Supply Chain Management and Zara

Zara Case Analysis Operations Management MBM1110 Table of circumscribe Executive Summary3 Introduction3 Outstanding practicable strategiesLayout4 Forecasting5 Product life cycle5 Product Design and Supply kitchen stove ManagementMarketing5 Just in time6 Vertical Integration6 internalisation of Bershka oddment7 Bibliography8 Executive Summary Zara, a flagship grasp blood of the Inditex group owned by Spanish harvestingion d piercing in tycoon Amancio Ortega is one of the top names in the mid- courtd shape attention. Zara was established in 1975 in Acoruna, Galicia, Spain and has expanded to 1395 stores only across the globe.It is verbalize that Zara, remote any opposite retail organization in the clothing industry takes just two weeks to design, develop and get a parvenu harvest-feast into the stores. However, the retail industry has a six month average to do so. By using its operational strategies in a very made manner, Zara is able to launch 10,000 new products e very year. This report will dispute the operational strategies that Zara wonts which works as secern winners and collection qualifiers. It in any case discusses the strategies that they use which baffles them one of the top names in the elan industry.Introduction Zara uses very innovative strategies for its railway line. By doing so, Zara is able to avoid outsourcing its manufacturing process to unkept cost and evolution countries like just about of the other companies in the industry. Zara does not even overstep a lot of money on foodstuffplaceing, hence gains its profit margin. It except does sp end up on the layout of its stores. Unlike many of its competitors, Zara is a vertic all toldy structured retailer since it controls most of the step in it supply chemical reach by designing, producing and distributing itself.This comical business model has turn uped in the emergence of one of the most successful retailers in the fashion industry. Terry Hill in 1993 c ame up with the terms ? cast qualifiers? and ? order winners? , against which it is believed that manufacturing strategy should be determined (Add Reff. Hill, T. (1993), Manufacturing dodging Text and Cases, 2nd ed. , Macmillan Press, London. ). Order Winners argon characteristics that serve as a competitive advantage for one firm over others.Order winners enable the customers to consider a particular firms nighs and services over the competitors. Order winners in this reason for Zara argon y High-end fashion at a conceivable price Even though Zaras products are highly fashionable, they comparatively cost expression less compared to other big names in the fashion industry Supply Chain Management y As discussed under in the report, due to Zaras outstanding SCM, it is able to order order the la render in fashion every two weeks for a reasonable price. Thus, are able to offer something to their clients that none of their competitors can.Order qualifiers are the competitive cha racteristics that a firm must take advantage of in order to be a viable competitor in the market place. To provide order qualifiers, companies need only to be in par with the competitors, however, in order to provide with order winners, companies need to be way better than its competition. Having said that, order qualifiers are in no way less key than the order winners, in fact, they both complement each other. In Zaras case the order qualifiers are y Quality They offer good quality products at relatively cheaper price compared to the competition.Outstanding Operational strategies While Zara perchance a very successful high end retailer, the main prospect of Zara that has got academics buzzing is its completely novel approach to its operations and supply chain for a retailer in high-end fashion. Layout The main intention of a layout strategy is to develop an economically viable layout that will be in line with the corporations Competitive requirements (Render & Heizer, 2005). Za ra invests a lot in their store layouts to make sure that their store finds the fresh and trendy look.They have a testing facility close to their dubiousness office in Spain, where they test antithetic types of store layouts on a regular basis. Zara remodels each of its stores every five years in order to keep up with the flow rate trends (Zaras Business Model, 2010). The entire layout, including the furniture and the window displays are all designed at the testing facility in order to maintain a standardized image globally. A flying team from the head office ordinarily flies down to a new berth to set up the store. Their motto is that they want the store managers to focus to a greater extent on sales than anything else.Zara can afford to do this since they do not spend lot advertising and marketing campaigns. Forecasting One of Zaras study competitive advantage over other retailers is it technique of fortune telling. Unlike, other retailers, Zara has developed its business model around reacting promptly. Zara focuses heavily on its forecasting effort on the amount and the type of fabric it will purchase. Zara tends to do this since its usually cheaper to rectify mistakes on raw fabric as compared to a undefiled product. It also uses the same fabric to produce something else (Render & Heizer, 2005).Zara usually buys un-processed fabric and colors it according to the