The presentation is create use as a material to the final case study presentation in Supply Chain class at Faculty of Engineering, Chulalongkorn University.
**All images use in the slide are from google images**
3. AMANCIO ORTEGA
• Second richest man by Forbes ranking
• The richest man in the world for a few minutes
• $79.1 B net worth
• Local shirtmaker shop hand in A Coruna, Spain
• High Apparel production cost
5. FOUNDING
- Opened first Zara shop in Galicia
- Changed from Zorba to Zara
- Incorporated the following year
- Started opening new store
- Hired José María Castellano to
help improve company’s computing
power
1975
1976
“ What the buyers buy is not
what the customer wants ”
6. LOCAL
EXPANSION - Opened new store nationally
- Operated stores in all Spanish
cities
- New design and distribution
method
- Inditex was created as holding
company
- Open store in Portugal, first outside
Spain
1980s
1985
1988
7. CROSS BORDER
- Expanded internationally
- Opening of Zara flagship store
- Inditex issued Initial Public Offering
(IPO)
- 26% of company shares
1990s
2001
8. DIGITALIZE
- Launched online store in 11
countries
- Extended online store in to US
- Over 2100 stores across 88
countries
2010
2011
Present
16. SOURCING & MANUFACTURING
MANUFACTURING
60% External manufacturing
- Outsource to Europe, North Africa and Asia
- Basic items
40% Internal manufacturing
- Fashionable items are produce internally
- Produce in small lot, reorder if they sold well
17. SOURCING & MANUFACTURING
VERTICAL INTEGRATION
Owning 20 factories
Reducing bull whip effect
Efficiently management of its supply chain
- Fabric distributing every 2 weeks using inventory
optimizing models
Just-In-Time using technology
21. RETAILING
MERCHANDISING
Store manager decides which merchandise to order and
which to discontinue
Display on store changes every three to four weeks
Replacing unsold items within a week
22. RETAILING
STORE OPERATION
Spending 0.3% of revenue on advertising
Spending on refurbishing
Spending on expanding new store
Opening stores in key traffic points worldwide
24. SCM Focus Efficiency Strong Supplier
Partnership
Responsiveness
Target Customers People of all ages Trendy customers Young woman
Products Basic items Wide design selection Fashion conscious
items
Manufacturing Mass production Mass production Small quantity batch
production
Outsourcing Outsourcing activities
including manufacturing
100% Outsourcing Vertical Integration
(Design-Manufacture-
Retail)
R&D Strategy Functional Materials Special collaborated
design items
Trendy designs
Inventory Control Bulk in stock, Long
supplementation cycle
80% Stock advanced in
retail store, 20% based
on market trend
Lean Inventory, Short
supplementation cycle
26. LESSON LEARNT
Success comes with agility and flexibility
• Agile Methodology ( Responsiveness )
• Vertical Integration
27. LESSON LEARNT
Change Risk to Opportunity
• Be Fast and Furious
• Air Freight
• Fast Cycle time
• Be Different
• Diseconomy of Scales
• No Advertising
29. LESSON LEARNT
Amancio Ortega in short
“He decided to fight to the top relying on pure
innovation. He found a great balance between
quality and price, shortened the shelf life of his
product by speeding up the design process,
selected prime locations for his stores and
extended their operating hours, and all of this
was done with the goal of attracting the casual
shopper. He made it all happen”
30. Q&A
Do you think ZARA’s supply chain
strategies have any disadvantage,
why?
31. The disadvantage of Zara's supply chain is that
since Zara owned all the channels of supply
chain, resulting in making the expansion
difficulty. As all system are tied together as a
vertical integration, one change in a supply
chain can lead to the major system restructure.
33. As Zara have control over the whole
supply chain while others company rely
mainly on outsourcing. Zara is able to
take advantage of diseconomy of scale
for better responsiveness while remain
cost efficient.