Globalization has open doors of opportunities for firms to reach and explore new markets. Now more than ever, supply chain management plays a key role for organizational success for those that aim to expand their market reach around the globe. This paper discusses perhaps one of the most excellent organizations when it comes to supply chain management. Zara is known around the world as one of the most successful provider of fashion products. This paper presents a description of supply chain management including its elements and components. The different stages of Zara’s supply chain and their contributions to the overall efficiency and effectively of Zara’s business model are discussed. Lastly, the paper discusses the different metrics that are used by the firm in measuring supply chain performance. Introduction
Zara is one of the most notable fashion stores in the world. Notable for its products and notable for its excellent supply chain management. This paper discusses the supply chain management at Zara, tackling the different areas of supply chain and their contribution to the company’s success.
Supply Chain Management
Supply chain refers to all the value adding operational activities involved with supplying to an end user with a service or product (Lowson 2002). A supply network is defined by Christopher (1992) as an interconnection of organizations which relate to each other through upstream and downstream linkages between the different processes and activities that produce value in the form of products and services to the ultimate consumer (cited in Lowson 2002). Porter (1985) is among the earliest influences upon an integrated supply network. According to Porter, the organization’s value chain is embedded within a value system comprising suppliers and buyers. The linkages within this chain or system provided the building blocks of competitive advantage. Conversely, supply chain management involves partnerships that are developed between organizations performing adjacent, linear steps in the chain. The supply chain is viewed as a whole rather than a set of fragmented parts in order that activities, the basic units of competitive advantage, can be configured, confined and performed in different ways to rival chains (Porter, 1996). Supply chain or value chain management is composed of the operational or tactical activities and can be defined as ‘managing the entire chain of raw material supply, manufacture, assembly and distribution to the end consumer (Jones 1989 cited in Lowson 20002). Christopher (1998) defines supply chain management as the management of upstream and downstream relationships with the suppliers and customers to deliver superior consumers value at less cost to the supply chain as a whole.
Components of the Supply Chain
The supply chain has four basic components: * Production – Businesses focus on how much to produce, where to produce it and which suppliers to use. * Inventory – Businesses decide where to store their products and how much to store. * Distribution – Businesses address questions about how their products should be moved and stored. * Payments – Businesses look for the bets ways to pay suppliers and get paid by customers.
Elements of the Supply Chain
* Structures - these are the organizational units within the supply chain that interact. They include a company, its suppliers, its customers, distribution channels, design and engineering centres, manufacturing and service centres. * Processes - the operational activities that transform inputs into outputs. These can involve demand and supply planning, forecasting, sourcing, purchasing, manufacturing and service operations, logistics, order entry, materials management, and new product or service development. * Linkages - connecting process to structure via communication, usually in the form of shared...