Zara Final Presentation


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A presentation I created with Humber College classmates describing Zara’s supply chain management.

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Zara Final Presentation

  1. 1. Zargistics Team:Blake VanderBerg - 821278942John Whelly - 820501401Jessica Weingert - 820853059Krisztina Virag - 821250982Jenna Zucker - 820920437Akwaugo Udenze - 821218781
  2. 2. • Zara is a Spanish clothing retailer • 1700 stores • 78 countries worldwide• Zara practices fast fashion – trends moves from the runway to stores within weeks, as opposed to months.• Zara’s supply chain has undergone tremendous changes in order to sustain its competitive advantage in today’s market• Zara has continually maintained its mission to provide fast, affordable, and fashionable items
  3. 3. Inventory Management• Focus on reducing response time• Launched approximately 11,000 new items per year, compared to 2,000 - 4,000 for H&M and Gap
  4. 4. Inventory Management• Stock outs are not uncommon• Short shelf life attracts more customers more often• Zara holds 6 days worth of inventory, while H&M holds 52 days, and Spanish retailer Cortefiel holds 94 days of inventory
  5. 5. Forecasting Extensive market research Quick input and output response Frequent new styles• Near-term forecasts• Short product life cycles to reduce errors and improve current products• Customer feedback
  6. 6. Procurement• Keeps approx. half of its production in- house• Separate procurement staff for each clothing line• Procures basic textiles from global suppliers• Uncomplicated items are outsourced to China• Difficult items are produced in Zara factories and by local subcontractors• Most suppliers are located in close proximity to its distribution centers 6
  7. 7. Production Planning• Centralized Design & Production Centre• Constant flow of data throughout the supply chain• Zara allows its retailers to change 40%-50% of its orders• Factories operate on a single-shift mentality, and can change quickly according to unforeseen demands• Under produces products in order to create scarcity value 7
  8. 8. Warehousing• “High-velocity” shipping• Merchandise is selected, sorted, and routed to the “lungs” of the warehouse• Merchandise is delivered, Retailers hold products in local distribution centres or in retail store stockrooms• “High-velocity” shipping relies on rapid information flows
  9. 9. Warehousing• Stores are electronically linked to the company’s headquarters• Logistics system is based on two core concepts: speed and flexibility• Currently building a new state-of-the-art warehouse and facility complex in Zaragoza, Spain
  10. 10. Transportation• Effective and efficient transportation network• Fast delivery time• Coordinates with all aspects of logistics• Quick response in supply chain• Ability to distribute merchandise within 2 weeks• Final step in order fulfillment• Promotes service quality
  11. 11. Customer Service• Founder: Amancio Ortega• Customer Service• Elements & Measures of Customer Service• Product Availability• Order Cycle Time• Logistics Operations• Response to Certain Events • Stock-outs • Extra Inventory• Future outlook
  12. 12. Performance Measurement• Dedicated to creating time to market efficiency• Order fulfillment and customer RESPONSIVE satisfaction• Tight linkages between demand and supply EFFICIENCY• Improve performance in accordance with EFFECTIVENES changes in demand S• Customer loyalty and brand recognition• Expansion into a global market
  13. 13. Technology• Competition: 2% of revenue and 2.5% workforce in IT• Zara: 0.5% of revenue and 0.5% workforce in IT• In store: • handheld PDA bi-weekly order, communication with HQ, feedback from customers, inventory.• In Store: DOS=old, slow. • Suggested: POS=speed, efficiency, connectivity.• WWW: Online stores open now. Better late than never. • iPad + Smart phone apps• In house: 200km tracks=60,000 items/hour 13
  14. 14. • Short-term goals should see Zara expand into North American and Asian markets as well as continued growth throughout Europe• In the future, Zara should increase its production outsourcing to Asian countries to reduce costs• Overall, Zara seems to be heading in the right direction as the company is growing at a tremendous rate and does not show any signs of slowing down