Zara uses an agile supply chain model that allows it to respond quickly to fashion trends. It has in-house designers that create over 40,000 designs per year, with only 10,000 selected for production. More than 50% of its production is in Europe, not Asia, to shorten lead times. Zara is able to expand sales and profits over 20% annually due to frequent new designs, minimal markdowns, and an efficient supply chain that takes only 2 weeks to deliver new designs to stores. Procurement plays a critical role through supplier selection, product decision making, and strategic buying that allows Zara to compete on time to market with minimal inventory.
The document discusses Zara's business model and use of technology. Some key points:
1. Zara links customer demand directly to manufacturing and distribution through vertical integration. Designers gather customer data from stores to quickly design and produce new products.
2. Products move from design to stores in just 3 weeks, much faster than competitors. Information technology helps share designs and gather sales data from stores twice weekly.
3. By producing locally and frequently updating stock based on sales, Zara can respond rapidly to fashion trends and consumer demands. This keeps customers returning to stores regularly.
This document provides a case study on the supply chain management of Zara, a global clothing retailer. It discusses Zara's vertically integrated supply chain model that allows it to design, manufacture, and distribute new clothing collections within 2 weeks. This rapid replenishment model has contributed greatly to Zara's success. The document also compares Zara's supply chain to those of other retailers like Myer, Dell, and Toyota, noting differences in their approaches to areas like production, inventory management, and responsiveness to customer demands.
This document provides information about Zara's supply chain management practices. It discusses how Zara was founded and expanded globally. It then describes Zara's fast fashion strategy and how they are able to introduce new designs quickly through vertical integration. The document outlines Zara's processes for spotting trends, designing, production, distribution, store layout, and reaping benefits from their supply chain system. It also discusses some challenges for Zara's supply chain with further expansion and potential modifications needed.
Zara has achieved great success through its vertically integrated supply chain model. It is able to design, produce, and distribute new clothing collections to stores within 2-3 weeks, far faster than competitors' 6-9 month timeline. Key aspects of Zara's supply chain include 200 in-house fashion designers, local fabric sourcing and production, and overnight trucking of products to European stores. This speed and flexibility allows Zara to respond quickly to fashion trends and reduces unsold inventory, contributing to higher profit margins compared to other retailers.
Zara is a large Spanish clothing retailer with over 1700 stores in 78 countries. It practices fast fashion, moving trends from runways to stores within weeks instead of months. Zara's supply chain undergoes constant changes to launch approximately 11,000 new items per year and sustain its competitive advantage. Inventory is kept low at only 1 month worth to attract customers more frequently. Zara produces around half of its items in-house and uses local suppliers to quickly fulfill orders and respond to changing demands.
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 supply chain.
ZARA Case Study: Role of Supply chain in organizational Successsadia butt
This document discusses the supply chain of Zara, a Spanish clothing retailer known for its fast fashion model. It outlines Zara's vertically integrated supply chain that allows it to design, manufacture, and distribute clothing in as little as 2-3 weeks. Key factors in Zara's supply chain success include vertical integration, use of information technologies to gain customer insights, and shorter lead times enabled by local sourcing and production in small batches.
Zara is a Spanish clothing retailer known for fast fashion. It was created in 1975 and now has over 2,100 stores globally. Zara's mission is to offer low-priced, on-trend clothing that mimics higher-end designs. It achieves this through vertical integration, just-in-time production, and a supply chain that can deliver new designs to stores within 15 days. Zara's success also comes from optimizing inventory, centralized logistics, and a large portfolio of young designers that help keep up with the latest trends.
The document discusses Zara's business model and use of technology. Some key points:
1. Zara links customer demand directly to manufacturing and distribution through vertical integration. Designers gather customer data from stores to quickly design and produce new products.
2. Products move from design to stores in just 3 weeks, much faster than competitors. Information technology helps share designs and gather sales data from stores twice weekly.
3. By producing locally and frequently updating stock based on sales, Zara can respond rapidly to fashion trends and consumer demands. This keeps customers returning to stores regularly.
This document provides a case study on the supply chain management of Zara, a global clothing retailer. It discusses Zara's vertically integrated supply chain model that allows it to design, manufacture, and distribute new clothing collections within 2 weeks. This rapid replenishment model has contributed greatly to Zara's success. The document also compares Zara's supply chain to those of other retailers like Myer, Dell, and Toyota, noting differences in their approaches to areas like production, inventory management, and responsiveness to customer demands.
This document provides information about Zara's supply chain management practices. It discusses how Zara was founded and expanded globally. It then describes Zara's fast fashion strategy and how they are able to introduce new designs quickly through vertical integration. The document outlines Zara's processes for spotting trends, designing, production, distribution, store layout, and reaping benefits from their supply chain system. It also discusses some challenges for Zara's supply chain with further expansion and potential modifications needed.
Zara has achieved great success through its vertically integrated supply chain model. It is able to design, produce, and distribute new clothing collections to stores within 2-3 weeks, far faster than competitors' 6-9 month timeline. Key aspects of Zara's supply chain include 200 in-house fashion designers, local fabric sourcing and production, and overnight trucking of products to European stores. This speed and flexibility allows Zara to respond quickly to fashion trends and reduces unsold inventory, contributing to higher profit margins compared to other retailers.
Zara is a large Spanish clothing retailer with over 1700 stores in 78 countries. It practices fast fashion, moving trends from runways to stores within weeks instead of months. Zara's supply chain undergoes constant changes to launch approximately 11,000 new items per year and sustain its competitive advantage. Inventory is kept low at only 1 month worth to attract customers more frequently. Zara produces around half of its items in-house and uses local suppliers to quickly fulfill orders and respond to changing demands.
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 supply chain.
ZARA Case Study: Role of Supply chain in organizational Successsadia butt
This document discusses the supply chain of Zara, a Spanish clothing retailer known for its fast fashion model. It outlines Zara's vertically integrated supply chain that allows it to design, manufacture, and distribute clothing in as little as 2-3 weeks. Key factors in Zara's supply chain success include vertical integration, use of information technologies to gain customer insights, and shorter lead times enabled by local sourcing and production in small batches.
Zara is a Spanish clothing retailer known for fast fashion. It was created in 1975 and now has over 2,100 stores globally. Zara's mission is to offer low-priced, on-trend clothing that mimics higher-end designs. It achieves this through vertical integration, just-in-time production, and a supply chain that can deliver new designs to stores within 15 days. Zara's success also comes from optimizing inventory, centralized logistics, and a large portfolio of young designers that help keep up with the latest trends.
This document discusses Zara's supply chain and how it contributes to the company's success. It provides details on Zara's vertically integrated supply chain model, which allows it to bring designs to stores in just 2-3 weeks compared to the industry average of 6-9 months. Key aspects of Zara's supply chain include local sourcing, fast production times, mass customization, and using IT to share information. This vertical integration model helps Zara increase revenue through more fashionable and scarce products, while decreasing costs through factors like lower transportation and inventory costs.
The document outlines Zara's fast fashion business model and supply chain operations, which focuses on rapid design, production, and distribution of new fashion items to stores within weeks in order to stay on top of constantly changing trends, allowing Zara to maintain its competitive advantage over rivals with shorter inventory turnovers and product lifecycles. Zara's centralized operations and extensive use of data and technology allows it to quickly respond to demand changes through flexible procurement, production planning, and high-velocity logistics. This responsive supply chain model has supported Zara's global expansion to over 1700 stores in 78 countries while continually renewing its inventory with around 11,
Zara is a Spanish brand of clothing founded by the visionary Amancio Gaona and Rosalina Mera at 1975. It is one of the major selling brands of one of the biggest fashion retailer ‘INDITEX’. Zara is now available in 86 countries with total of 1,763 stores worldwide. In 1975 INDITEX established Zara’s 1st store in downtown A Coruna, Spain. Zara offers fashionable designs for men, women, and kids.
