...in OM classes for a while. They are a successful, innovative firm whose competitive advantage really lies with their operations. The distinctive components of their operations (e.g., responsive production, excellent logistics) have been well documented. That has not kept The Economist from offering up a new article on the company which may not offer any great insight but has some interesting numbers (Global stretch, Mar 10). The secret of Zara’s success is its speed—four weeks for a new fashion idea to hit the shops—and the feedback that store managers send to head office, to help it fine-tune its ideas. There is also firm control from Spain, the sole logistics hub. Although 34% of Inditex’s manufacturing is outsourced to Asia, and 14% to parts of Europe including Turkey, those tend to be the more basic items. The high-fashion stuff, 49% of what it sells, is cut and finished in Spain though some sewing is done elsewhere. So this structure clearly makes sense. Long lead times and the concomitant inventories are more tolerable for basic T-shirts and such that will essentially always be carried. Labor savings from sourcing in Asia are likely more than enough to offset the added holding cost. That wouldn’t be true for products with more “fashion content” that may sell today but not tomorrow. Keeping that work in or near Spain shortens the lead time and avoid supply-demand mismatches. But how long will Zara be able to keep with this model? Particularly if the real growth opportunity...
Words: 449 - Pages: 2
...Zara’s supply chains and operations management | December 23 2013 | | | COVENTRY UNIVERSITY LONDON CAMPUS Student name: Ha Linh Tran Student ID: 4569196 Module title and code: 214LON Supply chain and Operations Management Tutor’s name: Dr Amanda Mao Assignment title: Zara’s supple chain and risks of management Date of submission: 23rd December 2013 Word count: 2169 CONTENTS Page 1. Introduction 2 2. Overview of Zara Corporation 2-3 3. Risk identification and assessment in Zara’s supply chain a. Supply chain and risks management definitions 3-5 b. Supply risks 6-8 c. Technology and facilities risks 8 d. Human rights and cooperate responsibility failures 9-12 4. Conclusion and Recommendation 13 5. References 1. Introduction Supply chains have expanded rapidly over the decades, with the aim to increase productivity, to lower costs and fulfill demands in emerging markets. The increasing complexity in a supply chain hinders visibility and consequently reduces one’s control over the process. Supply chain...
Words: 2439 - Pages: 10
...producers to the consumers (Bennet, 1988). Marketing channel is related to logistics management or thelogistical arrangements for delivering value to the customer. More specifically,marketing channels deal with the issue of the arrangements the organization makes to physically deliver its products to the customer. A channel is a set ofintermediary companies, people or agents who manage the movement of products and services from the manufacturer to the final user. All firms which take title to the product, or assist in transferring title as it moves from manufacturer toconsumer form part of thedistribution channel. A marketing channel aims to provide acompetitive advantage to the organization. It is related to supply chain management as both are involved in supplying a service or a product to the end users. Both are involved inpartnerships that are developed between organizations performing adjacent, linear steps in the chain. The supply chain or the marketing channel is viewed as a whole rather than a set of fragmented parts in order that activities, the basic units of competitive advantage, can be configured, confined and performed in different ways torival chains (Bradley, 2003). This paper will discuss the logistics, marketing channel and supply chain of an International clothing company – Zara. The company was chosen because of its unique and innovative distribution channel andsupply chain management. Company Background In 1963, Amancio Ortega started a small company in Spain...