season based on markets immediate need. By doing that, and by combining it with a high-velocity garment design & production process, its able to the deliver what the market is actually looking for at that time. Product life cycle In a typical Product Life Cycle Curve of the fashion retail industry, sales decreases as products move across the times line. However, Zaras Product Life Cycle Curve is totally the other way round since it is in a high fashion industry and it offers products that are of the latest trends and designs with a life of maximum 5-6 weeks.Product Design and Supply Chain Management The entire process of product design is very unique compared to its competitors. Commercial managers and designers at Zara start working on the design of the fabric, the costs, raw material, selling price etc as concisely as they receive the instruction manual from the Zara stores. Instructions are issued to cut appropriate fabric as soon as approvals are received. All the raw materials are distributed for assembly to a network of small family owned businesses that are mostly in Glacia and in Northern Portugal.Unlike its competitors, Zaras high-tech distribution services system ensures that at that place is no style lying around at the head office. The finished products are quickly cleared through the distribution centers and are shipped to the stores within 48 hours. Deliveries are received twice a week by each store. This entire process of product design and supply chain management gives Zara a huge edge over its competitors. Marketing Zara has a very unique approac h to marketing compared to the other big players in the industry.Unlike its competition, which spends 3-4 % of total revenues on marketing and advertising campaigns, Zara spends 0. 3%. This is a major competitive advantage over its competitors. Zara strategically locates all of their stores in charge retail districts for visibility marketing. As mentioned earlier about the product development cycles, customers are rendered immune to visit Zara stores very often since new items are stocked weekly and are often not re-stocked. Zara holds a feeling of scarcity within the customers, and this makes them come back to the store often and make purchases.Just in time Just-in-time (JIT) is a strategy that is utilize for take stock management in such(prenominal) a way that it helps a business improve its return on investment by reducing in-process livestock and the associated carrying costs (Shingo, 1989). Zara follows a true JIT inventory system. Its inventory system is influenced by th e pull of the customer instead of a push from the designer. This helps Zara to have a competitive advantage over the competition since it has a very low inventory to sales ratio. Vertical IntegrationZara is a very vertically interconnected federation by working through the whole value chain and is highly capital intensive. This is a unique model that let the corporation develop a strong merchandising strategy that led it to create a unique model of fast fashion system (Craig, Jones, & Nieto, 2004). Incorporation of Bershka Most big brands in the world regardless of the industry they are in usually have more than one brand name. In the fashion retail industry, Gap Inc. Owns few big names as Gap itself, Old Navy, Club Monaco, etc. It is a strategy apply to penetrate diametrical segments of a market and to increase the market share.It also tries to give consumers an impression that contrary brand names have something different about them. Companies also use the is strategy to cre ate a specialized brand for each and every market they try to stub. Inditex has also used the strategy of penetrating different segments of the market by creating a different brand name for each segment (Inditex Annual Report, 2008). Inditex owns different brands such as Zara, Massimo Dutti, Pull and Bear and Bershka which tends to cater to different markets. Merging all of these brands or any two brands into one name would not make a lot of business sense for Bershka.The brand Bershka was launched by Inditex in the year 1998 with an aim of targeting the young fashion-conscious crowd. Incorporating Bershka into Zaras operations would not be a very good strategic move for Inditex. Bershka currently owns 638 stores in 41 different countries, hence incorporating that in to Zaras operations would get along lot of challenges for Inditex. Since Bershka and Zara both have a very different target market, formulating strategies for both of these firms combined will definitely effect the o perations of the company in whole. Both brand names have established different commercial enterprise for themselves.Bershka currently targets the young and fashionable and Zara targets the fashionable crowd as well, however it has different demographics for it. Combining these two brands into one will result in loss of loyal customers and world power also impact the company negatively. Theres no guarantee that Bershkas existing clientele will shift to Zara, in fact they might just end up losing majority of that segment. Zaras market share might increase by a very small percentage however Bershka might end up losing a major chunk of its current clientele, which in turn will not be good for Inditex in whole. ConclusionRead also Advantages and Disadvantages of Administrative Management