Zara is a Spanish clothing retailer known for its lean manufacturing approach. It implements one-piece flow where products move through production one at a time based on customer demand from stores. Store managers place orders twice a week and new designs arrive within 15 days. Zara uses a network of factories in Spain, North Africa and Turkey to quickly produce unfinished products that are then finished and shipped within 24-40 hours. Every evening, store managers provide customer feedback that is analyzed to improve designs and operations, allowing Zara to be highly responsive to changing fashion trends.
Zara has maintained its leadership in the apparel industry through its unique supply chain strategies, including quick response to demand trends, small batch production to preserve exclusivity, and a central distribution center that can deliver new items within 48 hours. It produces 450 million items per year through hundreds of designers and production facilities near its headquarters in Spain, Portugal, and Morocco. Stores are located in high traffic areas and change window displays frequently to engage customers.
this presentation is about the supply chain of worlds leading apparel manufacturer ZARA and specially about it SUPPLY CHAIN. me and my colleagues have presented about the values, supply chain partners, KPI's(key performance indicators) and lot of supply chain related details n this presentation
Supply Chain Management of Zara (Case Study)Neha Chauhan
This document provides an overview of the Spanish apparel company Inditex and its flagship brand Zara. It discusses Zara's history and founding, Inditex's financial performance, Zara's unique business model centered around rapid design, production and distribution, and Zara's positioning within the global apparel industry. Key aspects of Zara's model include in-house design teams that produce new collections bi-weekly, local Spanish and Portuguese production facilities allowing for quick fulfillment, and a vertically integrated supply chain.
Zara is a Spanish clothing retailer known for its rapid 2-week production cycle and frequent new designs. It operates integrated supply chains to develop 10,000 new products annually. Zara designs most products in-house and manufactures half itself using nearby factories, with the rest outsourced to European and some Asian suppliers. Zara's design, production, distribution and store teams work closely together to quickly translate sales data into new production runs, allowing frequent updates to match changing fashion trends.
Zara started as a small company making women's clothing in Spain in 1963. In 1975, after a cancelled order, Zara opened its first retail store to sell excess inventory, learning the importance of integrating manufacturing and retail. Since then, Zara has grown to over 1750 stores worldwide selling affordable yet stylish clothing. Zara's success is due to its unique fashion designs, real-world prices, and collaborative digital networks linking it to suppliers and customers. It can develop new products and get them to stores within just two weeks, launching around 10,000 designs annually.
This document discusses Zara's supply chain and business model. It notes that Zara can produce 11,000 distinct items annually compared to 2,000-4,000 for similar companies. Zara's supply chain allows for short production cycles of 4-5 weeks and relies on information technology and a vertically integrated model. Stores provide frequent fresh assortments based on customer feedback and Zara spends little on advertising, instead focusing on prime locations.
Zara's value chain is highly integrated and controlled. It sources materials and produces about half of products in Spain and Europe to allow for quick design changes. Products are shipped to stores within 24 hours in Europe. Store managers have autonomy to make replenishment orders based on sales data. Zara uses minimal marketing and focuses on window displays. Its competitive advantage lies in its ability to design, produce, and deliver fashion trends rapidly and at scale through its vertically integrated system.
Operations management in apparel retailiing (ZARA)Humberto Galasso
This document provides an overview of operations management in the apparel retailing industry. It discusses the traditional design-to-market process used by many retailers and compares it to the faster process used by "fast fashion" retailers. It identifies three key operational decisions - design, production/purchasing, and distribution. The document focuses on distribution decisions, describing inventory models that have been used to optimize inventory allocation across a retail network during the selling season. Alternative solution approaches developed specifically for the apparel industry are also discussed.
Zara is by far the largest, most profitable and most internationalized fashion retail chain. Zara's success is based on a business system that depends on vertical integration, in-house production, quick response, one centralized distribution centre and low advertising cost. Zara's information system allows it to gather customer feedback and sales data in real-time to quickly design, produce, and distribute new fashion items to stores every few weeks. This rapid inventory turnover and frequent product refreshment is key to Zara maintaining its competitive edge over rivals in the fast fashion industry.
Zara is a highly successful fashion retailer known for its fast fashion model. It introduces new designs two weeks after seeing them on runways rather than the industry standard of six months. Zara achieves this through an integrated operation strategy that allows for quick design, production, and distribution. Stores provide immediate customer feedback that designers use to create new items. Factories located in Spain enable rapid production to meet changing demand. An efficient supply chain distributes goods to stores within 24 hours in Europe. This strategy of speed, affordability, and variety has made Zara one of the world's largest clothing retailers.
Zara is a Spanish clothing retailer founded in 1975 known for its rapid response to fashion trends. It has over 1,600 stores worldwide and is a flagship brand of the Inditex group. Zara's business strategy focuses on design, manufacturing, and logistics to produce trendy clothing in only 2-3 weeks. Zara's designers attend fashion shows to develop initial collections 9 months in advance and make constant adjustments based on sales data and customer feedback. Manufacturing is split between company-owned factories in Europe and outsourcing to factories globally to maximize flexibility and quick production turnaround.
Zara uses IT systems like POS and PDAs to gather real-time customer data on fashion trends. Designers use this data to quickly design and produce new clothing collections, with over 12,000 new items produced each year. Zara's supply chain is highly responsive, allowing new items to go from design to stores in just 15 days. This fast fashion model allows Zara to have minimal inventory and avoid markdowns. In contrast, competitors like Gap rely on long lead times and large production runs, leading to higher risks of unsold inventory.
Zara is a large global fashion retailer owned by the Spanish company Inditex. It operates over 2,000 stores worldwide and is known for its fast fashion business model. The document discusses Zara's business strategies including vertical integration, rapid production cycles, and limited advertising. It also analyzes Zara using various marketing frameworks such as the marketing mix, services marketing, and McDonaldization. A survey was conducted to understand customer perceptions of Zara. While mostly positive, some issues around ethics and lack of communication capabilities were identified.
Zara has achieved success through a vertically integrated supply chain model that allows for rapid production and distribution, getting new designs from concept to stores in as little as three weeks. However, Zara's reliance on outdated information technology systems, including a DOS-based point-of-sale system and lack of internal communication capabilities, presents weaknesses that could threaten its competitive edge if not modernized. Upgrading its IT infrastructure would enable Zara to improve inventory accuracy, facilitate real-time communication across its global operations, and help it continue responding quickly to fashion trends.
Comparing Zara and UNIQLO Using Supply Chain Analysis DeshmukhMika Deshmukh
A research paper comparing the supply chain aspects and methods of Zara and UNIQLO in order to draw conclusions about the companies' respective and comparative competitiveness, as well as to provide recommendations to improve their competitiveness in the U.S. market within the next five years.
1. IntroductionIn the modern society, all the enterprises in the.docxSONU61709
1. Introduction
In the modern society, all the enterprises in the face of increasingly complex social environment, fickle and variable current social situation in economy, politics, culture and other factors bring both opportunities and challenges to enterprises. To develop in intense market competitions, be prepared is the foundation of all the business activities. To walk on the right way by a clear direction to reach a right goal, planning must be an indispensable and significant process of the business operation.
