Zara Supply Chain Case Study

It is becoming apparent that the ever changing environment in the global marketplace requires a swifter response time from businesses and their supply chains. The era when production was moved overseas, so businesses can take advantage of low-cost labor is coming to an end, because businesses are not only competing on price but also on time. The owner of Zara, a Spanish clothing store knows this first hand, and has turned supply chain management on its ear, making his company the “envy of the industry” (Ferdows, Lewis, & Machuca, 2004).

The business idea of Zara is to link customer demand to manufacturing, and to link manufacturing to distribution. And based on this general idea, Zara has several essential elements for its business model. First, speed and decision making, which means that in the external level, Zara need to respond very quickly to demands of target customers, and always keep in style. While for the inside, Zara treasure intelligence and judgment of common employees who enjoy a great deal of autonomy. Second, its marketing, merchandising and advertising strategy. Zara does not spend on virtually advertising, while it spends heavily on stores, and no selling online because of

Another way there strategy contributors to their success is that they have the capability to keep a significant amount of product in home soil in there won factories and reserve approximately 85% of their capacity for seasonal adjustments this way they will be able to rapidly respond to unexpected trends in the industry. Additionally they use foreign factories as many other companies do as cost is much cheaper which allows production to increase and distrusted accordingly, however for fast fashion items Zara produces in

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.

For that reason, most of all the products Zara offers globally are relatively standardized fashionable products. In terms of marketing costs, Zara relies more on having prime retail locations than on advertising for attracting customers into its stores. It spends a meager 0.3 per cent of sales on advertising compared to an average of 3.5 of competitors according to the company, choosing highly visible locations for its stores renders advertising unnecessary. Zara provides following options to its targeted market:-

Zara currently employs no advertising at all. As word of mouth is very important in retail, this low key approach is in line with Zara 's culture. A well structured marketing campaign could, however, spread the word of Zara 's expansion across the US, while maintaining their mysterious boutique-type image. Billboards or print ads with a "teaser" approach could accomplish this goal. Advertising will become important to increase Zara 's profile during expansion. Due to its comfortable profit margins, a modest advertising budget could be afforded.

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.

if supplier doesn’t supply on time may incur the company the loses of the clothes out of date fashion . Huge number of tons will be consumed faster than before because of this fast fashion. This was the possible disadvantage of the fast fashion distribution system. There are a lot of advantages that offset the disadvantages of the fast fashion distribution system. We may say here fast fashion requires innovation and brainstorming to get new designs overtime to be

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.

In the current situation, Obermeyer is facing four broad issues: production planning for their short life cycle products, operational changes to reduce costs of mismatched supply and demand, coordination issues in their global supply chain and a confusion of where to produce the garments – Hong Kong or China. The best way to mitigate the inability to meet the demand of retailers during peaks sales would be to forecast the demands with either past data or with the help of a forecasting committee. It would be ideal for Obermeyer to forecast future demand with the help of a forecasting committee. To come over the confusion of which city to continue production in, Obermeyer should choose to continue short term production in Hong Kong but the Long Term production should be in China. It is anticipated that a two years lead time of planning and production activity must take place prior to the actual sale of products to consumers. They are more highly skilled and typically trained in a

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.

This paper as a result helps us understand how successful ZARA’s business model and how efficient over the year ZARA has been in reaching to its customers need, as we all know ZARA is a very trendy fashion brand especially among the youths and as a matter of fact it ranks 51 in Forbes most valuable brand list with total revenue of 11.3$ billion (Forbes). Over the year ZARA has come up with better strategies to improve their supply chain thereby improve their products and service to the customer and in this I Shall completely explain the business ideology of ZARA and as why it is one of the most preferred brands and also what improvement ZARA can get in their business strategy to improve more , this paper shall also explain as to why other

Like every good marketing company, they must understand what the customer values and wants, not what the company wants. This must be realistic and effective. We want to know and understand the customer so well, that the clothes literally sell without advertisement needed. Zara will see a lot of its results through its marketing.

The world has become fascinated towards the fashion. The first thing need to be considered is Fashion; it can be behavior, implementing new ideas on clothing’s, hairstyle, decorations and so on which are automatically linked to our day to day activities. In today’s context, fast fashion has become a trend to a fashion industry patterns yet delivered utilizing less costly materials to guarantee a low cost tag. Many companies have been successful and unsuccessful to earn a trust from their customer. For the matter of success level it depends on how innovativeness they are and also applies the principle of supply chain and logistic management activities for the growth of their

In 1993, the company decided to improve its distribution system, by creating a more exclusive and updated solution, aiming to gain a competitive advantage in the market. In order to achieve this, Adidas hired an IT company to create a new software. Unfortunately, the new software was not compatible with the one that the company’s vendors were using. At the same time, the IT Company ceased its operation.