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Zara Final Presentation

J
JPWhelly

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

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Zargistics Team:
Blake VanderBerg - 821278942
John Whelly - 820501401
Jessica Weingert - 820853059
Krisztina Virag - 821250982
Jenna Zucker - 820920437
Akwaugo Udenze - 821218781
• 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
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
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
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
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
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Zara Final Presentation

  • 1. Zargistics Team: Blake VanderBerg - 821278942 John Whelly - 820501401 Jessica Weingert - 820853059 Krisztina Virag - 821250982 Jenna Zucker - 820920437 Akwaugo Udenze - 821218781
  • 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. • 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