Zara's supply chain: Case Study

Topics: Supply chain management, Supply chain, Lean manufacturing Pages: 11 (3844 words) Published: April 13, 2014

Abstract
Purpose – The purpose of this paper is to understand how to develop a competitive supply chain in order to response to the speed of the customer changes in clothing industry. Literatures review – The key success factors of the clothing industry are explained. Also the supply chain concepts related to the industry are developed (Agility, Quick Response and Lean) Analysis of Zara’s supply chain – The supply chain network of the company is analysed and each stage of the network is developed in details to see how the supply concepts are applied or not by the leader of the clothing industry (Zara) Future developments – The company needs to focus on e-commerce development by taking advantage of its agile supply chain. Furthermore, Zara could set up a reverse logistics to develop a sustainable business. Conclusion – Three key points are relevant in this industry: the location of production facilities has to be the closest as possible to consumers (1). The use of concurrent engineering ease to develop products quickly (2). Finally, the ownership of the stores is a competitive advantage to understand the needs of customers. Limits – The use of Zara’s supply chain model is not applicable for international development.

Table of contents

1 - Introduction
“One day it’s in and the next day it’s out” (H. Klum). Customer demand changes in fashion clothing industry are quick and unpredictable. The summer/winter collections' times is ended, to give way to a perpetual series renewing of collections. Each time a customer come in a store, he wants to discover new products. The strategy sounds good and simple at a marketing point of view but that is a tricky challenge for supply chain managers. They need to reduce lead time, be innovative and responsive with a high variety of products to manage. How do companies have to organize its supply chain in order to be responsive to changes rapidly while remaining competitive in price? The aim of this essay is to explain how to develop a competitive supply chain in order to response to the speed of the customer changes in clothing industry. The first part deals with supply chain theoretical concepts used in the clothing supply chain. Afterward, I will explain you and analyse how Zara does to overcome competitors thanks to its supply chain and after I develop some future improvement ideas to stay competitive in the following decades.

2 - Literature review part: Clothing Industry Supply Chain
A – Key success factors in the fashion apparel industry
The fashion market is today highly competitive with several well-known brands such as Zara, H&M, River Island, Gap, Mango. According to Christopher et al. (2004), clothing market encompasses the following four features: short life cycles, high volatility, low predictability and high impulse purchasing. Every day, the customer wants a new fashion product at an affordable price. The characteristics of fast fashion are instability of forms and constant changes to create unique products. As it becomes impossible to forecast new trends, companies have to focus on timing and to get responsive to market changes. Each forecasting error or delay results in loss: markdown or lost sales (figure 1). The implications of these effects for supply chain management are numerous and important. B – Clothing Industry Supply Chain concepts

1) Agility
Agile Supply Chain is a “network’s ability to consistently identify and capture business opportunities more quickly than its rival do” according to Cai-Feng (2009). As in the clothing industry, the competition is based on time-to-market, agility is an adaptation faculty to the unpredictable changes of customer behaviour. Agility is required in fast changing environment in order to increase profit and outperform the competition. (Figure 1). Companies could become agile by improving the flow of information all along the supply chain, from final consumers to raw material suppliers. Concurrent...
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