, they need best transportation system. Because this can affect the entire process if it has

some drawbacks. The garment materials after it has been used must be distributed to the recycling phase

and not to be dumped in the landfill. If this happens, it increases the methane emission, affects the

environment in a much worse way. Eco- Friendly products can be used in almost all stage of the supply chain

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explained only in the economic term but also in the environmental aspects. From a Socio-economic

perspective, the stakeholders must focus on the working condition on the factory area, transportation

connection by aligning with ethical manner, best practice and code of conduct. In addition to this, the fashion

companies should contribute to improve sustainable consumption behaviour, attitudes towards achieving

the goal, way of working method and so on.

3.1.3 Attitude Behavioural Gap

Sustainability focus on the Production, consumption and on the environmental aspects. There is an

inconsistency in attitudes area towards Sustainable consumption and actual behaviour. Every individual does

not have permit to take market choice for its own purpose rather it is controlled by many other factors.

Individual does not have any power to select their design because it can result in confusion of the firm’s

working process and eventually leads to downfall in the growth. Whatever the company launches it in the

market, individual buy it [20]. The choice of selection may vary according to the price, design, material etc.

If focus on the customer, the consumption choice is possible. Firms are now in the path of making some

awareness about the sustainability sector to both customer and in its organizational level. More number of

sustainable products must be launched in the market which is double benefit for customer who are using

these products and encouraging the companies to deliver these products to a maximum level. Most of the

final consumers are more aware of the sustainability issues but the outcome is not to 100%. There are still

some bottlenecks to be considered. The apparel companies realise the significance of the sustainability and

they started to work.

3.2 SUPPLY CHAIN

3.2.1 Description

Supply Chain is fundamental process to make the company to perform very effectively and efficiently. It is

defined as the management of flow of goods and services, storage of raw materials, in-process inventory

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activities regarding to company’s working method. There are many tools and techniques to run this process

without any disturbance. The best outcome after doing this process is to satisfy the customer’s need and to

increase the profit of the firm in the long run. The purpose is to enhance the trust and positive relationship

between partners who are performing the task. Not only local companies get benefit from this, the global

firms make this activity to function in their process to avoid many problems. Careful monitoring the services

and goods are taken place. The importance of Supply Chain Process is considered in almost all the

departments of the organization. It varies according to the type of company operating in one country or in

several country, specialization, types of product variants, supplier and retailer, Make to Order process,

Assembly to Order, and so on. One of the key factors is Logistics and Transportation Process. This is heavily

depending on the firm’s overall growth. If it is not given proper importance, then it affects the firm’s

economic value leading to downfall in the market and it opens the gate to competitors to enter the market.

Nowadays, most of the companies take the path in Globalization. There are many reasons for the company

to choose the globalized way. Due to the low labour cost in some countries, they can use them and can

reduce the total production cost. One of the main factors is to make their companies product to be launched

in every nook and corner of the world. Also, there are many problems related to this like proper distribution

system must be formed which depends on whether to start a new firm in that country or with the help of

other available resources.[21]

3.2.2 Supply Chain Analysis

The starting phase of the analysis is to understand how the industry fits into its overall supply chain. All the

components which are to be used are identified correctly according to the specific characteristics and other

features. It is a tool to know about how the industry is progressing in the growth level in a specific area. In

other words, it can be described as how an industry in a particular region is connected to other firms which

is situated in that area or somewhere situated on the outside of that region. Initially, to make the final

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Based on this process, the analysis task starts by checking whether if we use this, we will get higher cost

value or vice versa. By considering the entire supply chain and the area where industry is established, it can

take many decisions which may be sometimes result in a positive advantage compared to other companies.

With the assistance from analysis result, the firm can perform some activities which may be not performed

by their competitors [22]. It can be able to produce very good products at a lower price than market price

and able to satisfy the customer needs, which leads to a profitable path. Also, more importantly, it helps to

identify the activities which need to be concentrated because there are some mistakes and complete focus

on the activities which are the most valuable to the company. Finally, the use of this analysis is to decide

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4. METHODOLOGY

This section synopses, briefs and explains the choices and the methods used to conduct the study. It

stimulates the adequacy of selected approach in relation to the study and defines the empirical data

collection procedure as well as the procedure for the analysis of this data.

