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Factors Affecting Zara Supply Chain

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Introduction A Supply Chain (SC) is an integrated process where involves various parties who are directly or indirectly working together to fulfil a customer’s demand. These parties can be manufacturers, suppliers, transporters, warehouses, distributers, retailers and end consumers. The functions of the SC cover a variety of areas, such as R&D, information flow, marketing, finance, distribution, operation, and customer services. In the manufacture industry, the SC includes of acquiring raw materials from suppliers, producing products by the acquired resources in a factory, storing raw materials and finished products in warehouse, and delivering the finished products to customer (retailers or end consumers). This process covers functions as production forecasting and planning, storage, logistics and distribution. Factors of Supply Chains …show more content…

Zara’s rapid growth and success are attributed to its strategy of highly responsive to changing trends with affordable prices. To achieve this, Zara uses a combination of flexible and quick sources in Europe and low-cost sources in Asia. As we known, Asia own the cheap raw material and labour for manufacturing, hence most of its apparel manufacturers have moved to Asia to reduce production costs. To reduce inventory holding and forecast error, Zara usually produce its apparels after the start of a sales season for a typical retailer, along with the forecast postponement of decisions until after trends are known. Inditex owns 8 distribution centres (DC) in Spain for distributing all finished products to all its stores worldwide. Even though the products are manufactured outside Spain, all the finished products must be concentrated into these 8 DCs before distribution. This allows store inventory to closely match local customer demand and reduce holding costs of over-inventory. (Sunil Chopra & Peter Meindl, 2016,

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