Strategy is defined as a plan of action designed to achieve a long-term or overall aim by Oxford Dictionary. A strategy is a series of integrated, coordinated action that designed to help organization develop core competencies and access to competitive advantage. Business model is an abstract representation of some aspects of a firm’s strategy; it helps people to understand how a firm can successfully deliver value to its customers. Unlike strategy, business models do not consider competitive positioning. Business strategic model could help organization to set direction and priorities in less resource and time by a scientific way.
In this report, mainly to explore two different strategic models(SWOT analysis, Porter’s value chain) from several aspects including introduction of strategic model, application of models, analysis and comparison about two models. At last, make a short reflective conclusion about the strategic models.
2. SWOT Analysis
2.1 What is SWOT Analysis model
Today’s organizations find themselves operating in an environment that is changing faster than ever before, SWOT analysis is a method for organization analyze the implications of these changes and modify the way to react to the changes. SWOT analysis is a method based on internal and external environment of the organization analysis or a procedural or structural components analysis thereof embodied in establishing the main strengths, weaknesses, opportunities and threats. (Verboncu, 2016). As a basis of strategic analysis and formulation,
SWOT analysis by analyzing the competitive advantage of the firm itself (Strength), competitive disadvantage (weakness), opportunities and threat, this model helps the enterprise get better know about the opportunities and challenges facing themselves, at the same time, it has vital significance for the development of the public division and formulate the future development strategy. Figure 1. SWOT matrix
SWOT matrix (Figure 1) is made for considering four components; important SWOT analysis’s results of the enterprise should be listed in the table. The combination of the four elements defining this model (the model of "fitting" or the model of "alignment") generates, according to experts, four modes of analysis of internal and external factors, as the basis of specific strategies. (Verboncu, 2016) These four factors come into being different strategy combination like SO, ST, WO and WT. (Figure 2)
Figure 2. SWOT Matr ...
This document discusses Zara's supply chain and how it contributes to the company's success. It provides details on Zara's vertically integrated supply chain model, which allows it to bring designs to stores in just 2-3 weeks compared to the industry average of 6-9 months. Key aspects of Zara's supply chain include local sourcing, fast production times, mass customization, and using IT to share information. This vertical integration model helps Zara increase revenue through more fashionable and scarce products, while decreasing costs through factors like lower transportation and inventory costs.
The document outlines Zara's fast fashion business model and supply chain operations, which focuses on rapid design, production, and distribution of new fashion items to stores within weeks in order to stay on top of constantly changing trends, allowing Zara to maintain its competitive advantage over rivals with shorter inventory turnovers and product lifecycles. Zara's centralized operations and extensive use of data and technology allows it to quickly respond to demand changes through flexible procurement, production planning, and high-velocity logistics. This responsive supply chain model has supported Zara's global expansion to over 1700 stores in 78 countries while continually renewing its inventory with around 11,
Zara is a Spanish brand of clothing founded by the visionary Amancio Gaona and Rosalina Mera at 1975. It is one of the major selling brands of one of the biggest fashion retailer ‘INDITEX’. Zara is now available in 86 countries with total of 1,763 stores worldwide. In 1975 INDITEX established Zara’s 1st store in downtown A Coruna, Spain. Zara offers fashionable designs for men, women, and kids.
Zara is a Spanish clothing retailer known for its lean manufacturing approach. It implements one-piece flow where products move through production one at a time based on customer demand from stores. Store managers place orders twice a week and new designs arrive within 15 days. Zara uses a network of factories in Spain, North Africa and Turkey to quickly produce unfinished products that are then finished and shipped within 24-40 hours. Every evening, store managers provide customer feedback that is analyzed to improve designs and operations, allowing Zara to be highly responsive to changing fashion trends.
Zara has maintained its leadership in the apparel industry through its unique supply chain strategies, including quick response to demand trends, small batch production to preserve exclusivity, and a central distribution center that can deliver new items within 48 hours. It produces 450 million items per year through hundreds of designers and production facilities near its headquarters in Spain, Portugal, and Morocco. Stores are located in high traffic areas and change window displays frequently to engage customers.
this presentation is about the supply chain of worlds leading apparel manufacturer ZARA and specially about it SUPPLY CHAIN. me and my colleagues have presented about the values, supply chain partners, KPI's(key performance indicators) and lot of supply chain related details n this presentation
Supply Chain Management of Zara (Case Study)Neha Chauhan
This document provides an overview of the Spanish apparel company Inditex and its flagship brand Zara. It discusses Zara's history and founding, Inditex's financial performance, Zara's unique business model centered around rapid design, production and distribution, and Zara's positioning within the global apparel industry. Key aspects of Zara's model include in-house design teams that produce new collections bi-weekly, local Spanish and Portuguese production facilities allowing for quick fulfillment, and a vertically integrated supply chain.
Zara is a Spanish clothing retailer known for its rapid 2-week production cycle and frequent new designs. It operates integrated supply chains to develop 10,000 new products annually. Zara designs most products in-house and manufactures half itself using nearby factories, with the rest outsourced to European and some Asian suppliers. Zara's design, production, distribution and store teams work closely together to quickly translate sales data into new production runs, allowing frequent updates to match changing fashion trends.
Zara started as a small company making women's clothing in Spain in 1963. In 1975, after a cancelled order, Zara opened its first retail store to sell excess inventory, learning the importance of integrating manufacturing and retail. Since then, Zara has grown to over 1750 stores worldwide selling affordable yet stylish clothing. Zara's success is due to its unique fashion designs, real-world prices, and collaborative digital networks linking it to suppliers and customers. It can develop new products and get them to stores within just two weeks, launching around 10,000 designs annually.
This document discusses Zara's supply chain and business model. It notes that Zara can produce 11,000 distinct items annually compared to 2,000-4,000 for similar companies. Zara's supply chain allows for short production cycles of 4-5 weeks and relies on information technology and a vertically integrated model. Stores provide frequent fresh assortments based on customer feedback and Zara spends little on advertising, instead focusing on prime locations.
Zara's value chain is highly integrated and controlled. It sources materials and produces about half of products in Spain and Europe to allow for quick design changes. Products are shipped to stores within 24 hours in Europe. Store managers have autonomy to make replenishment orders based on sales data. Zara uses minimal marketing and focuses on window displays. Its competitive advantage lies in its ability to design, produce, and deliver fashion trends rapidly and at scale through its vertically integrated system.
Operations management in apparel retailiing (ZARA)Humberto Galasso
This document provides an overview of operations management in the apparel retailing industry. It discusses the traditional design-to-market process used by many retailers and compares it to the faster process used by "fast fashion" retailers. It identifies three key operational decisions - design, production/purchasing, and distribution. The document focuses on distribution decisions, describing inventory models that have been used to optimize inventory allocation across a retail network during the selling season. Alternative solution approaches developed specifically for the apparel industry are also discussed.
Zara is by far the largest, most profitable and most internationalized fashion retail chain. Zara's success is based on a business system that depends on vertical integration, in-house production, quick response, one centralized distribution centre and low advertising cost. Zara's information system allows it to gather customer feedback and sales data in real-time to quickly design, produce, and distribute new fashion items to stores every few weeks. This rapid inventory turnover and frequent product refreshment is key to Zara maintaining its competitive edge over rivals in the fast fashion industry.