4.1 Approach

Firstly, in order to start the study in an eloquent way, many researchers have preferred to conduct a

qualitative analysis. A qualitative analysis helps the researcher to gain a more holistic kind of opinions,

feelings and knowledge. It mostly permits the flexibility in the analysis and opens the possibility of making

adjustment based on the case study and also with available company data and information on the websites.

For this, the qualitative strategy is adopted to analyse the whole process. But the main drawback of this

strategy is the difficulty of generalization. In qualitative researches, a less important sample than in

quantitative research is commonly used, which reduces the possibility of generalizing findings. Finally, this

study takes an inductive approach to the relationship between research and theory. Moreover, in inductive

theory, researchers use a grouping of existing literature and data to support a theory. Observations and

findings are hence contributing factors to the generation of a new theory. The alternative to an inductive

approach is the deductive approach, where theory guides research. [9]

4.2 Planning

This analysis is conducted by studying multiple case studies and mainly by collecting data’s that are available

on the company’s websites. However, this case studies are popular and a frequently used business research

design, which focuses on one single organisation or company, as well as specific person or actions.

Limitations in generation of the analysis of case studies data’s and information, researchers have decided to

conduct the multiple case study analysis. Therefore, we surfed some most important information on the

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Researchers aim to enlighten unique case characteristics by using an idiographic approach (ibid). Mainly, the

case study planning generally categorized as exploratory, explanatory and descriptive. The exploratory

approach aims to increase the overall understanding of a certain subject or area and is used when

researchers have limited access to enough data to define the problem properly. It uses techniques such as

open-ended questions in a survey or during interviews, literature studies and focus groups to increase

researchers’ understanding of the subject. The descriptive approach aims to collect quantitative data from

a sample in order to draw conclusions about the characteristics of a population. The third approach, the

explanatory approach, is conducted to increase understanding of cause and effect, and can for example be

achieved by performing experiments or conducting semi-structured interviews. Studies usually start with an

exploratory approach, which is followed by a descriptive approach and ends with an explanatory approach

[9]. This study mostly focuses on the qualitative analysis and thus chosen to use an exploratory approach as

the value adding activities to understand the topic and analysis was done successfully.

4.3 Procedure

First, in order to increase basic understanding of the topic and find out what is already known about the

research area a theoretical framework was constructed as first step of the research process. To do that

researchers identify existing concepts and theories relevant for this study. Mainly, the disciplined approach

is used to review the existing literature improves the consistency of literature search and review. This

method is mostly used to build the knowledge base. Additionally, the literature review provides the basics

of study, as well as the pre-existing knowledge and this helps researchers to construct questions that must

be answered through the whole study. The theoretical framework helped researchers to find potential

debates in previous research findings, if there are any unanswered questions discussed in literature. Theories

and concepts were gathered using different search engines and electronic databases. The search engine

Google and Google Scholar served as particularly helpful tools. Key words and criteria were determined and

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qualitative data can be collected through semi-structured interviews with selected representatives within

studied organizations. Conducting interviews is a frequently used method for qualitative research (Bryman

and Bell, 2011). Data collection has been characterized by a standardized research procedure, where the

same information was provided to all participants prior to the interview. Interviews were conducted via

Skype due to the geographical spread of interviewees. Since face-to-face interviews was not a feasible option

in this study, Skype was regarded the best alternative as it favours cooperation and allows for follow-up

questions to be asked (Blumberg, et. al., 2011). A semi-structured interview method was assessed to be most

suitable for the empirical data collection in this study. But in our thesis, we mainly collected data in

theoretical way using case studies and the qualitative data was collected through the company’s website

and from research papers. In addition to that some useful information was collected through the case studies

of the companies. Data collection has been characterized by a standardized research procedure and helps

us to find the best possible solutions [10]. By using this data collected from different sources, we made a

comparative analysis of four apparel companies and identified some of the improvements they established

in terms of sustainability and other supply chain related factors by using Supply chain models. With the help

of this, we found the type of strategy they are using in their process. A semi-structured data collection

method was assessed to be most suitable for the empirical data collection in this study. There is some

uncertainty in outcomes from each collection of data and a semi-structured approach allows us to move in

