...deliver to the demands of their customers. Zara, an international apparel retailer, based out of Spain, has figured out a way to give their customers the ultimate advantage over competitors by a process called Rapid-Fire Fulfillment. Implementing this process has not only reduced their design to sales cycle in weeks compared to months from their competitors, but “Zara’s sales and net income have continued to grow at an annual rate of over 20%” (Ferdows, Lewis & Machuca, 2004). Why is Rapid-Fire Fulfillment Successful for Zara? Zara has a rather untraditional way of processing their products. In Rapid-Fire Fulfillment, Zara can have strict controls over who handles their Supply Chain needs. Zara is one of the few retailers who are in charge of designing, manufacturing, and distributing their products. With this control, they are able to set a quick pace for the duration of the supply chain process. “At Zara, rapid timing and synchronicity are paramount” (Ferdows, Lewis & Machuca, 2004). Zara’s factories use advanced just-in-time systems that all them to customize their in-house processes and take advantage of innovations quickly. One processed used called postponement, which gives them the opportunity to purchase 50% of more of their fabrics without color so they can accommodate to color changes during the sales season. In essence, a fast and precise process, tight communication techniques, and world-class technology systems give Zara the opportunity to keep up with their...
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...Zara – Rapid Fire Fulfillment Donald R. Lile BUS – FP3022_assessment 1_1 Fundamentals of Supply Chain Management 3/2/16 Author Note Correspondence concerning this paper should be addressed to Donald R. Lile, Student Capella University, 225 S. 6th St. Minneapolis, MN 55402 dlile@capellauniversity.edu Zara – Rapid Fire Fulfillment Ferdows, Lewis, and Machuca, (2004). Zara, a Spanish clothier has been successful because of the ability to sustain an environment that optimizes the entire supply chain rather than each step. This assessment will identify why the company’s supply chain strategy is successful. This research will also examine how the fast response and information infrastructure aids in this success. And finally, and analysis will be completed on how the company’s unique replenishment strategy satisfies customers. Supply Chain Strategy Ferdows, Lewis, and Machuca, (2004). In an industry where the trend is to outsource, Zara bucks the system. Instead Zara keeps almost half its production in house. Zara designs and manages its rapid-fire supply chain by reinforcing three principles: 1. Close the communication loop 2. Stick to a rhythm across the entire chain 3. Leverage your capital assets to increase supply chain flexibility Zara customers can always find new products on the shelves, but they are in limited supply. Zara designers create approximately 40,000 new designs each year. From these new...
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...Rapid Fire Fulfillment: Background David Emme Muhlenberg College Abstract Zara developed three strategies to control the whole supply chain. These are closing the communication loop, stick to a rhythm, and leverage your assets. In doing this, Zara is able to coordinate across the supply chain to maintain a fast replenishment and meet capacity. The chocolate candy industry can benefit from buying the source of their supply and controlling its transport. Keywords. Capacity, align, supply chain, rythm To understand how Amancio Ortega developed rapid fire fulfillment with Zara’s is to understand first principles. Ortega’s first principal came out of desperation. Upon cancellation of a big lingerie order by a German wholesaler, Ortega had to find a way to sell his inventory. His solution, open a shop near his factory. This was not only the birth of Zara but also the Genesis of his principal to run his company: open a store close to the factory and be personally involved. This gave rise to, “you need to have five fingers touching the factory and five touching the customer.” (Ferdows, Lewis, & Machucha, 2004) This allowed Ortega to develop a responsive supply chain that designs, produces, delivers, and displays a new garment on the rack within fifteen days. Out of this first principle there are three identifiable actions Zara’s has taken to develop a proficient supply chain. They are closing the communication loop, stick to a rhythm across the supply chain...
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...www.hbr.org Spanish clothier Zara turns the rules of supply chain management on their head. The result? A superresponsive network and profit margins that are the envy of the industry. Rapid-Fire Fulfillment by Kasra Ferdows, Michael A. Lewis, and Jose A.D. Machuca Reprint R0411G HBR Spotlight The 21st Century Supply Chain Managing the modern supply chain is a job that involves specialists in manufacturing, purchasing, and distribution, of course. But today it is also vital to the work of chief financial officers, chief information officers, operations and customer service executives, and certainly chief executives. Changes in supply chain management have been truly revolutionary, and the pace of progress shows no sign of moderating. In our increasingly interconnected and interdependent global economy, the process of delivering supplies and finished goods (and information and other business services) from one place to another is accomplished by means of mind-boggling technological innovations, clever new applications of old ideas, seemingly magical mathematics, powerful software, and old-fashioned concrete, steel, and muscle. An end-to-end, top-to-bottom transformation of the twenty-first-century supply chain is shaping the agenda for senior managers now and will continue to do so for years to come. With this special series of articles, Harvard Business Review examines how corporations’ strategies and structures are changing and how those changes are manifest...