Zara is a highly successful fashion retailer known for its fast fashion model. It introduces new designs two weeks after seeing them on runways rather than the industry standard of six months. Zara achieves this through an integrated operation strategy that allows for quick design, production, and distribution. Stores provide immediate customer feedback that designers use to create new items. Factories located in Spain enable rapid production to meet changing demand. An efficient supply chain distributes goods to stores within 24 hours in Europe. This strategy of speed, affordability, and variety has made Zara one of the world's largest clothing retailers.
Zara is a Spanish clothing retailer founded in 1975 known for its rapid response to fashion trends. It has over 1,600 stores worldwide and is a flagship brand of the Inditex group. Zara's business strategy focuses on design, manufacturing, and logistics to produce trendy clothing in only 2-3 weeks. Zara's designers attend fashion shows to develop initial collections 9 months in advance and make constant adjustments based on sales data and customer feedback. Manufacturing is split between company-owned factories in Europe and outsourcing to factories globally to maximize flexibility and quick production turnaround.
Zara uses IT systems like POS and PDAs to gather real-time customer data on fashion trends. Designers use this data to quickly design and produce new clothing collections, with over 12,000 new items produced each year. Zara's supply chain is highly responsive, allowing new items to go from design to stores in just 15 days. This fast fashion model allows Zara to have minimal inventory and avoid markdowns. In contrast, competitors like Gap rely on long lead times and large production runs, leading to higher risks of unsold inventory.
Zara is a large global fashion retailer owned by the Spanish company Inditex. It operates over 2,000 stores worldwide and is known for its fast fashion business model. The document discusses Zara's business strategies including vertical integration, rapid production cycles, and limited advertising. It also analyzes Zara using various marketing frameworks such as the marketing mix, services marketing, and McDonaldization. A survey was conducted to understand customer perceptions of Zara. While mostly positive, some issues around ethics and lack of communication capabilities were identified.
Zara has achieved success through a vertically integrated supply chain model that allows for rapid production and distribution, getting new designs from concept to stores in as little as three weeks. However, Zara's reliance on outdated information technology systems, including a DOS-based point-of-sale system and lack of internal communication capabilities, presents weaknesses that could threaten its competitive edge if not modernized. Upgrading its IT infrastructure would enable Zara to improve inventory accuracy, facilitate real-time communication across its global operations, and help it continue responding quickly to fashion trends.
Comparing Zara and UNIQLO Using Supply Chain Analysis DeshmukhMika Deshmukh
A research paper comparing the supply chain aspects and methods of Zara and UNIQLO in order to draw conclusions about the companies' respective and comparative competitiveness, as well as to provide recommendations to improve their competitiveness in the U.S. market within the next five years.
1. IntroductionIn the modern society, all the enterprises in the.docxSONU61709
1. Introduction
In the modern society, all the enterprises in the face of increasingly complex social environment, fickle and variable current social situation in economy, politics, culture and other factors bring both opportunities and challenges to enterprises. To develop in intense market competitions, be prepared is the foundation of all the business activities. To walk on the right way by a clear direction to reach a right goal, planning must be an indispensable and significant process of the business operation.
Strategy is defined as a plan of action designed to achieve a long-term or overall aim by Oxford Dictionary. A strategy is a series of integrated, coordinated action that designed to help organization develop core competencies and access to competitive advantage. Business model is an abstract representation of some aspects of a firm’s strategy; it helps people to understand how a firm can successfully deliver value to its customers. Unlike strategy, business models do not consider competitive positioning. Business strategic model could help organization to set direction and priorities in less resource and time by a scientific way.
In this report, mainly to explore two different strategic models(SWOT analysis, Porter’s value chain) from several aspects including introduction of strategic model, application of models, analysis and comparison about two models. At last, make a short reflective conclusion about the strategic models.
2. SWOT Analysis
2.1 What is SWOT Analysis model
Today’s organizations find themselves operating in an environment that is changing faster than ever before, SWOT analysis is a method for organization analyze the implications of these changes and modify the way to react to the changes. SWOT analysis is a method based on internal and external environment of the organization analysis or a procedural or structural components analysis thereof embodied in establishing the main strengths, weaknesses, opportunities and threats. (Verboncu, 2016). As a basis of strategic analysis and formulation,
SWOT analysis by analyzing the competitive advantage of the firm itself (Strength), competitive disadvantage (weakness), opportunities and threat, this model helps the enterprise get better know about the opportunities and challenges facing themselves, at the same time, it has vital significance for the development of the public division and formulate the future development strategy. Figure 1. SWOT matrix
SWOT matrix (Figure 1) is made for considering four components; important SWOT analysis’s results of the enterprise should be listed in the table. The combination of the four elements defining this model (the model of "fitting" or the model of "alignment") generates, according to experts, four modes of analysis of internal and external factors, as the basis of specific strategies. (Verboncu, 2016) These four factors come into being different strategy combination like SO, ST, WO and WT. (Figure 2)
Figure 2. SWOT Matr ...
Zara has become very successful in the fashion industry due to its highly integrated supply chain that can design and produce new products in just two weeks. Zara relies on frequent information sharing between stores and designers, cross-functional collaboration, local manufacturing partners, and efficient distribution. As a result, Zara is able to keep inventory turnover high and quickly provide customers with the latest fashion trends, leading to strong financial performance for its parent company Inditex.
This document identifies and discusses several supply chain challenges faced by the clothing retailer Zara. It begins by providing background on Zara and its supply chain model. The main challenges discussed include inaccessibility of products to all customers due to centralized sourcing, a large carbon footprint and lack of sustainable practices, and various ethical issues around working conditions and treatment of suppliers and workers. For each challenge, potential solutions are proposed such as implementing e-procurement and e-logistics to reduce costs and improve accessibility, increasing supplier collaboration and quality control to reduce environmental impacts, and enhancing visibility, compliance monitoring and compensation of overseas suppliers and workers to address ethics concerns. The document concludes by suggesting both short and long-term strategies for Zara to address
Group project for Global Sourcing and Supply Chain Management in China.
We learned an immense amount about e-commerce and fast fashion to supply chain (turnaround rates, warehouse management, etc).
This summarizes a research report about the clothing retailer Zara. It begins with an introduction and background on Zara. It then conducts an environmental analysis using a SWOT analysis and Porter's Five Forces model. From this, it determines that an appropriate strategy for Zara would be to outsource some design operations to China in order to better understand consumer preferences in the growing Chinese market. The report discusses how outsourcing design operations to China aligns with industry-based, resource-based, and institution-based strategic views. It analyzes the risks and benefits and provides recommendations for implementing the strategy.
This document provides an analysis of Zara and its business model. It begins with an introduction that outlines Zara's profile as the leading brand of Inditex, the largest apparel retailer in the world. It then discusses Zara's unique business model of vertical integration and rapid replenishment.
The document then covers various theoretical concepts relevant to analyzing Zara, including Porter's value chain analysis, PESTLE analysis, and the product lifecycle. It identifies the main issues facing Zara as the need to upgrade its aging POS systems and difficulties expanding beyond Europe due to cultural differences.
The focus areas for analysis are identified as Zara's strategic management decisions, how its information systems support decision making, reasons
The document provides background information on Documentum, an enterprise content management software company founded in 1990. It discusses Documentum's opportunities in targeted markets where its software had been tested, such as aircraft maintenance and pharmaceuticals. It also notes threats such as the revolutionary nature of the technology potentially limiting early adoption. The document examines Documentum's challenges in explaining its value proposition to potential clients unfamiliar with their needs. It focuses on Documentum's challenges in selecting an appropriate target market and sales strategy, either focusing vertically on industries or horizontally on functions.
