The Retail Giant Of Zara Essay

This article makes up Chapter 1 of the free, open access book titled, Information Systems: A Manager's Guide to Harnessing Technology, by John Gallaugher. Please ensure that you read the entire Chapter 1 of the book consisting of 3 parts (Part 1 Introduction; Part 2 Don’t Guess, Gather Data; and Part 3 Moving Forward).

The different stakeholders that affect ZARA are the owners, employees, customer, suppliers, government and the investors. All these stakeholders play a big role in the business. Without them, ZARA will not be as successful as it is right now.

Second, in fulfillment, we can also see speed in responding to demand. For example, the replenishment, as well as production will be optimized according to supply and demand as quickly as possible. Besides, the fulfillment will commonly completed in one or two days, clothes flowed quickly, and without stopping, from factories to DCs to stores, where they were immediately put on the sales floor. Third, in design and manufacturing, we can find how Zara respond quickly to demand. Zara brought out new items continuously throughout the year, including both changes to existing garments and entirely new creations. The network of production had made design from conception through production and into the DC in as little as three weeks. Besides, Zara did not have to predict what would be selling six months, or even one month, in the future; it could continuously sense what customers wanted to buy and respond “on the fly.” All these operations reflect the speed-chasing and target-oriented nature of Zara business.

Critically analyze the organization from the systems approach. You should consider the inputs, transformation and output elements of the operation and consider how the system creates value.

Best Buy, a familiar retailer in the technology world, is struggling to stay on top. Online and mass stores have cornered the market in terms of convenience, customer service and price matching. The recent closing of over two hundred stores alongside falling sales has experts predicting that the giant won’t be in business long. Using a results-only work environment (ROWE), Best Buy has removed the customer from the equation and forced many employees out. A marketing disaster, Best Buy must change its marketing strategy from sales-based to a customer-based to stay afloat.

There vertical integration allows small batches of produce to be distributed and tested out allow them to save more money and cut inventory backlogs. Zara maintains a low cost by avoiding outsourcing (where possible) and producing all its merchandise and produce in home soil in Spain. Also Zara own many fabric dying, cutting and processing equipment that provided Zara added control and flexibility to adopt new trends on demand. Effectively Zara is able to design and manufacture products as well as deliver them in less than two weeks in contrast to competitors such as Benetton and H&M which require at least between five weeks and 4 months lead time to fill orders from its retail operations. One major unique characteristic was that Zara own its in house production which gives Zara the flexibility of quantity, variety, and the frequency of the designs they produce.

Zara International is considered a high end clothing store that is affordable. Due to its quality in fashion, low prices and immediate availability, popular stores such as Gap and H&M fail to keep up with Zara’s success. Zara’s well known tactic of fast fashion has separated them from their competition. The ‘fast fashion’ objective is to distribute top trends of fashion within the runway to customers by selling them in local stores. Zara has been able to achieve the fast fashion perspective by hiring approximately 200 people that will assist in getting these trends out in stores within a matter of weeks.

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.

The basic strategy for fighting competition is to attract buyers at lower prices, more unique designs, high-quality design, efficient customer service and solid image brand. Thus bargaining power of buyer for apparel industry is high as the products falls under the basic needs in human lives. There is no much difference in terms of products offered by the apparel company, so if buyer is unhappy with the product or service they can easily switch to another brand. Thus, Zara are trying to strengthen its position in the market by using their unique strategy by giving priority to buyer to meet their special needs.

The core concept of Zara 's business model is they sell "medium quality fashion clothing at affordable prices", and vertical integration and quick-response is key to Zara 's business model.  Through the entire process of Zara 's business system: designing, sourcing and manufacturing, distribution and retailing, they presented four fundamental success factors: short cycle time, small batches per product, extensive variety of product every season and heavy investment in information and communication technology.  These four elements are involved in every aspect of the business.

The recognized giants in today’s discount retail market are Wal-Mart, Sears, Roebuck and Company, and Target, and this paper compares Wal-Mart and Target. As the competition stiffens to capture market niches, these two organizations are heading for a showdown. This work demonstrates distinctive differences in company culture, promotion within the organization, lofty goal setting, and leadership styles between these two organizations. Although this paper shows a definite competitive advantage for the Wal-Mart organization, it will also demonstrate that Target

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.

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).

The following article will mainly focus on aspects of supply chain and logistics management of fashion related Retailer Company named Zara, which is expected to boost the value of customers, and sustainability concept is considered to be added benefit to the Zara Company. The advantage is mainly because of Zara company’s designing models that are related with business and they are compared with benefits and disadvantages with other companies which have seen success and also highlight on companies that are not successful. The business related strategies and management of supply chain operations are compared between Zara Company and with other companies like Dell and Myers. The difference in strategies and success is compared between Zara and Dell and also Myers with Zara.

Until now, every garment that is product in Zara’s factories around the world has to travel back to Spain in order to go through quality controls, and is then send to its distributors. But the continuous flows of goods from all the productions sites to Spain and from Spain to the markets of sell, as well as the relative communication flows necessary to such a business model will inevitably slow down as Zara will have to deal with a constantly growing number of customers. Thus, the highly centralized information system of Zara seems not to be easily applicable in Asia, in addition to being time and money consuming.