Supply chain management of ZARA


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Supply chain management of ZARA

  1. 1. Presented ByManju PokharelSUPPLY CHAIN MANAGEMENT OF ZARA
  2. 2. Zara: The LargestSpanish ClothesCompany
  3. 3. Introduction Zara (Spanish: [ˈθaɾa]) is a Spanish clothing andaccessories retailer based in Arteixo, Galicia, andfounded in 1975 by Amancio Ortega and Rosalía Mera. It is the flagship chain store of the Inditex group;Inditex Corporation. Inditex is a the worlds largestfashion group to which other fashion brand namesbelong such as as Zara Kids, Pull & Bear, MassimoDutti, Bershka, Stradivarius, Oysho, ZaraHome, Lefties and Uterqüe.
  4. 4.  ZARA changes their designs 2 weeks per time ,where Marks andSpencer changes two months a time. Products of ZARA is very popular with young females (age of 24 -25) Their product portfolio is comprises with men ,women andkids(ZARA KIDS)clothes, shoes, cosmetics,and complements. Company preferred to invest a percentage of revenue in openingnew stores rather than huge marketing campaigns. There are 1671 stores around the world.ZARA is a "fashionimitator"company. ZARA turns around more than 2000 designs per annually , andits revenue for 2012 is over 7 billion pounds.
  5. 5. Infrastructure Their factory is located in a city called La coruna,Spain.It is the city which has the cheapest labor in thecountry,but when compared to south Asian countriesthe cost of labor is expensive in Spain. It offers flexibility and agility to push new design tothe final selling point fast.
  6. 6. Human Resource Management ZARA recruits school leavers or most of the time job at ZARAs istheir first job. ZARAs always liked fresh, energetic young individualsbecause they are free from family commitments andthey can focus more on their job.
  7. 7. Technological Development ZARA has agents . These agents are sent to night clubs ,high class socialevents to pick up latest designs so within 6 hours usingtechnology they sent the sketches to the factory withslight differences in the design.
  8. 8. Operations Factory in spain is equipped with flexiblemanufacturing systems. (FMS)for fast turn around indesigns and productions. cost of labour is not cheap and focused on productivityand efficiency. they do have 12 days lead time.
  9. 9. Marketing and Sales Target customers are young females who are 24 yearsand 25 years. ZARA dont advertise much on media.but once, theyput up a large poster on a high wall in a tall building.everyone surprised why did they put up a poster likethat .reason was next to that building there was auniversity located in a tall building as same as when the young girls go to each floor theposter is visible.
  10. 10. Facilities they reach their target market by locating their storesin prime town-centre locations. By reducing the manufactured quantity of eachstyle, Zara creates artificial scarcity and lowers the riskof having stock it cannot sell. Scarcity in fashion increases desirability, which meansshoppers need to buy quickly as the item may not beavailable next week. Zara only discounts 18% of its stock in sales, which ishalf the industry average.
  11. 11. Inventory Stores place orders twice per week and the supply offinished goods is matched to store demand. Production is then increased or decreased in theflexible production facilities. Demand based production means there is very littleinventory in Zara’s supply chain, which results inmuch lower working capital requirements.
  12. 12. Procurement /Inbound logistics ZARA buys its raw materials from Italy, Spain, andGreece.Reason is final product can be push to the finalselling point quickly.suppliers have agreed to supplymaterial within 5 days to ZARAs facility in spain.dueto this most of the inbound logistics are roadhaulage.(mainly trucks)
  13. 13. Pricing As production is carried out in Spain where averagewages are higher than low cost Asian countries sofactory wage costs will be higher thancompetitors, which will affect margins.
  14. 14. Delivery Deliveries typically arrive one to two days afterordering with most deliveries arriving by truck fromthe Spanish factories. Clothes are then put straightonto the sales floor and are available to purchase. Own railway infrastructure
  15. 15. Strengths It produces about 11,000 distinct items annuallycompared with 2,000 to 4,000 items for its keycompetitors. The company can design a new product and havefinished goods in its stores in four to five weeks; it canmodify existing items in as little as two weeks. Shortening the product life cycle means greatersuccess in meeting consumer preferences.
  16. 16. Contd …. An average high-street store in Spain expectscustomers to visit three times a year. That goes up to 17times for Zara. 50% of the products Zara sells are manufactured inSpain, 26% in the rest of Europe, and 24% in Asianand African countries and the rest of the world.