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5. CASE STUDY ANALYSIS OF COMPANIES

5.1 H&M

5.1.1 About H&M

H&M was founded in 1947, A new fashion chain for women opens in Sweden with a new and progressive

concept frequently updated fashion at affordable prices and the product range grows to cover fashion for

men, babies, kids and youth. Also, the first steps of a worldwide expansion are taken, and the name change

to Hennes & Mauritz. Today Afound was launched in 2018 with the first stores in Sweden and online. Afound

is a new marketplace selling discounted fashion and lifestyle products, with both external and the H&M

group’s own brands, offering a wide range of well-known, popular brands for both women and men.

5.1.2. Sustainability

H&M believe that sustainable fashion and design should be available to everyone, not only to a privileged

few and they work towards the long-term perspective. To secure future business it is essential and natural

for them to address sustainability proactively. They are dedicated to continually making great fashion and

design affordable, by having a circular approach and being a fair and equal company. Thanks to their size

and to their committed colleagues, H&M group is fit to lead the change towards a more sustainable fashion

future. However, this is not a task that they can manage on their own; collaboration, new ways of working

and joint industry goals are key for accelerating the changes and results needed. Their continued

commitment to the United Nations Global Compact and our ongoing collaborative work with stakeholders,

including local and global experts and NGOs, are a few examples of how they work to achieve positive change

through shared responsibility. This represents the H&M group’s achievements and progress within the

sustainability field over the past year. However, turning fashion into a greener industry is very challenging

and not something that they can do on their own [23]. Therefore, they are working together with other

businesses around the world, to truly be able to make a difference. Being a global brand comes with a lot of

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regulations, in accordance to their code of conduct; the Sustainability Commitment. They are continuously

influencing to bring systemic change to the industry and across the lifecycle of their products. Together with

their colleagues, customers, stakeholders, business partners and peers, they can do this. They can do this in

many ways, from improving the livelihood of a cotton farmer, to encouraging our customers to recycle their

clothes through our garment recycling scheme. By this way they are making their customers proud of what

they wear [48]. Not only about how good they look, but also about the way the clothes are made and the

environmental and social impact the garments have across our value chain. Another important part of H&M

group’s sustainability strategy is to identify, invest in and promote sustainable innovations necessary for

transforming the fashion industry. Every year they take new steps towards our bold goal to only use recycled

or other sustainably sourced materials by 2030. This significantly reduces the use of natural resources and

the negative impact our business has on the climate.

5.1.3 Supply Chain

Their supply chain is connected to countless people, communities, ecosystems and other businesses around

the world and a part of the global economy. Their business’ social, environmental and economic impact is

significant and far-reaching, and they want it to be as positive as possible.

When we talk about their supply chain, the full range of activities it takes for them to bring their products to

the market from idea to distribution, and consumption to reuse or recycle. Starting from design,

Sustainability is a natural part of everything that they do. The designer’s drawing board is the first step

towards a conscious fashion choice. Choosing material, look, style, and quality – this is where it all starts.

After that processing of raw materials such as cotton, is a part of the supply chain often associated with

concerns for working conditions and intense water and chemical use. By making the right choices using a

wide range of environmentally friendly cotton and sustainably sourced materials, like recycled polyester or

lyocell, they can significantly reduce impacts at this stage [24]. They aim to reach 100% of their raw materials

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there are concerns regarding water, chemicals and working conditions as well as greenhouse gas emissions.

They do not have direct business relationships with mills. However, they are still working to improve their

sustainability performance and have so far integrated the fabric and yarn mills involved in making about 60%

of their products into their supplier audit system. They also have one of the strict Chemical Restrictions List

in the industry. H&M group does not own any factories, instead we work with independent suppliers. Many

of their products are made in some of the world’s poorest countries, and garment production is often the

first step on the way out of poverty for many of these countries. Transport represents around 6% of the

greenhouse gas emissions in a garment’s lifecycle. By choosing the right modes of transport, they can reduce

this impact even further. They use ships and trains to transport over 90% of their products from the suppliers

to their warehouses. They have 4,800 stores across 71 markets. So, what happens after the fashion leaves

the store and is in their hands. Caring for the clothes at home represents about 26% of all the greenhouse

gas emissions in a garment’s life. Therefore, they want to inspire you to be conscious in the way you care for

your clothes [25]. As much as 95% of all textiles thrown away across the globe each year could be recycled.

