Supply Chain and Purchasing Management (MSCP)
I. Supply Chain strategy3
II. Supply Chain structure5
III. Supply Chain processes6
IV. Supply Chain management practices7
V. Supply Chain performance8
VI. Strengths and weaknesses9
I. Supply Chain strategy
The purpose of this report is to compare the supply chains of Zara and Benetton, two global players of the apparel industry. To give a first overview, both companies are placed in the quadrant of supply chain strategy:
This scheme indicates that first of all, both companies are allocated close to each other and therefore face similar challenges. Since the casual-wear apparel industry is at a mature stage with saturation at global level, process stability is quite high for both. Zara is placed further towards ‘high demand variability’ due to its emphasis on continuous update of launched products and focus on design. Benetton is rather known for its casual, simple and basic clothing, with less product variations.
The strategic differences between the two companies can be summarized as follows: |Benetton | |Zara | |Lean SC |SC strategy |Responsive Supply Chain with Agile SC elements | |Minimize costs, maximize efficiency in terms of |Strategy parameter |Just-in-time reactions and flexibility to cope with | |total logistic cost | |customers’ changing needs | |Economies of scale | |Mass customization approach | |Stock control and centralized management | |Time-to-market crucial with quickly changing fashion | | | |trends | |Large organizational scope (network organization) |SC scope |Small organizational scope (mainly 2 firms, Zara and | | | |Inditex involved in SC, ownership of processes & retail | | | |shops) | |Small functional scope (most functions outsourced) | |Large functional scope (almost all traditional business | | | |functions involved in Zara SCM process) | |Rather physically efficient SC, some market |SC characteristics |Rather market responsive SC | |responsive aspects | | |
Zara is characterized by a high level of control and vertical integration of activities (design, production, logistics, and sales in the company’s own stores). In comparison, Zara’s approach is innovative in a way that they focus on mass customization without mass production methods. They use their flexible network and its ‘speed-to-scene’ capability to give the illusion of mass production while actually only producing small batches. In production, Zara out-sources only a very small portion compared to Benetton. This and the concept of ▪ producing only small batches with frequent delivery to stores, ▪ low capacity utilization of plants,
▪ use of exceptional freight matching retail demand and ▪ avoidance of EOS
built Zara’s key strategy and advantages.
These are flexibility and fast...