Supply Chain Management

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ZARA: Responsive, High-Speed, Affordable Fashion

1.What is Zara’s value proposition? How does it differ from its competitors?

Zara’s value proposition is ‘low-cost but high fashion’ together with the opportunity of having a new piece of clothing considered as ‘unique’ -that won’t be in the shop for more than 2 or 3 weeks. On short, as well the title of this paper states: ‘Responsive, High speed, Affordable fashion’. Stores are managed as small business, vertical communication and supply chain, so each manager knows exactly the demand and specific request, model and colour. This is a way of increasing efficiency, loyalty and customers satisfaction.

Unlike the competitors, Zara spends a low percent of its sales on advertising, but on the other hand they focus on the windows, display to highlight the value of the brand and try to reach the target by choosing location in centre locations. As for ‘price’, Zara position itself somewhere in the middle of its competitors. Another element that differs the company from the others are the simple ways of communicating data, easy and effective, to be understood by everybody. This way not only the flow of information will get faster, but also expenditures for IT department are smaller. Just- in-time manufacturing is the business model that brings 17 time a customer in a Zara store per year, compared to 3 times to the rivals.

2. How does Zara’s supply chain differ from the traditional retail industry model? What are some of the advantages and disadvantages of this type of supply chain?

Zara is highly responsive. Identifying what customers want and get the products to market in no time, base on the technology communication and coordination. This characteristic that distinct Zara from the other retailers is the vertical integration in the supply chain (starting from raw materials procurement, creation and manufacturing to distribution and sales) and just-in-time manufacturing. Apart from all the suppliers and...
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