Words: 2243 - Pages: 9
...fashion flagship chain retailer owned by Inditex Group and is vertically integrated in all aspects of its business. Zara, according to Ferdows et al (2002), has a decentralized communication and decision making process based on an autonomous ordering of clothing and fulfillment method. Zara’s vertically integrated structure of owning everything from the processes of manufacturing and design of its products to the individual stores is due to the fact they produce more of their products in-house, with only forty percent of its activities outsourced. The outsourced activities include the simpler labour intensive quick turnaround activities such as sewing and basic clothing designs while in-house activities are the more complex, complicated and trendy designs for their clothing. Zara’s top management’s opinion on the concept of most products produced in-house is it increases flexibility and speed as the products have a short cycle time. Zara also produces roughly half of its products within their own factories located in different regions around the world. Zara’s governance structure for gaining access to assets is continuous as they leverage their own assets, keeping their supply of materials within their parent company, Inditex Group. According to Ferdows et al (2002) some the supplies sourced and purchased from other Inditex firms include the dyes and fabrics used in the products. Vertically integrating allows Zara to control the whole supply and internal process chains while constantly...
Words: 656 - Pages: 3
...globalize."1 If you ever shopped at Zara, the ubiquitous clotting store,you may have noticed its trendy offering is extremely fast.But how does Zara get new styles to its stores so fast?I think it's because of its effective supply chain.The Zara's vertically integrated supply chain system enabled the company to place the latest designs in any store across the world within a period of two to three weeks. 2 In my perspective of view it mainly depends on its efficient production,distribution and retailing. First of all,different from other clothiers,Zara has its own textile and clothing factories,To simplify the production process , Zara's clothing generally have three sizes,three colors and three numbers,and they prepare the cloth cut computer-oriented according to the design template and then subcontracted to garment factory to sew slopwork at a fast rate.The high efficiency of operations management makes the production speed high, meanwhile it can reduce the inventory costs caused by stagnation pressure. In Zara's distribution center, about 75% of the clothing is shipped by truck directly to stores in Europe , the remaining 25 % will be transported by aviation and vehicles to further contries , such as China and United States . This ensures Zara's fast and efficient logistics. Further more,Zara has sophisticated IT system, store managers update the daily sales data to the company headquarters in Spain through the Internet,and apply for the replenishment twice a week...
Words: 393 - Pages: 2
...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 Turnaround ...
Words: 4558 - Pages: 19
...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 in their supply chains. The Articles ...
Words: 4607 - Pages: 19
...5 The power of cooperative dealer 6 IT is the heart of ZARA mode 6 Track fashion with the information base 6 Information standardizing and optimizing design 7 Zara’s competitive advantage – based on value chain perspective 8 Design 8 Marketing 9 Conclusion 12 ZARA's Informational Rapid Response Mechanism and Fast Fashion Summary In recent years, with the unique marketing strategy, fast fashion apparel business has developed rapidly in the world. Some of enterprises engaged in the fast fashion business have obtained considerable sales and global business expansion, it can be said that fast fashion has been become one of the most valuable fields in the clothing industry, and carrying out fast fashion business has become an ideal choice for clothing enterprises to develop rapidly and create performance (Hayes & Jones, 2006). In this paper, it chose an international fast fashion clothing brand--ZARA of Spain, which is characterized on marketing and has won widely recognized worldwide, as the research object. Through the analysis of the brand's marketing strategy, it interprets the universal business model used the fast fashion clothing brand to do business. This paper adopts the method of case study, first makes detailed analysis on the research object –ZARA, then summarizes the operation mode of fast fashion brand, and based on this put forward recommendations on problems needed to pay attention when clothing enterprises develop fast fashion business. ...
Words: 2964 - Pages: 12
...explores the case of Zara–Rapid Fire Fulfillment from research conducted in textbook and on website. Keywords: Supply Chain, Supply Chain Management Zara-Rapid Fire Fulfillment Zara is a company that is known for its speed and being responsive over the cost. While this is not how the industry looks at producing clothing in the marketplace, it has worked very successfully for Zara. Amancio Ortega founded Zara in 1975 with the purpose of understanding the world market and what it means to his fashion merchandise. Ten years after he established Zara, he formed a parent company called Inditex which incorporates other retail concepts and suppliers that he built. Zara began in Spain as a small shop near his factory as he was desperate to find out not to go bankrupt when a buyer backed out of an order that had all of his capital tied up and no prospective buyers in sight. This was the beginning of Zara which is now in 86 countries across the world. The Zara brand is known for the delivery small batches of clothes quickly to the stores. In some cases, this may mean a store will receive new garment orders more than once a week. This does not seem feasible to the clothing industry competitors; however, Zara has been doing this for decades successfully with large profits. The key to this is Zara’s supply chain. Zara controls more of the manufacturing and supply chain then that of other retailers which gives them a competitive advantage. To begin with, Zara has to have a business...