They have already launched collections containing 20% recycled cotton from our garment collecting

programme.

5.1.4 Sustainable Supply Chain Development

The cooperation between H&M and the ILO dates to 2001, when H&M joined the ILO Better Factories

programme in Cambodia. The new strategic partnership will promote a wide range of activities with the aim

to further strengthen the sustainability work in H&M’s supply chain. The activities will be both at the global,

national and enterprise level in many countries. The partnership is also intended to establish a positive model

for other operators and create a global alliance to promote the ILO’s Decent Work Agenda. “Issues in the

garment industry are systemic and require action that helps develop effective industrial relations and

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and comprehensive collaborations with companies that have experience in these fields, such as H&M,” says

ILO Director-General Guy Ryder.

The ILO has a tripartite structure with governments, employers’ organizations and workers’ organizations

from 187 countries as members, “they see the cooperation as a great opportunity to further strengthen their

work towards the establishment of well-functioning industrial relations on all their strategic production

markets. ILO, with its unique tripartite composition, is the perfect partner for addressing issues such as

wages and training and skills development in the textile industry,” says Karl-Johan Persson, CEO at H&M.

Together with their suppliers, they have made great improvements in developing better social and

environmental standards at the factories. Achieving fair living wages, reducing overtime and ensuring

workplace safety are key focus areas [26]. They also set standards to encourage the transport companies we

use, to make more environmentally friendly decisions. They use renewable energy in their stores, offices and

warehouses wherever this is credibly available and feasible, and they ensure the data privacy of their

customers and colleagues, as well as advertising in a responsible way. As they grow, entering new markets

and employ new people, they need to make sure they live up to their values across the organisation and

ensure an inspiring and healthy working environment for their colleagues, Washing your garments at 30°C

instead of 60°C and hanging your laundry up to dry will cut energy use and save the money.

5.2 LEVI’S

5.2.1 About Levi’s

Levi’s is a privately held clothing company known worldwide for its Levi’s brand of denim jeans. It was

founded in 1853 when Levi Strauss came from Buttenheim to San Francisco. Although the company began

producing denim overalls in the 1870s, modern jeans were not produced until the 1920s. The main and first

products are Jeans and the trousers are made from denim. The American blue jean was invented by Jacob

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in the 1950s. Historic brands include Levi’s, Lee and Wrangler. Jeans are now a very popular form of casual

dress around the world and have been so for decades.

5.2.2 Sustainability

Levi tells that Sustainability is sewn into the fabric of everything what they do from how their clothing is

made to the work they do to help protect our planet. Levi Strauss & Co. has a long history of caring both for

the communities in which they work and live, and for the environment. They believe that making a mark in

the world is about what you do, but also how you do it. For them, both the what and the how has been

guided by the same values since their founding in 1853. The values are Empathy, Originality, Integrity,

Courage. They like to say that their company and their products are Made of Progress, in part because they

have a long history of firsts. They invented the blue jean, they made the first blue jeans for women, they

integrated their factories before the law required it, they were the first multinational apparel company to

establish a comprehensive workplace code of conduct for their manufacturing suppliers, their leaders stood

shoulder-to-shoulder with employees to share information about HIV/AIDS, even before the deadly virus

had a name, they were the first Fortune 500 company to grant domestic partnership health benefits, they

launched Improving Worker’s Well Being, a program to improve the lives of apparel workers outside the

factory walls, they were the first company in their industry to establish global guidelines for water quality

standards for their suppliers, they were one of the first companies in the industry to establish a Restricted

Substances List, they were the first to provide financial incentives for garment suppliers in developing

countries to upgrade environmental, health, safety and labour standards. They strive to leverage their iconic

brands to drive positive, sustainable change and profitable business results. By sharing their approaches with

their suppliers, they work together to move their industry forward while reducing our impact on the planet.