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...The 21st Century Supply Chain Managing the modern supply chain is a job that involves specialists in manufacturing, purchasing, and distribution, of course. But today it is also vital to the work of chief financial officers, chief information officers, operations and customer service executives, and certainly chief executives. Changes in supply chain management have been truly revolutionary, and the pace of progress shows no sign of moderating. In our increasingly interconnected and interdependent global economy, the process of delivering supplies and finished goods (and information and other business services) from one place to another is accomplished by means of mind-boggling technological innovations, clever new applications of old ideas, seemingly magical mathematics, powerful software, and old-fashioned concrete, steel, and muscle. An end-to-end, top-to-bottom transformation of the twenty-first-century supply chain is shaping the agenda for senior managers now and will continue to do so for years to come. With this special series of articles, Harvard Business Review examines how corporations’ strategies and structures are changing and how those changes are manifest in their supply chains. The Articles The Triple-A Supply Chain by Hau L. Lee October 2004 The best supply chains aren’t just fast and cost-effective. They are also agile and adaptable, and they ensure that all their companies’ interests stay aligned. Reprint R0410F; OnPoint 8096 Leading a Supply Chain...
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...Zara – Rapid Fire Fulfillment Peggy Martin February 16, 2014 BUS/3022 Professor Matt Fok The first Zara store opened in La Coruna, Spain in 1975. Today, Zara has grown from one small shop to a major apparel company, having 4,700 stores in 76 countries globally. Zara’s great success can be attributed to its very unique supply chain strategy. (Chopra & Meindl, 2013) Zara’s very successful supply chain strategy is based on the five fingers touching the factory and five fingers touching the customer philosophy. Basically, this means to have full control over all the merchandise until it has been purchased by the customer. Instead of outsourcing or contracting with third-party logistics companies, Zara handles the designing, manufacturing, warehousing, and distribution of all its merchandise. In addition, all logistics functions is handled by Zara, and even put all the price tags on its products before they are shipped out to the stores. (Ferdows, Lewis, & Machuca, 2004) Zara has managed to achieve an excellent strategic fit for the company. All areas of the company, from design to distribution work together smoothly, having the same ultimate goal. Zara’s strategy has allowed them to cut the design to sale cycle time considerably. Generally, in the clothing industry, the design to sale cycle time is anywhere from four to six months. Zara is able to maintain a cycle time of four to six weeks. In addition, the information technology that...
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...Surf the firm websites and write your impressions about the current health of business of Zara and Marks and Spencer. Zara’s website gives the impression that it is dedicated to young, fashionable and price conscious customers. Marks & Spencer on the other hand seems to be dedicated to the middle aged working population. Marks & Spencer website gives the impression of a departmental store offering a wide array of products ranging from apparel, furniture to food items and electronic gadgets. Marks and Spencer is definitely not only a clothing retailer and has diversified itself into other retail segments. The online marketing for Marks and Spencer is far more aggressive than for Zara, with videos of products one might be interested in on the website. Marks & Spencer has a wider range of offerings online compared to Zara. Marks & Spencer online profile is more customer oriented than Zara’s website. According to Marks & Spence website there are over 21 million people visiting their stores each week. M&S is the number one provider of women’s wear and lingerie in the UK (Marks). In their supply chain - What is it that Zara can do and Marks & Spencer cannot? Why? Zara’s business model is structured around a vertically integrated supply chain, which allows it to match the ever-changing fashion trends. Unlike its competitors in the apparel industry, Zara chooses to have in-house manufacturing operations and owns production facilities in Spain and Mexico. These facilities...