Words: 865 - Pages: 4
...Problem Analysis Firm-based-value chain model Model Application Implementation Opportunity Analysis Evaluation of IS Implementation Tangible Costs Analysis Tangible Benefits Intangible Costs Analysis Intangible Benefits Conclusion for Evaluation of IT Implementation Conclusion and Recommendations References 3 4 5 5 6 6 7 7 7 9 12 12 13 14 15 16 16 19 Zara Case Paper Analysis Abstract This case paper presents the business analysis of Zara, the leading and the profitable brand of Inditex. The case paper’s objective is to discuss whether to update the current DOS/IT infrastructure and evaluate the effects of the upgrade. By using the Michael Porter’s value chain analysis, we can understand Zara’s core business model of vertical integration and assess the areas where IS will add value to the system. The case paper also presents the IS implementation opportunities and evaluating the effectiveness of the implementation. The case paper concludes by providing recommendations for updating the current OS along with its advantages. 3 Zara Case Paper Analysis Case Description Zara is one of the largest international fashion brands of Inditex. The company first opened in La Coruna in 1975, still lives by the simple idea of Amancio Ortega to link customer 4 demand to manufacturing, and link manufacturing to distribution. The customer is at the heart of the business model. In 1985, Inditex became the holding company atop Zara and other retail chains, and Jose Maria Castellano Rios...
Words: 6004 - Pages: 25
...ZARA’S OPERATIONS STATEGY, A CRITIQUE OF A BUSINESS CASE. 1.Excecutive summary. Operations management is in regard to all operations within the organization responsible for creating goods and services that organizations pass to their customers. This function is at the heart of all organizations, giving the means of achieving their aims and reason for their existence. These activities include: managing purchases, inventory control, quality control, storage and logistics. A great deal of focus in operations is on efficiency and effectiveness of such a process. An example of successful operations strategy in the retail industry is the strategy employed by Zara which is discussed in this critique. Zara started as a single shop in La Coruna and then rapidly spread its wings to 68 countries; opening a store each day - one of the fastest global expansions the world has ever seen. Throughout the entire system of Zara’s business; designing, sourcing, manufacturing, distribution process and retailing come out a number of success factors: short cycle time, small batches per product, extensive variety of product every season and heavy investment in information and technology. This elements feature in every aspect of the business. 2. Introduction. Zara is the flagship brand of the Spanish fashion retail giant, Inditex, (Industrias de Deseno Texti S. A.) Founded in 1975 ; this super- heated performers in soft retail fashion market in recent years; is engaged in textile design, manufacturing...
Words: 4086 - Pages: 17
...Dessain, & Sjoman, 2007) Inditex has a total of 1,558 stores operating in 45 countries out of which 550 stores are of Zara. Inditex’s major sales contribution is Zara accounting for 73.3%. Zara presents new style clothes for Men, Women, and Children along with reasonable prices. (McAfee, Dessain, & Sjoman, 2007) Women clothing accounts for 60% of Zara’s revenue. It has built up a business model to sell the garments by following trends and style, with virtually no advertising and trust the choices of store managers which is called as "commercials" on what garments should to be in stores. (McAfee, Dessain, & Sjoman, 2007) Value Chain Model: Zara currently uses the value chain model (concept originally proposed by Michael Porter), which is helpful to access areas of weakness and strengthen them to achieve profit and competitive edge. This model helps decision-making that can implement IT or add value to the products and services. The chain mainly consists of six Primary activities and three Support activities. (Kroenke, 2012). Problems that Zara might face in its primary activities when its operations are expanded beyond their operating capabilities: Morgane’s comment: I don’t think that you should talk about the issue of centralized IS with potential boom of Chinese and other huge markets here because it is gonna be a simple repetition of the third part …...