On sustainability and governance, they strive to do the right thing, and they know that their actions speak

louder than words. With that in mind, they work to ensure that the decisions they make in the area of

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Their commitment to sustainability goes far beyond regulatory compliance or minimizing the environmental

impact of their business practices. Their vision is to build sustainability into everything they do, so that their

profitable growth helps restore the planet. The Sustainability Leadership Team crafts the company’s

sustainability strategies in partnership with leaders from the different business units. The team defines

global targets and measures progress. Sustainability is deeply embedded into their products, their culture,

and their business. Responsibilities for sustainability goals are embedded in business functions. Business unit

leaders have sustainability goals included in their strategic plans and are held accountable for meeting these

goals. In terms of production they want their products to be part of a sustainable global movement. That’s

why the factories that make their products must adhere to our Terms of Engagement.[27]

5.2.3 Supply Chain

Levi Strauss & Co. is one of the world's largest brand-name apparel marketers with sales in more than 110

countries. Levi's, Dockers and Levi Strauss Signature branded products are sold through more than 55,000

retail locations worldwide, including 138 company-owned stores and more than 1,100 franchised stores

around the world. As part of an effort to optimize its global sourcing operations, Levi Strauss & Co. recently

sought help to automate processes from procurement through payment.[28]

The company selected Trade Card, a provider of on-demand supply chain management solutions, to

eliminate manual processes that require physical handling and viewing of paper documents for purchase

orders, invoices and compliance checking. The on-demand platform is expected to connect Levi’s back end

with key partners in the supply chain, including vendors, buyers, customs agents and financial institutions,

and complement the company’s SAP Apparel and Footwear Solution (AFS) investment. With go-live planned

in early 2008, Levi’s will bring 225 vendors from Europe, Asia and the Americas onto the Trade Card Platform.

In terms of product supply manufacturing the untapped profit potential represented in state-of-the-art

supply chain systems is driving demand for supply chain executives. This includes leaders with expertise in

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relationships, cost reduction, top-line growth and technological efficiency. The opportunity to network a

company's suppliers, manufacturers, distributors, retailers, and customers with an emphasis on customer

satisfaction directly impacts shareholder value.[29]

For the past 15 years, Hunt Executive Search has been partnering with clients within the consumer, retail,

industrial, life sciences, and professional services sectors to recruit world-class senior executives who bring

these initiatives to major corporations focused on creating a competitive advantage. Hunt Executive Search

Global Product Supply Practice has a well-established track record for recruiting top strategic and technical

minds to its clients [30]. The practice has conducted more than 500 assignments around the world in the

areas of supply chain, manufacturing, strategic sourcing, procurement, third party outsourcing,

transportation, distribution, warehouse management, inventory management, demand planning, supply

forecasting and IT.

Levi's to transform its supply chain under new operating model that will create a more sustainable supply

chain and a cleaner jean. That’s called Project F.L.X. (future-led execution), this new model replaces manual

techniques and automates the jeans finishing process, allowing the company to reduce the number of

chemical formulations used in finishing from thousands to a few dozen. Traditionally, denim finishing which

creates worn, faded design elements on jeans has been a highly manual, labour-intensive and

chemical-reliant process [31]. Levi’s digitization enables a responsive and sustainable supply chain at an unparalleled

scale. “Thirty years ago, jeans were only available in three shades: rinsed, stonewashed and bleached. Today

those three shades have exploded into endless variations, all produced with very labour-intensive jobs and

long lists of chemical formulations,” said Bart Sights, vice president of technical innovation at Levi Strauss &

Co. and head of the company's Eureka Innovation Lab [32]. They are designing a cleaner jean for the planet

and the people who make Levi's jeans, and they are doing it on a scale that no one else has achieved to date.

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2020 and accelerates the elimination of many chemical formulations that the company's Screened Chemistry

program identified as "phase outs." Among the chemicals that will be eliminated is potassium

permanganate, an oxidizer that is used industrywide to replicate authentic vintage finishes. “It's inspiring to

see how LS &Co. used constraints to drive innovation, paving the way for a more sustainable apparel

industry. "Beyond eliminating many chemicals, Project F.L.X. is expected to reduce textile waste by more

accurately making what the market needs and may also provide the opportunity to save water in the future.