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...Caso Zara Rapid Fire Fulfillment Introducción - Zara se fundó en base a una cancelación de orden por un distribuidor mayorista en 1975 - Zara ahora cuenta con 650 tiendas en 50 paises - Entre 1991 y 2003, Inditex, registro un aumento en sus ventas de 12%, y en sus utilidades en 14% - El fundador trabaja bajo la filosofía de “controlar todo lo relacionado con el producto desde su fabricación hasta la compra final del cliente” - Tiempo de entrega por prenda nueva (Diseño, producción y entrega): 15 días - Estrategia de Negocio: Ofrecer prendas de moda confeccionada con materiales y costos bajos. - Prácticas actuales de manejo SCM: o Produce 50% de sus prendas internamente o No utiliza el 100% de su capacidad, mantiene capacidad extra para eventualidades o No utiliza economía de escalas (grandes lotes, costos bajos) ▪ Lotes pequeños, alta variedad o Diseña, Almacena, Distribye y realiza todas las actividades logísticas por su cuenta o Las operaciones tampoco son convencionales - Principios básicos de operación de Inditex: o Canales de comunicación fluidos y eficientes o Ritmo de trabajo constante a través de cadena de suministros o Aprovechamiento de sus Activos - Canales de comunicación fluidos y eficientes o Punto crítico de la industria “Moda Rápida”: Alta velocidad de intercambio de información...
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...Zara is a clothing and accessories retailer selling stylish apparel at affordable prices, and it is also the most profitable brand of the Spanish clothing retail group Inditex SA. Originally, the first Zara store opened when a German wholesaler suddenly cancelled a big lingerie order in 1975 and owner Amancia Ortega worried it might bankrupt his young clothing company. Ortega planned for this new Zara outlet, located near his factory in La Coruna in northern Spain, to sell this overstock merchandise himself. Since then, Zara has expanded into 500 stores in 68 countries as of January 2007 and has become a leader in customized fashion retailing. Learning from his early bad experience, Ortega developed a highly vertically integrated operation where a majority of the company’s production processes are kept in-house. Zara’s operational brilliance does not rest upon one specific operational component, but rather on a very unique and almost counterintuitive “jigsaw puzzle” of supply chain structure that has allowed it to grow market share and sales, even in times of economic decline. Zara has developed a business model with some basic operational goals: provide consumers with affordable and stylish clothes in very short lead times, supply small quantities of each style to reduce inventory risk and cost and increase the number of available styles and choice. It has created a unique value for its customers – offer very affordable and cutting-edge designer knock-off fashion much faster...
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...Case 1: Zara, H&M, Benetton Supply Chain Strategies | Executive Summary The performance of many organizations is highly dependent on utilizing the correct supply chain model. This report focuses on the analysis of the supply chains of three clothing companies: Zara, Hennes & Mauritz (H&M), and Benetton. The analysis was focused on three aspects. First, the supply chain models of the three retailers were compared and contrasted and there was an evaluation whether each of the retailers has the right supply chains for the type of products they offer. Second, the analysis highlighted how the supply chain architecture of the three companies impacts the management of inventory, information, and capacity. Finally, the analysis also included some research on how the supply chain strategies of these retailers have changed in recent times and its impacts on their relative competitive advantage. Based on the analysis, several recommendations around strategic and process improvement were provided for Zara, H&M, and Benetton. The recommendations are further supported by an implementation plan as well as an overall assessment of the risks that the retailers face. Sources of analysis include the two Harvard Business Review Articles “What is the Right Supply Chain for Your Product” and “Rapid-Fire Fulfillment”. The analysis also utilized several research reports from DataMonitor. Analysis Zara, H&M, and Benetton are all clothing retailers that focus on fashion...
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...The case of Zara – The Postponement strategy I) Introduction In order to compete in the world of rising globalization and shortening of product life cycle nowadays, firms have to deal with the demand for increasing product variety to meet the diverse needs of customers. Mass customization has become a requirement for many businesses especially in the dynamic, fast-changing industries. However, the more product varieties, the more difficult it is to forecast demand, control inventory and manufacture. Therefore, some innovative companies have integrated “postponement” strategies with their supply chain operations to gain control of product variety proliferation. Zara is one of the most successful fast-fashion chains in the world, which is famous for its ability to keep itself up to date with fashion trends and the incredibly short time to introduce new products. In order to react quickly to fashion changes and consumer demand, Zara maintains extremely efficient supply chain operations. By properly designing the product structure and the manufacturing and supply chain process, Zara can delay the point in which the final products assume their specific characteristics, thus raising the flexibility to handle the changing demand for the multiple products. This is known as the “postponement” approach. In this paper, we will analyze how Zara achieves mass customization through “postponement”, with a particular focus on the supply chain structure, relationship and enabling activities...
