Inditex, the parent company of Zara had a net profit in 2011 of 1.73 billion euros: a jump of 32% of its net profit of 2010.
Moreover Zara has 507 stores around the world with a total selling area of 488,400 m² and 1,050 million of Inditex's capital invested into them. It also owns a 130,000 m² warehouse closed to its headquarters in Arteixo, Spain. Zara also purchased 20 factories that were highly automated with machines that were specialized for specific garments. 18 of these factories were located near headquarters, which minimized transportation costs. Concerning its production capacity, Zara, based most of its production on what the client is demanding at any time, virtually on demand manufacturing of a shop (pull strategy). The model of local production allows you to provide quicker. This is possible due to the average of only 12 days between design and the store. This production model can reduce inventory costs, lower margins by working with the most competitive offer and eliminates the need to resort to traditional sales in the sector to provide an outlet for surplus production. In this model is critical to have flexible production capacity to quickly adapt to changes in the always uncertain demand.
Zara has human resources teams in the retail and manufacturing environment that work exclusively to respond to the demand of its customer in a better way than its competitors. In the manufacturing environment, Zara’s product development teams are responsible for attending high-fashion fairs and exhibitions to translate the latest trends of the season into their designs.
Organisation: vertical integration
Knowledge / Information