The company has already proved it can use nearly 100% recycled water in the final manufacturing stages

with Project F.L.X. and is exploring the possibility of rolling out this water recycling capability more broadly

over time. To help unlock the benefits of digitally enabled design and development, LS &Co turned to

long-standing partner Jeanologia, a leader in eco-efficient solutions for fabric and garment finishing. Since 1993,

Jeanologia has operated with the ambition of advancing sustainable apparel manufacturing by delivering

disruptive technologies, including ozone, laser and e-flow finishing systems. The company's like-minded

focus on scalability was essential to supporting LS &Co end-to-end, transformative vision.[33]

5.3 PRIMARK

5.3.1. About Primark

Primark is an Irish Fast Fashion Retailer established in Dublin on 1969. The number of stores is increasing

day by day. At present, it has 350 stores. The store in Madrid is the first one which opened outside United

Kingdom and Ireland and it also adds that it is the second biggest in the chain. The products are diverse which

consists of Clothing, Cosmetics, Footwear, Homeware, Accessories. The competitive advantage is that sells

the products at a lower market price compared to other competitors. Primark is well known as amazing

trendy clothes at an amazing lower price. In fact, 98% of factories which are making Primark products are

also preparing other company products. They are not owning any factories and is more focus on the suppliers

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Primark is committed to reducing the impact that it has on the environment, and as part of that commitment.

Primark has signed up to the UK’s Sustainable Clothing Action Plan (SCAP) and the European Clothing Action

Plan (ECAP). They are looking forward to working with SCAP and ECAP to achieve its environmental

sustainability goals, including the use of more sustainable fibres and developing its recycling various

program. A member in the Sustainable Apparel Coalition and also has various good initiatives in place that

aim to offset their environmental impact[34]. Since 2002, they started to use paper bags instead of plastic

bags. They are also taking steps to use 100% post-consumer waste materials in their packaging. In the US,

Primark have partnered with the charity Delivering Good, in which stores donate unsold items to those in

need. The impact on the climate has been started to measure and reports on the greenhouse gas emissions

generated both from their own operations and some of their supply chain. However, they have minimal

published greenhouse gas emissions reduction initiatives beyond energy efficiency in stores and have not

set a reduction target. Their efforts are not enough to minimize the brand’s huge carbon footprint as a fast

fashion chain. Primark need to start using eco-friendly materials in their products, set specific reduction

targets in terms of greenhouse gas emissions and wastewater, and implement adequate policies and

initiatives for resource management and disposal[35].

5.3.3 Supply Chain

The Supply Chain of PRIMARK is quite expanded in 37 countries operated by 700 suppliers and about 1200

Tier 1 factory. The main concentration is on China, India, Turkey, Bangladesh and Eastern Europe. Initially,

the Primark’s Code of Conduct I strictly obeyed by all the suppliers. According to this, the process is

performing across the boundaries of the company. In addition to this, suppliers are given a training for about

11000 hours trying to reach the maximum impact. The Ethical Trade Team is of significantly employed to

inspect the standard of the Supplier and to address if there are any issues relating to it or in the coming

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of the suppliers are not educated to that level to get to know the ethical aspect. In that area, there is a lack

of coordination because of the cultural diversity. It is both a combination of positive and negative factors.

Primark is trying to create a framework by making all the suppliers to do the work according to the

International standards in a cooperative way. It works with Suppliers and other partners to help the migrant

workers by providing them necessary papers for legal employment and a sufficient salary. Labour unions are

made in practice so that it can protect the rules and avoid the mistakes which can be happen. The company

has worked with local organisation in all the sourcing areas so that it makes a positive connection with the

employees and the services associated with it. The most important point is that if anyone touches any layer

of supply chain, it must be properly examined.[36]

PRIMARK has joined the Sustainable Apparel Coalition (SAC) and has a lot of good initiatives which lessen

the harmful effect on the environment. The company is keen in developing the sustainable areas by

implementing SAC’s Sustainability tool and high Index so that it helps to improve the Supply chain. They are

investing more in supply chain field by concentrating on the Sustainable Cotton Programme which makes

the farmers to use natural method to develop cotton. The added feature is to reduce in the overall use of

water and use of chemical pesticides in a much lower level. The advantage of this programme is that the

profit of the farmer has been significantly increasing.[37]

