Business Process Re-engineering (BPR) had its origin in America in the early 1990s. It is a process where a group of logically related tasks involves the firm's resources to provide customer-oriented results in support of the organization's objectives (www.oaktraining.com). Every organization venture into re-engineering for three “C” and they are customers, competition and change.
From the customers emerge demand, there is constant change in their needs and sophisticated behavior of the customers calls for re-engineering. Secondly competition arises from local and global and thirdly changes bring forth development in technology and customer preferences. Many organizations do not go for re-engineering because of complacency, political resistance, failure, fear of unknown and new developments. Thomas Davenport describes BPR as; "Encompasses the envisioning of new work strategies, the actual process design activity, and the implementation of the change in all its complex technological, human, and organizational dimensions". (Davenport, 1993)
ZARA is founded in the year 1975 and owned by Amancio Ortega, in La Courna. Inditex is probably the world's fastest growing clothing retailer with over 3,100 stores around the world in over 70 countries and the Zara format taking around 1,000 of those stores. In March 2006, the group overtook Sweden's Hennes & Mauritz (H&M) to become Europe's largest fashion retailer.
Inditex owns stores present in Europe, North and South America, Asia, and Oceania and engaged in the design and the manufacturing of its products and the main activity is retail. It holds under it firms sorted in sub-categories like footwear, men, women, children clothing, fashion, etc,. It caters to the fashionable family clothing, which consists of the design and the retail of trendy clothes for young men and women. Some of the direct competitors of Inditex for example are Benetton, Mango, Gap Inc., H&M, and Abercrombie.
Three principles of Amancio Ortega, the founder
He has devised three principles for ZARA and they are
a. Close the communication circle
b. Keep a rhythm
c. Invest in your own assets.
These three principles facilitate flexibility and reactivity in the Zara organisation culture.
Why ZARA pitched into Business process Reengineering?
Basically, every company faces tough competition in the market. Zara plunged into reengineering to combat the increasing competition with the competitors. Secondly, every company gears up the process time. Zara speeded up the process of getting products and services in the market. Every company works at the rapport with suppliers and the customers. Zara builds closer relationship with the suppliers and customers.
Porter Analysis in Zara Fashion Chain
The core purpose of the Porter analysis is to analyse the competitive advantage of any company in the market. Zara’s competitive advantage could be seen in vertical integration, quick response strategy, centralized distribution centres, expansion and product image.
Zara’s value chain flows in the vicious circle of sourcing & manufacturing, distribution, retailing, and design. They follow the merchandising strategy where they buy the raw material available in low cost, they purchase it that moment and apply scarcity and opportunity technique that is buy now and not later. They cater to fast fashion which is responding to the current situation and come out with up to date designs. So much so, Zara makes 40 percent of its own fabrics and produces 60 percent of its stock in house.
Quick Response strategy
The ultimate aim of this strategy is to provide information to designers quickly. The store managers send customers feedback directly to Zara’s in house designers via handheld devices. The designers are kept abreast of fast changing trends and demands. (Matchette, 2006) This trend gives...