Zara Operations Strategy

Operations management refers to all levels of an organisation and how best to efficiently convene, fund, maintain and maximise its services and/or operations, both internal and external. The core goal/objective of operations management it to maximise outputs while reducing and minimising the inputs required to achieve the desired results.

Zara is a high-end street store offering the latest tastes in fashion for women, men, and children alike. Amancio Ortego, Zara’s founder, has made the store grow with rapid success in both its home country, Spain, and internationally. One of the distinct reasons why Zara is such a unique company compared to its competitors is its foundation of the quick response system. Today, Zara’s cycle time is six weeks, in which it responds to its customers’ demand very quickly, unlike most stores that take half a year. Overall, Zara is distinct from most apparel stores in its ability to travel globally and from its international strategy.

Operations Management focuses on the design and management of products, processes, services and supply chains (Diemond, 2014). It considers the acquisition, development, and utilization of resources that firms need to deliver the goods and services their clients want (Diemond 2014). Operations Management consists of many topics which are applied on a daily basis at the company I work for. Some of the topics include process control, lean manufacturing, six sigma, and supply chain management. It is the process that controls how inputs (raw materials, labor, and energy) get converted into outputs (finished goods or services).

James, T. (2011) defines Operations Management as the management of the processes which aid production of goods and or services. This implies that all production activities must be coordinated well to ensure a lean process of resource management is adopted.

Operations Management in an organisation is repsonsible for managing and in making decisions concerning the activities that convert inputs into outputs , that is goods and services. This covers both short term actvities as well as longer term activities to meet strategic goals. Inputs can be the raw materaials need to manufacture goods such as furniture or the computers needed to create a service like online shopping site. Operation management’s role is to make decisions to improve how operation activities function, for example, to improve the final quality of the output or to change production methods to be more efficient in terms of cost and in time.

There are several ingenious steps taken by Zara that proves both profitable and unprecedented. Zara has used technology to revolutionize their business, from buying the unprocessed cloth to determining which color die to use and what to make with that cloth. The technology process continues on the manufacturing lines and all the way to the final sale. But it does not stop there, it goes beyond the point of sale to question the reasons why a purchase was not made after a client expressed an interest in an item. The point of sale system provides real time data which is given immediate attention.

Engaging in irregularities is severely sanctioned in correspondence with article 34 of the Examination rules.

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).

Operations management focuses on managing the processes of producing and distributing products and services. Operations activities often include product creation, development, production and distribution. It deals with all operations within the organization. Related activities include managing purchases, inventory control, quality control, storage, logistics and evaluations. The nature of how operations management is carried out in an organization depends very much on the nature of products or services in the organization, for example, retail, manufacturing, wholesale, etc.

From this Zara have taken the route of just-in-time (JIT) were the JIT "eliminates all activities that neither add value to the final product nor allow for the continuous flow of material" (Rushton. A, 2000) With the vertical integrated business modal, spanning design, JIT production, marketing and sales are all taken into consideration, thus Zara produces more than half its own clothes

Zara is an international retailer that is continuously growing in popularity due to the store’s trend-sensitive and affordable styles. Inditex, Zara’s distribution group, is one of Spain’s greatest successes in that they have dominated the global market. Their unique business model and marketing tactics have a lot to do with this company’s worldwide success. This retailer exhibits a creative and eco-friendly business plan that integrates design, just-in-time production, marketing and sales. With a vertically integrated supply chain system, Zara controls product design, development, manufacturing, selling and distribution to retailers, product service and advertising.

All operations are service providers who may produce products as a means of serving their customers. Operations management is important for all organizations.

The retail giant Zara have proven that utilizing all resources and different management techniques branded the store as a fashion empire. However, Zara has been named one of the most profitable retailers in the world. Zara has expanded and is operating stores all over the world which makes the retailer global. The philosophy behind the retail giant is immersing new fashion fast. Furthermore, Zara focus is producing high-end quality clothes through creativity. The retail giant uses a rapid response system to trending clothes which increase Zara profits and market demands. The retailer implemented several business models to reflect the current state of the business. For example, capabilities, utilize short lead times, reduce inventory risk, decrease quantities that are produced and increase choices and styles, value drivers and concept. Following this business model allowed Zara to be branded as supplying the consumer with what they want and fast. Nevertheless, the retailer offers moderate pricing, customer loyalty, and a turnaround time of the latest trends of 24 to 48 hours. These goals formulated the fundamental concept of monitoring production, maintaining designs and tracking the distribution processes. The entire process has enabled Zara to exploit and execute all competitors. Also, the strategy behind Zara planning is maintaining total control over production and keeping manufacturing and all designing in-house. Within this case study, five question will be answered

Instituto de Empresa, Maria de Molina 12, 5°, Madrid 28006, Spain E-mails: angel.diaz@ie.edu; luis.solis@ie.edu Abstract Zara is a Spanish fashion manufacturer and retailer that has known swift success. Spaniards have become used to visiting Zara frequently, as there is always a new product. Zara launches 100 different collections every year, with over 11000 models, none lasting more than five weeks in production and with an average lead-time (design to store delivery) of four weeks. Inditex, the group to which the brand Zara belongs owns five brands with over 1000 stores in more than 30 countries. Although its global sales are still one sixth those of Gap, its

The best way to grow the Zara chain is own subsidiaries in terms of consideration to keep its’ competitive advantages. Specifically, in market of Italian, due to restriction of regulation, it have to start from a JV model, the feature of ZARA should successfully meet the shopping demands in terms of active shopping habits of the local customers. However, currently cooperation with the largest licensees of its’ main competitor, Benetton has 2 folds effects, advantage is the partner should very familiar with preference of local customer and have strong sources in local markets but it may cause release of some key company secret and competitiveness.