Zara 's Supply Chain Of Zara

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.

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

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.

No business in this type of industry has total control over the market price and there are no barriers to entry and exit. Because of its monopolistically competitive playing grounds, Zara’s conduct is to increase its market power by producing demand for its heterogeneous products. Through differentiation and cost leadership, Zara attempts to increase market demand by offering new items weekly while keeping a low inventory, thus making its products unique and attractive to consumers. Because of its backward vertical integration model, Zara creates a strong synergy throughout its production process. Zara has sustained a competitive advantage globally by expanding into new markets and becoming more efficient. In a monopolistically competitive industry, Zara is expected to make profits in the short run but will break even in the long run because demand will decrease as average total costs increase. This means in the long run, a monopolistically competitive firm, such as Zara, will make zero economic profit (AmosWEB, 2001).

Zara’s strategy is to offer cutting edge fashion at affordable prices by following fashion and identifying which styles are “hot”, and quickly getting the latest styles into stores. They can move from identifying a trend to having clothes ready for sale within 30 days (whereas most retailers take 4-12 months). This is made possible by controlling almost the whole garment supply chain from design to retail.

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 supply chain from raw material to consumer it's from design and production to distribution and retailing. Zara has unique and rabid supply chain today. Design and production are internal process and are done in company. At Zara's headquarters, there are creative teams of three hundred professionals doing a design process. They responsible for design the designs which will satisfy customer needs and keep pace with fashion. Zara can take a product from concept through design, manufacturing, and store-shelf placement in as

Zara is an apparel company and the leader brand of the Spanish retail mogul, Inditex. zara was established in 1975 in Spain by Amancio Ortega who is currently the 3rd richest man in the world, the first store was opened as an outlet but by 1979 the establishment already had six stores at different locations in Spain and by 1985 the company branched out to Portugal new york city and Paris. Today Zara has over 1900 stores worldwide which are located in 22 different countries; these stores render employment to over 125,000 employees. Zara depends on information they gather from customer and organizational feedback from all their stores on a daily basis this information is then forwarded to the supply chain, which works in synergy with the stores to keep the level of storage in stores down to a minimum. Zara owns the production, supply chain and in-house production, which lead to greater speed in output (M.A.Cano)

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.

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).

Zara has succeeded by creating a vertically integrated system where the disadvantages of vertical integration (higher costs of manufacturing in Europe, lack of flexibility in shifting plant locations, etc.) are offset by the unprecedented speed and design flexibility that its tightly coordinated vertical system permits. Thus, Zara’s highly compressed product development cycle would be impossible for Gap or any other retailer relying on contract manufacturers in Southeast Asia.

It can be inhibited that Zara sustain its competitive advantage by its well-managed business model. Zara used exceptional delivery channel and synchronized supply chain management (Palladino 2010; Holweg 2005).

Introduction     Zara  is  a  fashion  retailer  established  in  1975  by  the  Spanish  group  Inditex  founded  by   Amancio  Ortega  Gaona.  Inditex  runs  over  more  than  5400  stores  worldwide  and  owns   brands   other   than   Zara   such   as   Massimo   Dutti,   Breshka,   Oysho,   Pull   and   Bear   and   Stradivarius.   Inditex   headquarters   are   located   close   to   La   Coruña   in   northwestern   of   Spain.   The   old   shipbuilding   town   of   La   Coruña   seems   an   unlikely   home   to   a

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.