VF also uses a “package sourcing” model in production where a single supplier is responsible for the entire garment, from raw material procurement to packaging and shipping finished goods to the market. “Package sourcing” has the benefit of low cost, as companies can choose between various suppliers all over the globe based on economic factors, such as labor and transportation costs, and trade quota or tariff considerations to get the cheapest price for finished goods. It also allows VF
An additional method Zara utilizes to ensure the right product is produced is to constantly monitoring the sells at every store in real time through the use of computers. Sells managers are the individuals that play out this strategy. When the clothing sells well or does not sell well, they can quickly let the designers know to swiftly create new designs (“Case 3-4. Continued Growth for Zara and Inditex”, 2013). However, the competition is changing their strategies in an attempt to successfully compete with Zara. The methods that Zara has implemented to ensure fast fashion is truly fast has pressured the competition into reducing their lead times on stocking their stores (Hayes & Jones, 2006).
Global sourcing is a technique of strategic sourcing in the global strategy, which is an effective approach as a part of organization’s procurement section. The objective of global sourcing is to develop global efficiencies in the delivery of a product or service for the firms achieving a sustainable competitive advantage and this is an important weapon have been focused in the 21st Century. The well-known organization, Hennes and Mauritz (H&M) is one of the largest international fashion retail and production house with the great deal of businesses all over the world. In the today’s competitive market and
In today’s business world, production cost was an increasing concern for companies working to stay competitive in the global marketplace. The top management must search for a global solution to drive down costs and reduce difficult activities associate with inventory management and production management. Global sourcing aimed to exploit global efficiencies in the delivery of services and goods across geopolitical boundaries, including low cost skilled labor, low cost raw materials, tax benefits, and price breaks. Whelan Pharmaceutical was the best example to illustrate how the company chose the best manufacturing site for global sourcing from different perspectives.
Globalization has made some changes in political, economic, and environmental situation. One of the way to keep the factory sustain in the global supply chain is to change the production place, expand the corporation or contracting across the globe (Ellram, 2013). This situation has led some of brand manufacturer move their factories back to the home country or known as reshoring (Biraldi et al. 2017) (Ellram, 2013). Big American fashion company such as Brooks Brothers, Under Armour, Ralph Lauren and Levi’s has moved most of the production process closer to their headquarter for a better supply chain. However, Wage is not the only reason to move the factory, carbon emission effect, and closer to the market also a consideration aspect for reshoring. The risk of supply chain that caused by the product quality failure and intellectual property theft can be reduced by doing reshoring (Tate, 2014).
Inditex ensures that its fashion is fast through its supply chain efforts. They have created new methods to enable store managers to order and display merchandise faster and added cargo routes for shipping goods. The company ships clothing straight from the factory to stores and makes two-thirds of its goods in Spain and nearby countries, compared to most competitors who manufacture most of their clothing in Asia. Inditex has their sales managers monitoring computers, which are reporting sales at every store around the world. When a garment does well or fails, they are able to quickly tell designers if they need to come up with new ideas. They also have generated
The Spanish retail chain Zara has unique supply chain management practices that enable it to gain a competitive advantage over other fashion retailers in the industry. Zara’s rapid response time enables the firm to quickly respond to changing fashions while deliberately under producing products. This strategy, which is supported by competencies in logistic management, design and information systems, allows the company to maintain less inventory and higher profit margins and is a key factor to Zara’s success. The firm should continue to add value by seeking new opportunities to expand in the retail market and maintain their sustainable growth.
There are segmented clothing and retail industries around the world. Therefore, there are provisions for a smaller number of firms in the industry. Although Creación has direct competitors like Jovian and
The global manufacture chain is helpful to reduce the cost because the apparel production is highly labour-intensive (Z02). For example, a jacket was produced among many countries to make a good use of the price advantages of different areas.
Quick response of Zara leads it to be successful in the fashion clothing industry. Zara adopts international strategy for its operation. With vertical integration, it benefits Zara in cost aspect, however, it involves some risks. Due to our anaylysis on Zara’s operations, some of the recommendations are made to facilitate its further improvements.
Rivalry among existing competitors: The apparel industry is highly competitive with a great number of both local and global competitors. As the market is mature, its growth is small. Accelerated growth and expansion to new markets are not easy goals to achieve. The barrier to get out of the industry is quite low for distributors, but high for producers. Most fashion manufacturers moved their production base to low-cost countries like China as wage and raw materials in developed markets like Western Europe are high. Besides, there is no great discrepancy in terms of quality of products, so customers make their purchase choices based on price and brand recognition.
Fraser points out that, “for the past few decades, supply chain strategy in apparel was focused on chasing low cost labor from one country to the next. Today, apparel is produced just about everywhere on
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. 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. This assignment presents core competencies to help Zara achieve competitive advantages in fashion industry. Besides, we also offer five competitive objectives about quality, speed, flexibility, dependability and cost to evaluate