Case: Marks & Spencer’s versus Zara’s Operations
Marks & Spencer (M&S) is a major British retailer of clothing, food and financial services. Over 30 million customers are served per month in more than 300 UK stores, besides the many international locations. The company was established in 1884 and now it has over $17 billion in annual sales with the highest profit margin in the retailing industry. M & S is encountering some difficulties in logistics because it has lengthy logistics procedures forcing the retailer to order 9 months in advance. Competitors like Zara have very fast and efficient logistics with excellent lead time. Nimble competitors are offering low prices as well as achieving many deliveries per year of new fashion items. M&S decided to pursue a new strategy of improving their product appeal, availability and value. The retailer encountered difficulties because its processes are not flexible enough to allow short lead times. New product development is slow and costly. The relationship with suppliers is not fast enough, nor efficient enough. M&S started to achieve savings by using fewer suppliers and working more effectively with them. This is to assure better product quality, value and availability. Spanish retailer Zara has hit on a formula for supply chain success that works. By defying conventional wisdom, Zara can design and distribute a garment to market in just fifteen days. In Zara stores, customers can always find new products—but they're in limited supply. This makes the customer eager to visit the store more often and in an urgent manner. Whatever is sold will not be back again. Such a retail concept depends on the regular creation and rapid replenishment of small batches of new goods. Zara often beats the high-fashion houses to the market and offers almost the same products, made with less expensive fabric, at much lower prices. This "fast fashion" system depends on a constant exchange of information throughout every part...
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