Words: 2308 - Pages: 10
...La Coruna, Spain and is a leading retail outlet today. Zara’s sales make up 64.8% of its parent company Inditex group revenue and has stores in more than 86 countries. Because of its responsive and unique supply chain sales had increased by 10.1% from 2011 to 2012 fiscal year end. Zara has grown rapidly with a strategy to be highly responsive to changing trends while keeping prices affordable. Zara’s success is because of its responsive supply chain designed around customer needs based on real-time feedback received from store managers. This enables designs to be created or altered to meet customer trends. Zara manufactures in small batches, manages all functions in-house, holds retail stores to strict timetables, ships items on racks with price tags, leaves large areas empty in expensive stores, and allows occasional stock-outs. Zara has total control over design, warehousing, and distribution functions that allows the company to manufacture and have an item ready for display in 15 days normally this process takes design houses months to complete therefore higher net margin on sales than competitors. Zara keeps at least 50% of production in-house and outsources only labor intensive jobs, such as sewing to a select few suppliers, this goes against the industry norm, but it gives Zara control over the entire supply chain. This prevents supplier delays and results in the product reaching the customer faster. Zara’s designers are young, ambitious, and energetic individuals...
Words: 909 - Pages: 4
...process, agility, retail power, and a successful supply chain. As in the case, managing a supply chain in the fashion industry is extremely difficult. Customers’ wants and trends are constantly changing, and suppliers have to be ready for those changes at anytime in order to work with Zara. Zara, one of the brands of Inditex and most profitable, was established in 1975. It has become well known for their fashion designing and manufacturing efficiencies. The company has developed into the leader of highest profit margins comparing to its competitors, also being one of the most famous fashion companies know by consumers. It’s a Spanish based company, manufacturing all of their products in Europe, later distributing them all across the world to their retail stores. Inditex group has set up strategies for Zara to follow when first creating the company, and now with the operations. Stating that “Through Zara’s business model, we aim to contribute to the sustainable development of society and that of the environment with which we interacts”. For each of their retail store the approach has been focused, “at the store, we save energy, the eco-friendly shop, we produce less waste, and recycle, and our commitment extends to all our staff, an environmentally aware team.” Inditex has done a fantastic job with the brand and operations of Zara. It has made a strong base of exactly what the intent of the company is, and setting the operations of how they are going to do that. They know exactly...
Words: 2460 - Pages: 10
...garment industry. The case offers an illustration of a fast-response global supply, production and retail network. In 2003 Zara was the only retailer that could deliver garments to its stores worldwide (507 in 33 countries) in just fifteen days after they were designed. It could do that because of its unique systems for product design, order administration, production, distribution and retailing. The unconventional approach that Zara often deploys in these areas provides interesting opportunities for discussion and learning. Kasra Ferdows, Georgetown University, USA ferdowsk@georgetown.edu Michael Lewis, University of Warwick, UK michael.lewis@warwick.ac.uk Jose A.D. Machuca, University of Sevilla, Spain. jmachuca@cica.es The unabridged Zara case was the winner of the 2003 Indiana University Center for International Business Education and Research (CIBER)-sponsored Production and Operations Management Society(POMS) International Case Competition. Isabelle Borges, one of the product market specialists in the women’s wear department at the Zara headquarters, sensed that they were on to something. The new khaki skirt had sold out in the La Coruña store after only a few hours on the shelves and the store manager had just told her that she could have easily sold more. A small batch of 2800 skirts, just enough to “test the waters,” had been sent out the previous night to a selection of Zara’s worldwide network of stores. Ms. Borges called around a few of the Seville...
Words: 5071 - Pages: 21
