Supply Chain Management and Zara

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Zara Case Analysis Operations Management MBM1110

Table of Contents
Executive Summary ................................................................................................................................. 3 Introduction ............................................................................................................................................ 3 Outstanding Operational strategies ..................................................................................................... 4 Layout ................................................................................................................................................. 4 Forecasting .......................................................................................................................................... 5 Product life cycle ................................................................................................................................. 5 Product Design and Supply Chain Management ................................................................................... 5 Marketing ............................................................................................................................................ 5 Just in time .......................................................................................................................................... 6 Vertical Integration .............................................................................................................................. 6 Incorporation of Bershka ..................................................................................................................... 6 Conclusion ............................................................................................................................................... 7 Bibliography ............................................................................................................................................ 8

Executive Summary
Zara, a flagship chain store of the Inditex group owned by Spanish business tycoon Amancio Ortega is one of the top names in the mid-priced fashion industry. Zara was established in 1975 in Acoruna, Galicia, Spain and has expanded to 1395 stores all across the globe. It is said that Zara, unlike any other retail organization in the clothing industry takes just two weeks to design, develop and get a new product into the stores. However, the retail industry has a six month average to do so. By using its operational strategies in a very successful manner, Zara is able to launch 10,000 new products every year. This report will discuss the operational strategies that Zara uses which works as order winners and order qualifiers. It also discusses the strategies that they use which makes them one of the top names in the fashion industry.

Introduction
Zara uses very innovative strategies for its business. By doing so, Zara is able to avoid outsourcing its manufacturing process to low cost and developing countries like most of the other companies in the industry. Zara does not even spend a lot of money on marketing, hence increases its profit margin. It however does spend on the layout of its stores. Unlike many of its competitors, Zara is a vertically integrated retailer since it controls most of the step in it supply chain by designing, producing and distributing itself. This unique business model has resulted in the emergence of one of the most successful retailers in the fashion industry. Terry Hill in 1993 came up with the terms ³order qualifiers´ and ³order winners´, against which it is believed that manufacturing strategy should be determined (Add Reff. Hill, T. (1993), Manufacturing Strategy: Text and Cases, 2nd ed., Macmillan Press, London.). Order Winners are characteristics that serve as a competitive advantage for one firm over others. Order winners enable the customers to choose a particular firms goods and...
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