5.4 ZARA

5.4.1 About Zara

ZARA is a Spanish based retailer which has 10000 stores throughout the world and the first store was

established in 1975.The parent company is INDITEX. This company is specialised in products like clothing,

perfumes, accessories and many others. Zara accounts for about two-thirds of sales of the entire INDITEX

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The products which are manufactured from this company are performed in a sustainable manner and most

primarily it takes good control on the environmental aspects. The resources which obtained are cleaner and

pure and it gets the most benefit from this item[38]. There have been some steps employed to build a sort

of activities to make the waste products collect from the customer and modify into a useful one with result

leads to an effective commodity. The Eco-friendly stores reduce the consumption of energy to about 20%

and the water of 40%. The company is thriving to make the waste from their operating centres, stores and

all the location related to the company to reach zero level by 2023. An alliance with United Nations

Environment Programme made the desire that the recycling of plastics must be accomplished in the

commercial market so that it can make the packaging sector a more effective working one. There has been

a practice following in some of the stores that the clothes which the customers feel if it is obsolete, they can

dispose in the containers which is positioned near the stores. This is done to make the clothes reuse and

made again to release into the market.

5.4.3 Supply Chain

All the suppliers who are in contact with ZARA must follow the set of principles which is enclosed in Code of Conduct [39]. Zara follow’s Just In-time Production, as the products keeps changing in their stores in an

interval of fifteen days which is the key competitive advantage and also on the other side, it is a tragedy for

the company if it has not done its task efficiently. This can be expressed in other words as it has a Lower lead

time and rapid change in the product turnover. The distribution system for all the stores are different from

others because each of them has a diverse value in the demand factor. It also depends on the location of

stores where it is established. The strategy of the supply chain is Vertically integrated. The management of

Inventory is processed under the direct observation of all the process taken place and it is mostly done by

Automated technology [40]. Suppliers of Zara are identified by the closest proximity so that in case of

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are ironed, and they display with the help of hangars and the product is fitted with price label. After this, the

overnight trucks are used mainly to transport the finished products to the stores in the European region.

While long distance is covered by air and water transport [41].

There is a sustainability training program conducted to the purchasing group to make sure that social and

environmental factors are properly monitored and controlled. The worker must develop mutual interest

between the others to avoid further problems. Both the buyers and sellers are made to undergo a set a

decision to follow on the basis of sustainability factors. A practice of sharing the art of sustainability to be

associated with the stakeholders. ZARA has developed a program called ’Worker at Centre’ which leads to

track, check and continuously improve the performance of supply chain [42]. A lot of beneficial actors like

NGO, Trade Unions, Governmental organisation, communities, employees and so on. The primary purpose

is to enable the workers to provide them all the basic requirements for advancing in the areas of

sustainability. Especially, the power to individual must be well protected and supported. Depending on the

Rules and Regulation, there has been a variety of programs initiated to preserve the basic procedures [43].

SUSTAINABILITY APPAREL COALITION (SAC) is to develop a Higg Index to find, assess the social and

environmental factor of garments and footwear. To make some drastic change in the textile sector and

displaying the data related to the environmental and social impacts of all the products which the company

needs to notice the values. ZARA performs perfectly with International Labour Organisation to enhance the

production process in the South east Asian countries because most of the factories comes under this region.

Also, it makes the suppliers feel secure to do their job without any mistakes and continual effort makes some

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6. ANALYSIS

6.1 SUPPLY CHAIN

6.1.1 FISHER MODEL ANALYSIS

Fisher mainly analyses the outbound perspective of the companies supply chain by looking at the

characteristics of the product so not by considering the manufacturing part, but it focuses on the

characteristics of the products and demand. It classifies two kind of products such as Functional product and

Innovative product. In Functional, the most important is to supply a predictable demand efficiently at the

lowest possible cost while in terms of Innovative product the mission is to respond quickly to an

unpredictable demand in order to reduce stock out and also to avoid Inventory cost as well.