The global apparel industry is buyer-driven, with fragmented upstream production and concentrated downstream retailers and brands. Production is located primarily in developing countries for lower costs. Retailing is increasingly concentrated to improve speed and flexibility. Customer spending on apparel decreases as income increases.
Zara uses a business model of quick response and frequent deliveries of on-trend fashion. It targets middle-income, fashion-conscious customers with affordable prices. Key competitive advantages include a strong real estate network, internal manufacturing allowing quick response, engaged human resources, and integrated IT infrastructure.
The recommendations are to aggressively expand Zara in Europe and the Middle East in the short-term. Expansion in North America is not recommended currently due to
BMS510 Logistics And Supply Chain Management.docxstudywriters
This document provides an overview of supply chain management concepts and Zara's supply chain strategy. It discusses key supply chain concepts like being consumer-centric, partnerships, adaptability, risk control, and innovation. It then describes Zara's supply chain process of designing, manufacturing, shipping and selling products in an integrated manner. Zara is able to get products to stores within 2 weeks compared to an industry average of 6 months. The document also discusses how an effective supply chain can provide competitive advantages through cost savings and efficiency. Zara's rapid response supply chain is highlighted as giving it an advantage over competitors. Challenges for Zara's supply chain like unpredictability and expansion are also summarized. Finally, the interrelationships between the
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Kaan Over
James K. Lill, Adriana Gil-Matos
Introduction to Engineering Management
October 30, 2016
Zara International: Fashion at the Speed of Light
This study analyzes the status of Zara International taking a broader look at the apparel industry where it operates and the competitive factors, its current operational performance, its market competiveness and its response to the new trends such market globalization. The study also stretches to find out whether Inditex is still providing worthy management benchmarks that firms such as Zara could follow.
Apparel Industry and Its Competitive Factors
The global apparel industry continues to grow healthily into the future. This is attributed to the absence of switching costs for consumers and great product differentiation which has resulted into moderate competition rate. Apparel industry is important to all the economies across the globe as it contribute immensely to trade, employment, investment and revenue all over the world. The industry has vast product differentiation, short product life cycles, and is characterized by great pace of demand change that is coupled with rather long and fixed supply processes.
According to statista.com, the US Apparel industry is estimated to be around $225billion with the women accounting for the largest sales volume at $110,826 million. As of 2015, the market was valued at approximately 343 billion U.S. dollars. Price per apparel article in US was estimated to be about $19. The clothing stores sales in the industry was also estimated to about $183.01bn. The U.S. Apparel Manufacturing was reported to have employed about 89,588 people as of 2014. At the retail level clothing store sales in U.S. was estimated at $183.01bn while the U.S. apparel and accessories retail e-commerce revenue was reported to be about $63.5 Major retail and discount stores are the likes of Target, Wal-Mart, and Kohl's; these firms operate by keeping profit margins thin at stores which sell moderately priced apparel.
As seen in the figure below, the market value of the apparel industry in the United States has been on the increase since 2011. In 2011 the market was valued at $309.98 billion, in 2012, this increased to $316.92 and in 2013 it reached $323.75 billion. In 2014, the market again recorded an increase standing at $331.49 billion. In 2015 it increased to $342.94 billion and currently it stands at $358.88 billion.
Fig1: Market value of apparel and footwear in the United States from 2011 to 2016 (In $billion)
The major competitive factors in the apparel industry include the cost of labor, cost of raw materials and the shipping costs (Lu 32). Besides these, in order to remain competitive within the apparel industry, firms must updated on the latest trends in the market. As such, firms must ensure tha.
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introduction
Companies can effectively compete within an industry through innovative models.
Zara is an example, and its competitors are such as Gap, Southwest airlines, Wal-Mart and Dell among others.
Business model and key disruptive elements
Model Innovation disrupted market
-Deliver styles while still hot -marketing to convince buyers
-Reduce marketing cost and increase- -Increase marketing cost
layout cost.
-Hasten shift to customer demand -clearing the stock
Disruptive business model
The disruptive business model reduces the performance of the competitors by introducing new technologies that disrupt the normal activities in the industry.
4
most demanding use 1 2 3 4 3 4 5 6 30 1 2 3 4 2 3 4 5 low qu ality use 1 2 3 4 1 2 3 4
Ordering- orders are made on time and regulation made to ensure that the order is not late.
Fulfillment-the order is fulfilled by the La Coruna team.
Design and manufacturing- Design is made so as to meet the customers taste and ever changing desires.
Operations
The disruptive models change the way the operations are done. It introduces new operation models such as Zara’s the process of ordering, fulfillment and design.
5
Approaches and organization-consistent with the preference for speed and decentralized decision making.
Application development and other IT activities were the responsibility of an Is department of approximately 50 people
Information Technology(IT)
In side the factories,, relatively simple applications were used to plan production.
Most sophisticated ones were large computer controlled equipment that cut cloth into patterns.
Factories
Automated distribution centres e.g miles of automated conveyer belts facilitated the ongoing task of receiving bulk quantities of each garment from factories then recombining the garments into shipment for each store.
Distribution centres
Personal digital assistants(PDAs) and POS systems. Allows redundancy and division of labor.
Constantly upgrades PDAs to meet technological advancement.
POS terminals remained unchanged since they are remarkably stable, effective and easy to roll out and maintain over time.
stores
Zara leads in the profit margins and growth rate due to unique business model within the industry.
conclusion
Work sheet 4
What business is Zara in?
Worksheet#4
Core Competencies & Competitive Advantages
Learning Task#8
Zara Competencies
There are essentially business results and primary business measures which are reflective of Zara’s competitive advantages and core competencies. These are financial and operational. Write them down in the space provided on Worksheet #4
Zara’s core Competencies and how Zara has built them to execute the behavior drivers.
· To create a timely and accurate “one-number plan” that drives all the business functions and enables planning initial assortment at the store level.
· To develop a synchronized supply chain.
6
Competitive Advantages
MGT/498 Strategic Management
Wal-Mart is the world’s largest retailer and deals in general merchandise where the products that they deal in are varied. The largest merchandise that Wal-Mart deals in is grocery, which accounts for up to 56% of the sales (Gallo, 2013). The grocery industry is highly fragmented with several players meaning that the competition levels are very high. For Wal-Mart, there are certain strategies that are being applied to achieve competitive advantage. The company, therefore, has come up with a strategy known as everyday low prices which have helped the company to gather a huge market share. This is the same strategy that has been applied by Toyota as they manufacture low price cars that can suit low-income earners who wish to enjoy the experience of owning a car.
Wal-Mart has created a successful vendor relationship, which has enabled the company to move a mile away from the competitors such as Costco and Safeway and Kroger. Successful vendor relationship ensures that forward supply chain is flawless and that customers can get the products that they need at the best moment, and the best condition needed. This is the same criteria of competitive advantage that has been adopted in Coca-Cola and A.O Smith Water Products. Vendors are very important in ensuring that business is meeting the consumer needs and that they receive proper feedback since the vendors have close contact with the consumers. Toyota has developed such a strong relationship with its vendors who are spread across the world making it easy for them to do business compared to the competitors (Gallo, 2013).
In business the most important factor to success is communication. Most businesses have failed due to their inability to create a proper communication network. For a business such as Wal-Mart that operates several stores and deals with various suppliers, it is very important that communication is made efficient. This is what has happened in Wal-Mart, Toyota, ATT, Coca Cola, Apple, Qantas Airline, Nike and A.O Smith Water Products. Multinational, in particular, need a communication model that ensures all the international branches are linked with the home country as it ensures synergy in operation.
