Disadvantages Of Zara Supply Chain

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

Zara’s value chain differs from the other traditional models a lot. The design and creation rely extensively on copying fashion trends observed at the fashion shoes and at competitors’ points of sale, which based on buyers and designers alike.

-to reach its goal of   quickly and accurately responding to shifting consumer demands, Zara established 3 cyclical processes—Ordering, Fulfillment, and design and manufacturing

At its heart Zara is building on a vertically integrated demand and supply chain, while most other textile chains rely on outsourcing and cheap labor in China. It enables company to short turnaround times and achieves greater flexibility, reducing stock to a minimum and diminishing fashion risk to the greatest possible extent.

In the high-street retail market, fast fashion is the current key to success where the speed of fashion trends means a more disposable clothing culture is emerging where low cost and a quick product lifecycle are vital to successful sales. With such demands from the end use consumer and with instantaneous information at hand, an increasingly important emphasis is being placed on supply chain management efficiencies.

For start in Zara's supply chain is unique. Current conventional wisdom calls for manufacturers in all industries to outsource their goods globally to the cheapest provider. Thus, most of Zara's competitors contract manufacturing out to low-wage countries, notably Asia. However, Zara makes 40% on its own fabrics and produces more than half of its own clothes, rather than relying on a hodgepodge of slow-moving suppliers. Even items that are produced in farms are dealt locally in order to maximize time efficiency. Nearly all Zara's clothes for its stores worldwide they are produced in its remote northeast corner of Spain (Chopra & M, 2000) .

Zara is characterized by its unique and rapid-fire supply chain that is governed by the vertically integrated system that links their shops, designers, and distribution system. The key players in this system are the wholesalers and retailers, so controlling the activities of those mark the success of the business. Zara’s system is so integrated that makes it hard for other competitors to nail the starting point of a similar product.

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

2006). This chapter will explore the development of dynamic capabilities of the woven cotton piecegood supply chain in China and Hong Kong in response to the emergence of the relatively new “fast fashion” retail business strategy and the consequent manufacturing adjustments along the supply chain which improved production output and reduced production costs for the Chinese factories. In addition, the following text will overview a qualitative research study conducted by means of in-depth interviews with eight large Chinese textile factories to gain accurate data on the changes that are currently implemented to coincide with fast fashion’s model. The data may be beneficial to buyers and suppliers in understanding difficulties faced by both producers and retailers in the fast fashion industry and may provide the possible changes China should make to further secure a competitive advantage in the global textile industry. Lastly, a model will be presented, which is useful to textile industry professionals for a better understanding of time management and costs associated with alternative production methods. Current research in fast fashion generally does not extend toward the manufacturing arm in China and to the reaction of the product suppliers; therefore, this work offers unique insight into the ways in which the T C C factories prioritise, manage, and innovate to remain competitive.

Thirdly, it is unique that Zara spends money on marketing, but concentrates on opening new stores instead. For their business model, Zara has a competitive advantage in areas of development, marketing, cost of production and IT infrastructure. Zara gives power to their store managers in deciding what to display and what to sell in the stores based on market research done by the headquarters. Then managers are able to order clothes to meet customer’s demand. For product development, managers need obtain the standardized information from the market or customer feedback by using a handheld device. Then send it back to headquarters for further market research. As a result, the headquarters can have a more effective plan for design and production. In reality, this allows Zara to produce around 11,000 new styles per year, while their competitors can only produce 3,000-4,000. Zara’s speed makes its product development outstanding from the market and it is important for future success. In the area of marketing, Zara only spends 0.3% of their total revenues for marketing expenses, while their competitors spend 3-4% on average. Moreover, Zara focuses on attracting customers by having a good choice of location for visibility marketing, store layout and the styles of product. For example, Zara has new styles of clothes every week and often not restocked, customers will then be attracted to visit the stores every week to

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.

Christopher et al. (2004) identified a number of significant changes that have challenged supply-chain operations including short product life cycles, high levels of impulse buying and volatility, coupled with low predictability of demand. While the traditional apparel industry model worked on long lead times, in recent years there has been an increase in ‘time-based competition’ and the need for fashion businesses to focus on lead-time reduction and develop more responsive replenishment systems (Christopher et al, 2004). Many retailers have looked to global sourcing in reducing lead times with Jin (2004, cited in Doyle, Moore & Morgan, 2006: 3) identifying that “a balance between global and local sourcing may be the best route […] with emphasis being placed upon domestic suppliers where demand is highly volatile and unpredictable”. Deputy Chairman at Zara, a multi-channel retailer that was waiting for online consumer demand to build before

Zara is a vertically integrated group, which controls most of its supply chain. About 50 percent of its products are manufactured in Spain, 25 percent comes from Europe and remaining fraction is produced in Asia and Africa. After that the whole production is received and warehoused in the logistics centre in Spain before being sent to the stores. It does not matter where they have been produced; the main categorization is done in Spain. Also, Materials and fabrics are kept in warehouses without exact colors or prints, due to be able to react quickly to the market changes. Zara buys the fabric/raw material in only 4 different colors. Also, all the Suppliers are close to their manufacturing units so that Zara can order on a need/demand basis. Overnight trucks are used to deliver to the European stores and airfreight is used to ship to other countries.

. If your competitor has the better quality of garment in same pricing, it is better to also enhance your garment quality.

The relatively biggest and famous fashion distributor Inditex is parent company of Zara. In august 2008, Inditex acquired another famous brand GAP. This resulted in making Inditex as world’s biggest retailer (The Guardian, 2008). Zara has a contribution of 2/3 of the sales in the parent company which makes them the important brand of the company.