In 1963, Amancio Ortega started a small company in
Spain that manufactured women’s pajamas and
lingerie products for garment wholesalers. In
1975, after a German customer cancelled a sizable
order, the firm opened its forts Zara retail shop.
The original intent was simply to have an outlet for
cancelled orders but the experience taught the firm the
importance of a marriage between manufacturing and
retailing a lesson that guided the evolution of the
company ever since.
Since then Zara chains have grown into
retailing giants with almost 1751 stores
worldwide and an impressive sales record, it has
presence in 100 countries around the globe.
The success of Zara is partly to do with the
appeal of its men and women and children’s
fashions and accessories that display unique style
but at real world prices. But it is also partly as a
result of their collaborative, digital networks that
link Zara with its suppliers and customers.
It is claimed that Zara needs just two weeks to
develop a new product and get it to stores, and
launches around 10,000 new designs each year. Zara
has resisted the industry-wide trend towards
transferring fast fashion production to low-cost
countries. Perhaps its most unusual strategy was its
policy of zero advertising; the company preferred to
invest a percentage of revenues in opening new stores
instead. This has increased the idea of Zara as a
"fashion imitator" company and low cost products.
Lack of advertisement is also in contrast to direct
competitors such as Uniqlo and United Colours of
ZARA SUPPLY CHAIN MANAGEMENT:
Zara is a vertically integrated retailer. Unlike similar
apparel retailers, Zara controls most of the steps on the
supply-chain, designing, manufacturing, and distributing its
products. Zara set up its own factory in La Coruña in
1980, and upgraded to reverse milk-run-type production
and distribution facilities in 1990. This approach, designed
by Toyota Motor Corp., was called the just-in-time (JIT)
It enabled the company to establish a
business model that allows self-containment throughout
the stages of materials, manufacture, product completion
and distribution to stores worldwide within just a few days.
SUPPLY CHAIN COMPONENTS:
For Zara stores to be able to offer cutting
edge fashion at affordable prices requires the firm to
exert a strong influence over almost the entire garment
1) Design and Order Administration:
The design and order administration at Zara is
very effective and efficient. The company ensure
product quality by designing its own products. Zara has
almost 300 people working in its headquarters in Spain.
These talented people include designers and
specialists. Together they produce designs for
approximately 40,000 items per year from which
10,000 are selected for production.
50% of the products Zara sells are manufactured in
Spain, 26% in the rest of Europe, and 24% in Asian and
African countries and the rest of the world. , Zara makes
its most fashionable items half of all its merchandise at a
dozen company owned factories in Spain
and Portugal, particularly in Galicia and
northern Portugal where labour is somewhat cheaper
than in most of Western Europe.
Procurement and Production Planners
Distribution Centre – all products pass through Zara’s
major distribution center in La Coruña. The 5-storey,
50,000 square meter distribution center employs some
of the most sophisticated and up-to-date automated
Logistics (Contractors) – In 2012, the distribution
center shipped 130 million pieces. 75 percent of these
shipments were to stores in Europe. Fashion garments
represent around 80 percent of Zara’s products and the
rest are more basic items.
4) Retailing :
Stores usually place their orders and receive
shipments twice per week. Orders have to be placed at
pre-designated times. The overall experience of the
customer in the store in considered. Apart form the
fashion supply, the interior design of the
store, coordination of collections, maximum care over
window displays and customer care are some of the
elements that guarantee this experience.
Effectiveness of Scheduling Techniques:
Scheduling refers to the time or date on which activities
are to be undertaken. Such fixing determines the manner in
which resources will flow in an operating system, the
effectiveness of which has an important impact on production
and thus supply chain performance.
The scheduling techniques of Zara is very efficient.
Centrally Managed Inventory – controlled and timely delivery of
clothing to all stores across the world.
Reduced Design Cycle Time – timely response to items that sell
well and ability to quickly alter or enter new designs.
Strong IT System – allows almost immediate communication of
sales and inventory information across enterprise.
Logistics and Distribution – clothes move within hours to their
destination, efficient scheduling of shipments.
Zara is an example of how a firm can
design and manage its supply chain to gain competitive
The retailing success of Zara can be partly
attributed to its excellent supply chain management.
Zara makes sure that each element of the supply chain
network adds value to the entire operation. Zara makes
sure that it streamline its supply chain, removing steps
that does not contribute to the achievement of the
company’s goals and developing those elements that