Wal-Mart values its employees more than any other asset that they own. Most businesses have failed to consider their employees as an asset and usually treat them as outsiders. For instance, Nike has had several instances in the 90s when they were accused of mistreating foreign workforce in Asia. Wal-Mart, ATT, and Qantas Airline have shown that a motivated employee is a productive employee. It is the employees who will serve the customers better to elicit frequent returns to business.
The two very important competitive strategies that would ensure that Wal-Mart continues to be innovative and sustainable is having efficient operations management and valuing the employees. When employees are treated well, they feel moti.
1) Porter's five forces analysis finds the global apparel industry has medium threat of new entrants due to modest growth and low capital requirements, but high bargaining power of customers and suppliers who face few switching costs. Rivalry is also high due to frequent price changes and ease of switching brands.
2) Zara's value chain emphasizes rapid design, production, and distribution through internal suppliers and owned factories. New collections are delivered to stores every two weeks to quickly reflect changing fashion trends. Marketing relies on brand reputation and store displays rather than advertising.
3) Zara's infrastructure allows for fast global coordination between managers, designers, and suppliers. Over half of its 60,000 young, female workforce is based
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This document provides contact information for an educational services company and includes sample assignments from various business courses. The assignments cover topics such as business communication, economics, corporate social responsibility, information systems, management, and human resources. Students are encouraged to contact the company for help completing their assignments.
This document discusses time-based competition and how organizations have evolved to speed up supply chain processes. It provides an overview of time-based competition and how companies like Zara have implemented strategies to reduce product development times. Zara is used as a case study, being able to develop a concept to store in 15 days versus an industry standard of 6 months. The document also reviews literature on time-based competition and analyzes how effective strategies are compared to industry standards.
THE WASTES IN THE LEAN MARKETING. A PROPOSED TAXONOMYAndrea Payaro
This document presents a study that develops a model to identify wastes in marketing strategies using lean principles. The study applies the model to 12 Italian SMEs. The model identifies 8 types of waste in marketing: overproduction, inventory, waiting, transportation, overprocessing, motion, defects, and unused talent. Companies rate their current and ideal states for each waste. The largest gaps identify high priority wastes to address. After implementation, companies found the model helped identify improvement tools, increased customer knowledge, and improved satisfaction. However, regular customer surveys are needed and a prioritization system for improvement projects. Overall, companies found the waste classification a useful way to identify non-value-added marketing activities.
This presentation summarizes Classic Wears Pvt Ltd's inventory management practices. It discusses the company's inventory cycle and factors that affect inventory purchases and policies. Key problems identified include a lack of computerization, excess old stock, and wastage. Suggestions provided to address these issues include implementing a just-in-time system to reduce stock obsolescence, computerizing the store department for easier recording, and controlling wastage by having production returns remaining materials.
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Agile supply chain zara case study
1. Agile Supply Chain: Zara's case study
analysis
Galin Zhelyazkov
Design, Manufacture & Engineering Management; Strathclyde University Glasgow
email: galin.zhelyazkov@strath.ac.uk
Abstract
Purpose – The purpose of this paper is to assess and document the key aspects in Zara's
success by identifing current gaps, and to provide direction for future research efforts.
Design/methodology/approach – Zara's case studies and literature published from 2001 to
2010 was reviewed.
Findings – The review summarizes significant aspects of Zara success, many of which at least
partially addressed in previous research.
Research limitations/implications – This effort is not an exhaustive review of all research
published for Zara. This review does not consider unpublished papers, papers in non-academic
journals, or papers presented at conferences.
Practical implications – This review is a useful resource for supply chain researchers
interested in agile supply chain and retailers willing to learn the key aspects of Zara's success in
agile supply chain.
Originality/value – This paper uses the findings of other researchers as a measure of the
achievements of Zara against academic theory. The gaps identified and challenges made will
serve as a foundation upon which future researchers can build.
Keywords Supply chain management, Agile supply chain, Zara case study analysis
Paper type Case Study Analysis
Introduction
It is becoming clear that the changed conditions in the global marketplace demand a much more
agile response from the organizations and their partners in the supply chain. The period when
production was moved overseas, so business can take advantage of cheap labour is coming
to an end, because fast fashion starts competing not only on price but also on time. According
to Cai-feng (2009) product and technology life cycles are likely to continue to shorten, while
demand will be increasingly difficult to forecast. Decision about raw materials must be taken
long in advance and still remain the most risky part of agile supply chain. Customer behaviour
2. has changed and nowadays buyers want to see frequently new stiles (Bruce and Dali, 2006).
This is clearly result of the new buyers behaviour, clothes are not used anymore to protect body
from cold, but to accompany a persona style and support aimed personality appearance (Cai-
feng, 2009). All these facts play a key role in the new relationship between retailers, suppliers
and consumers.
Supply Chain Management (SCM) is the success factor in fast fashion business. It deals with
suppliers, with supplier’s suppliers, with customers and sometimes even customer’s customers.
It looks at the process from raw materials origin to customer consumption. The output of supply
chain is not just a physical product, but a combination of time, place, form and function of a
product/service proposition (Cai-feng, 2009).
In the fashion world, where companies are competing on time (time-to-market) the need
of new abilities are raising. Agility is such an ability that responds rapidly to unpredictable
changes in demand . Cai-feng (2009) define Agile Supply Chain (ASC) as a network‘s ability
to consistently identify and capture business opportunities more quickly than its rivals do.
Barnes and Greenwood (2006) definition can enrich it by adding: ASC is a “quick response,
describe shorter, more flexible, demand driven supply chains. ASC is driven by information
such as market data and information-sharing between businesses in the supply chain. In agile
supply chains, the visibility of information allows the supply chain to become more responsive to
changes in demand in the market place”.
Part of the ASC process is agile manufacturing. Cai-feng (2009) points at four pivotal
objectives of agile manufacturing: customer enrichment ahead of competitors, achieving mass
customization at the cost of mass production, mastering change and uncertainty through
routinely adaptable structures, and leveraging the impact of people across enterprises through
information technology.
This paper will try to reveal the key aspects of ASC in fast fashion. Zara's case study will be
used, as an example, considered to be the pioneer in fast fashion industry nowadays.
The section following this introduction will present the case study of Zara. The outcome will be
presented and discussed in the results section. Finally, a conclusion will be drawn, followed by
the cited sources.
Zara's Case Study
Zara is a fashion label and fashion chain stores established in 1975 by the Spanish group
Inditex own by Amancio Ortega. Next to Zara, the rest of the labels the groups own are
Bershka, Massimo Dutti, Pull and Bear, Stradivarius, Oysho, Zara Home, Zara kinds and
Uterque. During the last two decades Zara tripled its profit and stores and nowadays is ranked
the third biggest retailer world-wide (Zhang, 2008). It has 3000 in-house designers located in its
headquarter in the region of A Coruña, Spain,which design over 40 000 items per year among
which only 10 000 are selected for production (Li, 2009). Opposite to its competitors, more than
50% of its production is in Europe and not in Asia or South America (Bruce and Daly, 2006).
According to Sull and Turconi (2008) average markdown ratio is at approximately 50 per cent,
for comparison Zara sold only 15 per cent on sale. All these facts allows Zara to expand its
sales and profits over 20 per cent per year. By September 2010 Inditex group owns 4907 stores
3. in 77 countries around the world (38 in Europe and 39 outside Europe). Zara gets the credit
to be pioneer in Agile Supply Chain and most researchers explain its success with its efficient
ASC (Dutta, 2002; Tiplady, 2006; Sull and Turconi, 2008; Zhang, 2008). Zhang (2008) suggests
that “whole process of the supply chain in Zara could be divided into four parts: product
organization and design; purchase and production; product distribution; sales and feedback”.
