To begin with, procurement can be defined as the process of obtaining goods/services a company needs. It includes the preparation and processing of demand, receiving the end-receipt and confirmation of the payment. It often involves tasks like purchase planning, research and selecting suppliers, price negotiation, financing purchases and in the end making the purchases.

Procurement is becoming more and more strategic, because it is the beginning of the whole business process. The possibility to purchase materials is essential and it will determine if the operations are able to continue. The price of getting the materials is also essential for the company's strategy. Strategic procurement is a complex process, it requires a huge amount of information, it involves many different people and it needs continuous communication between suppliers in order to let it work well. Trade-offs always have to be made; either go for a cheaper supplier with less service and quality, or go for the best supplier with the best quality and service, but for an expensive price. This decision has to be in line with every other department and the whole business strategy.

For every company their procurement strategy is different and it will be different for other industries as well. For some companies the procurement can be easy, when they for example have a long term contract with a supplier or when there are a lot of suppliers available. For other companies it can be a very hard challenge to find the right supplier with the right conditions, for example when there are a limited amount of suppliers available in the market.

H&M

The swedish fashion store H&M (Hennis and Mauritz) is one of the biggest fashion companies in the world. It has more than 4300 stores in 64 different countries. According to their annual report, they create their collections by their own designers, pattern makers and buyers, while outsourcing the manufacturing to independent suppliers. They don’t use any middlemen, they strive to buy the right product from the right market and to achieve effective logistic and to be cost-efficient in every part of the process. While having so many stores is so many countries, they still manage to get all of their materials and products to all their stores. This makes H&M a good example of a company with a successful procurement strategy.

MANGO

Mango is a multinational dedicated to the design, manufacture and marketing of clothing and accessories for women, children and men. It was founded in 1984 in Barcelona by the Andic brothers. It has more than 2,700 points of sale in more than 105 countries. The firm employees more than 16,000 workers. Their employees have an average age of around 30 years and formed 80% by women. On their procurement process, Mango makes sure that the correct goods or services are purchased (in terms of the correct quality and specification), the best value for money is achieved, the process is safe (ie: risk of fraud is minimised) and the process is fast enough to meet programme needs.

PRIMARK

The dark side of Procurement in Fashion Industries

Primark opened its first store in Dublin and today operates in 325 stores in 11 countries across Europe and America. Primark is considered as the cheapest fashion store with a decent quality. It manages to sell clothes for such a cheap price, that you can ask yourself how they even manage to get profits out of it. They have outsourced their production to China (41 suppliers), India (5 suppliers), Bangladesh (3 suppliers) and Poland (1 supplier). However, after doing research in their procurement strategy, it came to light that Primark had subcontracted labour to child workers. According to the Guardian: “The investigation found that in the refugee camps of southern India young children had been working long hours in foul conditions to sew the designs that will see.” After this was discovered, Primark dropped their 3 suppliers before getting all the negative publicity. This article was written in 2008 and since then Primark tried to get a more sustainable image. They set up the Primark's Supplier Code of Conduct which is a mandatory requirement within which its suppliers work. However, it is just a formality every company has and it doesn’t mean that it will be better.

The procurement of Primark can, looking only at costs, be seen a successful one, because they manage to sell their product at almost the lowest price as possible. However, on the other side the worker conditions of the outsourced factories are almost unethical and that is the dark side of the fashion industry. Most of the clothes are made in cheap labor countries under bad working conditions. However, Primark still manages to be one of the bigger clothing companies, although the way they produce their clothes is unethical.