As completely as possible, sketch the supply chain for Zara from raw materials to consumer purchase.
ZARA’S SUPPLY CHAIN
Zara makes about 40% of their raw material (fabric). The remaining 60% is outsourced from within Spain, mostly from the La Curuna. Designing of clothes at Zara is done by creative teams of over 300 professionals at the headquarters in La Curuna, Spain. They act on the information fed to them from the stores managers.
The first stage in Zara’s production system is cutting of fabric. The design is then sent for sewing by one of several hundred local cooperatives. After sewing, the clothes are returned to Zara’s facilities for ironing by an assembly line of workers. After this, the clothing items are wrapped in plastic and transported on conveyor belts to a group of giant warehouses.
In the warehouse, the customised machines patterned after the equipment used by overnight parcel services, sorts, packs, labels, and allocates clothing items for shipment to Zara’s retail stores. For Zara’s retail stores within a 24-hour drive, goods are delivered by truck whereas goods meant for stores beyond 24-hour drive are delivered by cargo jets.
Zara sells to customers at their own retail stores, each managed by a retail manager who gives feedback on fashion trends to the design team.
Discuss the concepts of horizontal and vertical conflict as they relate to Zara.
According to Tybout and Calder (2010) channel conflict is generated when one channel member’s action prevent the channel from achieving its goals. It can stem from difference between channel members goals and objectives, from disagreements over the domain of responsibility and from difference in perception of the market place. Channel conflict can be vertical or horizontal.
According to Vashisht (2005) vertical conflict exist when there is a conflict between different levels within the same channel. Vertical conflict can be a conflict between producers and wholesalers or a conflict between producers and retailers. Some of the causes of vertical conflict are; • When one member of the channel attempts to control the entire distribution system (Sharma, 1995). • If a company refuses to reimburse damages claimed by the distributors. • Frequent changes in the price structure by the company. • When the producer chooses to bypass the wholesaler and deal directly with the consumer or retailer (Lamb, Hair and McDaniel, 2008).
Vertical conflict in Zara’s channel
In the case of Zara, vertical conflict can happen at three levels: between suppliers of raw materials (fabric) and the design team, between the suppliers of raw materials and the production team, and between the design team and the production team. As Zara seek to achieve their vision of ‘fast-fashion’, they need continuous supply of raw materials to meet the growing demand by customers. This can lead to putting pressure on suppliers who supply about 60% of the raw materials thereby stretching their production capacities.
Between suppliers of raw materials and the design team, conflict can arise as designers constantly seek to meet Zara’s vision of providing variety of innovative clothing items. This calls for constant changes to texture, colour, quality, and other dimensions of the fabric to satisfy the changing demand. As Zara insists on these changes relying on their dominating influence in the market, conflicts can arise between the design team and the suppliers.
Between the design team and the production team (specifically, the sewing group), conflict can arise as the sewing group must continually have to adapt to the new designs being developed by the design team. It is one thing coming out with the designs and another thing altogether putting the pieces together into designer clothes. The sewing group is made up of different entities that have their own vision and mission as well as...