Product organization and design
Next to its unique models the majority of Zara's items are imitation of high-end brands.
According to Zhang (2008) “the main duty of ZARA’s designers is not for product innovation, but
for reorganizing fashion elements of the existed products on their purpose, transferring them
into new kinds of products. They work to interpret the fashion instead of creating fashion” he
says.
The samples are collected from various sources, like pret-a-porters, haut couture (Dutta, 2002),
moulded by culture, for example what is happening on the street, in clubs, lifestyle hotspots and
fashion “flash points”, and not from a mood board or a trend prediction agency 12 months in
advance of a selling season (Barnes and Greenwood, 2006).
The only place where Zara's is predicting heavily its ordering its fabrics. Fabrics are considered
raw materials and need to be present before the season starts due to long lead times. Anyhow,
there is still efficiency applied in this process. The fabrics are ordered uncolored and this gives
flexibility to change the color depending on the trends. As Cai-feng (2009) mentioning: majority
of stock is held as “work-in-process” awaiting configuration instructions.
Zara is balancing its in-house and outsourcing activities. For example heavy labour tasks like
sewing and coloring are outsourced to companies close to its headquarter, often with bad
reputation for mistreating its employees and poor compensations (Dutta, 2002). On the other
hand activities like design, prototyping and computer aided fabric cuts are held in-house to help
agility. After clothes are assembled and return from the sewing factories, they are distributed to
Zara's stores. To ensure that each order could arrive at destination punctually, laser barcode
scanners, which are able to pick and sort over 80 000 pieces of clothes with a error rate of less
than 0.5%, will be adopted in sorting the finished products (Zhang, 2008).
Procurement
Every organization purchases items, meaning, every organization requires to purchase
supplies, perhaps as raw materials, components, sub-assemblies, spares, equipment, services
and consumables. The procurement of these is either buying or leasing them.
Procurement interacts with every single unit in the organization, going from marketing and sales
to engineering, design and manufacturing, therefore is to important for the organization.
● Procurement is important for the company for a number of reasons: Materials change
- The global markets and agile supply can provide various materials very briefly on
different price. This affects directly the final product, making it more competitive, possible
cheaper and more appealing to the customers.
● Customer demand - Lately there is a growth in companies product mix, while shortening
products life cycle. A good example are Zara designs, they produce small quantities
and wide variety, that way updating the shop outlook every week and cutting down on
5. ● Price variation - The new technologies allow a product price to change couple of times
a day, depending on supply and demand. The same technologies allow monitoring that
process.
● Procurement is value adding process and not a cost centre.
● Manufacturing - It is important for the manufacturing materials to be delivered on time,
with the correct quality, to the correct place, in correct condition and at the right total
cost.
● SCM - Supply chain management puts great emphasis on procurement.
● subcontracting and outsourcing - become more cost effective.
Procurement has direct connection with company profit. Every penny saved in purchasing is a
profit, while every sales brings cost of sales.
In fast fashion, purchasing activities play a critical role through supplier selection and product
decision-making, and indeed, buying is arguably changing from purely operational to much
more strategic (Bruce and Daly, 2006). Bititci (2010) describes the difference between strategic
and operational procurement in the table below.
Strategic procurement Operational Procurement
Goals:
1. Right Place
2. Right Quantity
3. Right Quality
4. Right Time
5. Right Price
6. Right Supply
Goals:
1. Mamage uninterrupted flow of
materials and services
2. Manage cost of operational activities
3. Minimise inventory investment and
lost
Activities
• Developing procurement strategy and
aligning it with the overall organizational
strategy
• Assessing the supply market
• Gathering information, identifying suitable
suppliers
• Selecting supplier
• Negotiate company’s supply contracts
• Evaluating supplier
• Management critical commodities
• Managing relationships with critical
suppliers and the rest of company
• Monitoring procurement performance
• Improving the procurement processes
Developing an electronic procurement
Activities
• Preparing forecasts with quantities and
delivery times required
• Collecting demands
• Controlling authorization issues
• Placing purchase orders
• Follow-up purchase orders
• Communicate with suppliers
• Taking care of administration: delivery, tax
and regulatory issues, invoices
• Monitoring the shipments
• Managing transaction with suppliers
• Source items that are unique to the
operating unit
• Generate and forward material releases
• Provide suppliers performance feedback
6. system
• Implement company’s best practises
Production
Supply Chain Operations (SCO) manages three clear aspects: maximize resource used,
minimize inventory and lead times. Those three directly affect pricing, customer satisfaction,
and overall business values like profit, turnover, sales, etc. (Bititci, 2010). Zhang (2008) argues
that production lot in Zara should be kept as small as possible, leaving the extra capacity in the
products which are mostly needed in the manufacturing. He argues that big orders will result in
inventory increase. On the other hand Tiplady (2006) highlight the raising problem that with the
increased number of Zara stores around the world, lead times cannot be kept so short.
The two factors in a product manufacturing are: complexity and uncertainty. Depending on
those two, products fall into four categories shown below (Bititci, 2010):
High Complexity Low Complexity
High Uncertainty Fitness for purpose
timeliness
Example:
● aerospace
● shipbuilding
Key competences:
1. Product design
2. Construction
Timeliness / Flexibility
Example:
cosmetics
textiles
Key competences:
1. Time To Market
2. Supply flexibility
3. Product design
Low Uncertainty
Value for money
Example:
● automotive
● white goods
Key competences:
1. Product quality
2. Supply flexibility
3. Efficiency
Price
Example:
● simple components
● stationary
Key competences:
1. Manufacturing
2. Logistic productivity
Zara is producing fashion outfits, this has low complex, but high uncertainty. Cai-feng (2009)
argues that uncertainty is also a characteristic of competition among organizations and will
increase due to a combination of factors in future supply chain environment. However, Zara is
7. minimizing its uncertainty by focusing on a limited range of and basic shapes, so that it deals
with a rather narrow product range. In that case even if a product does not sell well, a small
number has been shipped and it is going to be markdown and replaced with new one shortly.
Bruce and Daly (2006) said that “fast fashion does not apply to the whole range in stores, and
as much as 80 per cent of goods may be core and basic lines, with fast fashion accounting for
up to 20 per cent ”. Zara does not do different, it also has its runners and repeaters. The Zara
basic label is daily commodities with no shelf life, e.g. underwear, basic t-shirts, socks, etc. and
are mainly produced in China, which presume cheaper production and longer lead times. On
the other hand the high-end trendy Zara labels like Zara RTF, mainly consisting of up-to-date
fashion outfits are produced in Portugal and Spain, meaning higher production cost and shorter
lead times, but helping fast reaction on demand.
Product distribution
Cai-feng (2009) said that “marketing success was based upon strong brands and innovative
technologies”. Nowadays, next to them we can place ASC, which is capable of responding
faster to the changeable demand. This new addition changes the business to enhance
competition on time by efficient supply chain (SC). There are various ways the business can
influence the SC. Delivery time influences the company image. Lack of company’s product on
the shelf, turns the customer to competitor's product and around 20% never come back. In other
words, short delivery times can increase market share (Bititci, 2010) .
