OPERATIONS STRATEGY FOR ZARA COMPANY
Operations strategy is the total pattern of decisions which shape the long-term capabilities of any type of operations and their contribution to the overall strategy, through the reconciliation of market requirements with operations resources. It is also a tool that helps to define the methods of producing goods or a service offered to the customer.
Zara Company deals in the fashion industry. Zara’s success in the apparel industry is attributable to the following operation strategies;
Strength, Weaknesses, Opportunities and Threat Analysis
Zara has three major strengths among others that gives Zara a niche in its operations:
Research and Development: Extensive market research providing a constant stream of inputs to the product development process rather than in batches or discrete seasons.
Location strategy: Locating various business functions in close proximity of the headquarters, and tight control, allows the various functions to co-ordinate and take joint decisions very quickly. Control also refers to early investment in raw material, and direct or indirect ‘ownership’ of processing and production capacities. These provide the capability to respond very quickly to the market research-influenced decisions.
Technology: Communication and Information Technology are absolutely vital to managing the constant interface of various functions and management of the huge variety of product information. Zara as a fashion firm is technology savvy. Zara has embraced the latest technology in its operations. The blend of technology-enabled strategy that Zara has unleashed seems to break all of the rules in the fashion industry. This strategy has made Zara shun advertising and rarely runs sales. Zara is highly vertically integrated, keeping huge swaths of its production process in-house. This is just but another strength that Zara has over its competitors. Nearly 60% of Zara’s merchandise is produced in-house while its competitors such as Hennes & Mauritz has 900 suppliers and no factories. Zara has got inventory optimization models and systems that help the firm determine how many of which items in which sizes should be delivered to stores during twice-a-week shipments. This is a strategy that puts Zara ahead of its competitors by ensuring the store shelves have new items as frequently as possible. Since clothing is expensive, Zara’s value chain has proved difficult to copy which puts Zara at a competitive edge. However, threats can also occur for Zara. In as much as copying is difficult, rival firms will strive to compete with Zara in many other ways.
Zara exists in a market where “fashion” – the rise and decline of the desire for a specific look in a season or less – is a fact of life. Secondly there is a large population of consumers who can afford to change their wardrobe with changing styles every season – this can help to build scale. Thirdly the cost of custom tailoring is very high in that market. These are some of the opportunities that have emerged to help Zara become a success story.
Order winners and order qualifiers at Zara
Order winners at Zara include; price, product reliability, product specification and product range
Most items are manufactured in a limited production run at Zara. This reduces inventory levels hence reduced inventory costs. This leads to prices that reasonable for Zara client base. Reliability of Zara’s products is another winner. With the twice a week delivery schedules employed by Zara, customers are assured of new range of products in a short period of time. Customer needs are specified in that, Zara considers customer feedback very vital in the design of its products. As such products are produced to specific customer demands. Product range is also another order winner at Zara. A design is enhanced with various features e.g in the type of neck line, color etc.
Qualifiers include; speedy delivery...
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