When it comes to H&M it follows both the characteristics of Functional and Innovative and in terms of supply

chain they stay on the Lean and Agile strategy. When the company gets started the demand is unpredictable

at that time, they have the goal to increase year by year by 15% but when it comes to global market the

growth rate almost got saturated and demand becomes almost predictable and turn into the functional

product. Roughly the company has reached the mature point after the 70 years of being the popular brand

and the life cycle of product has reached the stable and long. On comparing the demand and Product life

cycle the contribution margin is Low and the variety of products is high, and they innovate lot of product

varieties. H&M has a dedicated customer so if they introduce any new varieties means it sells out very

quickly. When it comes to the lead time between design to go to the shelves of the shops is 21 days to six

months.

Levi’s is known for its supply chain transparency and ranked as the top apparel retailer out of 40 in its 2016 Fashion transparency Index. Their supply chain has evolved periodically, and they are always looking for new

ways to satisfy customer demands. They applied assemble-to order macro design and product as their

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order to increase the perceived value of the new product. LS&CO has been successful with positioning its

products with changing times and changing demands while keeping existing customers and capturing new

markets. Levi’s makes the better customer experiences through big data and data analytics, it makes the

collaboration with the SAS to build an analytically driven, decision-ready culture that helps it connect to the

people who love its apparel. By using this tool LS &CO can optimize plans and predict opportunities through

merchandise planning, allocation and inventory management. Through this smarter demand plans, supply

chain geared to the preferences of millions of customers, consumers around the world can find the

merchandise they want, Levi Strauss & Co. can make data-driven decisions, leading to increased growth and

a genuine competitive advantage. So, by this way the demand is predictable, but this comes under innovative

characteristics not the functional one because of the introduction of big data. When it comes to the product

variety, they don’t have much varieties in jeans, so they are functional in that manner and the average

stockout rate is low. If they are launching the new brands such as Dockers it takes the same time to get

saturated in terms of the profit and sales according to the time in the comparison of the product lifecycle.

Primark is popular in the customer’ view because it delivers the price of the dresses to a lower value. Because of this, the graph of the company’s turnover is somewhat in a good level. The prime idea is to provide at a

cheaper rate of the products. This is a sort of competitive advantage that the company is enjoying

throughout its cycle. In order to match this for every year, they are working continuously to manufacture,

display numerous types of their products in the stores so that they can maintain the economic stability and

keen in escalating their value in the fashion market. When taking the volume category, it is higher in the

value of selling in the store. From this, it can be understood that the problem in the stocks should not occur.

If it happens, then it cannot satisfy the customer, which leads to decrease in the sales and the outcome can

affect the company’s profit factor. So, a clean and effective strategy should be formulated. Also, Primark is

more worried about the environment than the profit to it. The steps are initiated to go for sustainable way

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of newer model to solve all the drawbacks in their system and to develop into a beneficial manner. Mostly,

it is in the combination of innovative and ordinary process which depends on the context of working type.

Zara is well known for its responsive time or in other words it can be expressed as Lead time. In a span of fifteen day, they can able to design, manufacture and transport it to their stores. Due to this effect, the

growth of the product is limited to few days because there is another batch of garments which are ready to

be made to replace the old stuff with the latest model to attract the vibrant customers. The products range

fits to all the age groups and also other accessories been displayed in the stores. To capture hearts of

customer, many varieties need to be created. They are well versed in both hard and soft data so tracking of

this sort of activity will be more easily handled by them. Since in the Fashion field, the demand cannot be

figured correctly. The strategy of Zara is following the KANBAN way of approach to decrease the problems

in the uncertainty and in the demand variability. Regarding the approach to markets, they seek certain tactics

and to properly manage the stock out which would avoid major problems. They are also keen in not

producing to a high number because it may lead in not selling all the products. So, Zara’s product can be

more innovative in upcoming days, while they are also doing more different from their own previous

Applying sustainable development on supply chain in apparel industries

SCHOOL OF INDUSTRIAL AND INFORMATION ENGINEERING

MASTER OF SCIENCE IN MANAGEMENT ENGINEERING