Zara is consider to be the pioneer in fast fashion, with its twice a week supply to its stores with
new fashion items. For comparison, the usual times are from six to nine months (Bruce and
Daly, 2006) for far east clothing industry, 4 months for an international brand and only a week
for Zara (Zhang, 2008). This way Zara can react immediately on demand changes and even
if an item is not salable, there are small number of it in a store. The new items in store keep
people coming back every week and find new goods to buy. It helps to keep the stores “fresh”
and minimize the risk of wrong forecasting (Dutta, 2002).
ASC is critical for the fashion business success. In order to manage supply chain correctly
retailers should take into consideration all possible variables. Those can be: weather conditions,
specific customer requirements, shelf life, raw materials supply lead times, sales forecasts,
market specific requirements, etc (Bititci, 2010).
Zara's success is due to many reasons, e.g. efficient supply chain, efficient organization
management, and one of the most important customer orientation. When the movie Marie
Antoinette was released October 2006 in the cinemas and become total hit in EU and US,
Zara's stores were populated with puffy ball gowns and jackets from velvet with golden buttons
(Sull and Turconi, 2008). Another example of listening to its customers' voice was after 9/11 act
in New York. For a week the colorful outfits were replaced with back and dark colored clothes in
Zara's stores.
Another important aspect is that rapid turnover, eliminates working capital needs, consequently
number of short term loans is decreased. In that sense, the efficiency of Zara originates from a
small scale in operation, small batch of production and transportation, many times of distribution
in small quantities. If order is big, inventory increases and the ability to comply with customer
demand decreases (Zhang, 2008).
8. Sales and Feedback
An early and constant communication between customer and supplier can ensure a better
SCM. Another rule is if customer treats his suppliers well, inform them, being involved with their
process is likely that less issues raise and usually is a guarantee for a longtime partnership.
These facts are well known by Zara and used in its daily operations. Zara’s designers gather
data on sales and inventory from each of its stores on a daily basis and use this to inform
their view of the situation. This process is named Shared Situation Awareness by Sull and
Turnocni. It consist of three steps: observe the raw data, making sense of raw data and testing
hypotheses (Sull and Turconi, 2008).
The raw data comes from quantitative and qualitative approaches. Sales and replenishment
reports are examined hourly by the Zara’s store managers. On the other hand store managers
order items themselves instead of relying on what has being sent from the headquarters. The
accuracy of their forecasting affects their compensation, which makes them more responsible.
Part of the qualitative data gathering is direct customer feedback given to shop assistants daily.
Another one is after shop closes, the store manager and assistants turn to a recovery team
and try to recall what happen during this day, as well as sort out tried, but unsold items in fitting
rooms and try to find a pattern, which can be fed to the design team.
The gathered raw data is analyzed in Zara's headquarter, where design team, fast prototyping
team, market specialists and buyers sit together in tightly coupled teams. The discussions are
located in three halls with open layouts: one for man, woman and children clothes. Based on
feedback new designs are made, prototyped and rated by the team. Depending on the outcome,
there are trowed away or send to store to test if customers will buy them.
In order to test if an item matches with the overall collection, in terms of materials, colors,
fabrics, etc. Zara's headquarter has a facility called Fashion street. It is an underground floor
resembling the high streets of Milan or London, where not only windows are up to date, but also
interior, lights and even background music. This is all carefully designed by architects, visual
merchandisers and designers.
Results
The results from the Zara's case study are presented in subsections listed below. Each section
begins with academic theory and continues with how Zara has implemented it.
Consumer-driven process
Agile companies can be characterized as more customer focused (Power et al, 2001). Typical
for agile organization is to know Who is the customer?; What is his need?; Does the goods
satisfy customer’s needs?; How satisfied he is? (Bititci, 2010). Agile companies were also
found to be using technology to promote productivity, new product development and customer
satisfaction.
In that sense Zara can be considered a typical agile company. Its success is based on the close
connection between customers and designers. Thought internal interfaces Zara is gathering its
information, e.g. sales, staff, leftovers analysis, complaints, and like this is aware of all answers
9. to the question listed above.
Agility – impact on the supply chain
Agility is introduced as a response to the dynamic and turbulent markets and customer demand
(Prater et al, 2001). It directly affects the supply chain and it is one of the reason concepts like
agile supply chain and fast fashion emerged. The need of decreasing lead times and being
flexible in fast fashion introduced involvement of suppliers in the process as being crucial to
their ability to attain high levels of customer satisfaction (Power et al, 2001).
According to Prater et al (2001) the two concepts inherent in most of the 12 attributes specifying
an agile firm are speed and flexibility. Although the speed and flexibility of the supply chain
affect a firm's agility, the agile manufacturing is still an important part of it.
However, in order to react on the rapid change in consumer demand, Zara has developed an
efficient agile supply chain, with all designers, buyer experts and management in one place and
production facilities close to them, assuring full flexibility and agility.
Retailer power
While fast fashion is heaven for its target consumers, it can be hell for traditional retailers (Sull
and Turconi, 2008). Retailers nowadays prefer working with agile suppliers, so they don't have
to carry stock and increase inventory. Like this retailers increase their competitiveness and
strength their position on the market.
Zara owns its store chain and don't franchise, in order to avoid the standard problems. On the
other hand its agile supply chain gives all the benefits listed above. The stores are precisely
organized and the items differ from one to another depending on the shop manager's prediction.
Suppliers under increased pressure
Consumer needs are changing at a much more frequent pace and this reflects on the whole
supply chain by putting pressure on the suppliers. The contemporary fashion industry remains
highly competitive, with additional pressure for fashion companies to compete not only on price,
but also their ability to deliver newness and “refresh” product (Barnes and Greenwood, 2006).
While the most of the retailers are struggling with this new situation, Zara is proven to be the
pioneer in fast fashion with twice a week supply to its stores, keeping them fresh and interesting
for its customers. On the other hand producing small quantities and numerous different outfits
throughout the year. These both aspects help reducing markdowns, sales and outlet to on of the
lowest in the industry, compared to the old fashion retailers.
Elimination of stages in the supply chain
Clothes shopping has its piks traditionally during certain periods of the year matching events
like trade fairs, fashion shows, fabric events etc, organized around a two season approach to
product ranges, with planning for product ranges based on previous sales data, starting as long
as one year in advance of the selling season (Barnes and Greenwood, 2006). The number of
planned seasons has significantly increased in response to consumer demand for newness,
resulting in as many as 20 “seasons” per year (Dutta,2002), for example, in Zara’s case there
10. are more than 40 000 items designed per year. Those are continuously supplied to its stores
increasing the number of “seasons” radically and breaking the tradition two season model.
Conclusion
Over the last decades Zara introduced agile supply chain (ASC) in the fast fashion industry
and positioned itself third in the world retailers ranking. This came as a result of close
communication between customers and its designers and the ability to ship the desired
items in a week catching the sales moment. All these prove that ASC is an aspect enhancing
competition among organizations. Another lesson is that efficient production organization with
a good balance between in house and outsourcing task leads to minimum lead times and
increase in market share for Zara. The supply chain is not on an isolated agile process of Zara,
but indeed the whole organization is agile and working very efficient.
By using quick response Zara aims to reduce both excess stock holding in the supply chain and
risk associated with forecasting as product specifications are not finalized until closer to delivery
(Bruce and Daly, 2006).
What could be concluded from Zara's success from the perspective of speed is that several
benefits such as improved customer satisfaction, increased market opportunity, decreased
overall risks, and reduced total costs can be simultaneously achieved through being fast (Li,
2009).
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