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...World’ is ZARA. Fashion is more than clothing; it’s a part of our live. We live in Fashion. ZARA is a member of the INDITEX group, a Spanish group. ZARA have established its stores all over the world, Europe, America, the Middle East, Asia Pacific and among its 5000+ stores (from the INDITEX group), Hong Kong shares 8 ZARA stores from the whole wide world. Zara offers the latest trends in international fashion in an environment of thought-out design. Its stores located in the main commercial areas of cities across the Europe, America and Asia, offer fashion inspired in the tastes, wishes and lifestyles of today's men and women. Zara’s clothing has identified a significant underserved segment within it. Zara’s clothing is uniquely positioned to serve this segment of the market because of its fast paced fashion ideas, its latest technology, its efficient business strategies and its affordable prices. Due to the growing of the clothing industry and the enormous unmet need in the clothing market we see the long-term expansion and potential of Zara throughout the world. We are visionaries who see Zara as an extreme financial launch. By achieving its sales targets, Zara will position itself for exceptional profitability and self-funded growth. ZARA’s Plan is to maintain and develop its position in the market by giving well in time response to changing trends in consumer tastes through creating new designs that are suitable for all customers at an affordable price. “Zara constantly...
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...World’ is ZARA. Fashion is more than clothing; it’s a part of our live. We live in Fashion. ZARA is a member of the INDITEX group, a Spanish group. ZARA have established its stores all over the world, Europe, America, the Middle East, Asia Pacific and among its 5000+ stores (from the INDITEX group), Hong Kong shares 8 ZARA stores from the whole wide world. Zara offers the latest trends in international fashion in an environment of thought-out design. Its stores located in the main commercial areas of cities across the Europe, America and Asia, offer fashion inspired in the tastes, wishes and lifestyles of today's men and women. Zara’s clothing has identified a significant underserved segment within it. Zara’s clothing is uniquely positioned to serve this segment of the market because of its fast paced fashion ideas, its latest technology, its efficient business strategies and its affordable prices. Due to the growing of the clothing industry and the enormous unmet need in the clothing market we see the long-term expansion and potential of Zara throughout the world. We are visionaries who see Zara as an extreme financial launch. By achieving its sales targets, Zara will position itself for exceptional profitability and self-funded growth. ZARA’s Plan is to maintain and develop its position in the market by giving well in time response to changing trends in consumer tastes through creating new designs that are suitable for all customers at an affordable price. “Zara constantly...
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...ZARA Word count: 3799 Table of Contents Executive summary 2 Zara background 3 External factors and competitive forces 3 PESTEL 3 Porter’s 5 4 Internal factors 6 Resources and capabilities 6 Manufacturing 8 Logistics 8 Public relations crisis and their effect on peformance 8 Evaluation of strategic options and recommendation 10 References 12 Appendixes 13 Executive summary This project aims to provide an in-depth analysis of external and internal factors affecting performance of world leading retailer Zara. First of all, the brief background on Zara is provided in order to familiarise reader with the business model they implement. Secondly, the PESTEL framework is utilised as the base for analysis of external environment and its potential effects on company’s performance. Further, the Porter’s 5 forces are identified in order to assess where the competitive advantage stems from. After assessment of external environment, this paper provides the overview of internal factors which might be crucial for success, as well as drawbacks of Zara’s internal organisation. Assessment of internal environment starts from the evaluation of Zara’s resources and capabilities, followed by the critical analysis of manufacturing and logistics processes. Further discussion of the PR issues and its effects on company performance is provided. In addition, the benefits of corporate socially responsible policies are discussed. Overall conclusions on Zara strategic...
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...Int. J. Production Economics 147 (2014) 230–238 Contents lists available at ScienceDirect Int. J. Production Economics journal homepage: www.elsevier.com/locate/ijpe Defining value chain architectures: Linking strategic value creation to operational supply chain design Matthias Holweg a, Petri Helo b,n a b Judge Business School, University of Cambridge, UK Department of Production, Faculty of Technology, University of Vaasa, Finland art ic l e i nf o Article history: Received 31 May 2012 Accepted 13 June 2013 Available online 28 June 2013 Keywords: Value chain Supply chain management Operations strategy a b s t r a c t Over the past three decades scholars have developed comprehensive insights into the operational and strategic aspect of designing and managing the supply chain. Reviewing this ample body of knowledge however one cannot help but notice a persistent disunion between the “value chain” view that considers aspects of value creation and appropriation, and the operational “supply chain” view that considers strategies and tools for designing and operating efficient inter-firm networks. Commonly these views do not interact: value creation has the aim of capturing the maximum value-added in financial terms, the supply chain view aims for designing operationally efficient supply chains. In contrast to their treatise within the academic literature, from a practical point of view these two aspects are both necessary (and thus in their own right insufficient)...
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