Zara Case

Topics: Management, Supply chain, Strategic management, Outsourcing, Price / Pages: 3 (569 words) / Published: Oct 27th, 2013
Case: Operations Strategy of Zara
Question 1: Zara has a variety responsive supply chain. (a) Does it offer a competitive advantage, and (b) how does this affect supply chain design and performance?

(a) Yes
Zara’s responsive strategies improve the efficiency of information exchange in every level of supply chain; customers, store managers, designers and market specialists, production stuffs, subcontractors, buyers, warehouse managers, distributors, and so on.
As a result of efficient exchange of information, Zara can increase product turnover rate and delivery speed of products, designs, and trends, so each store can get new products just in time. Each shop is also able to reduce inventory risk, which makes Zara to offer products at an affordable price.

Question 2; Zara chooses both in-house and outsourced manufacturing. What are the reasons for choosing both strategies?

Using in-house manufacturing, Zara can be more responsive to trend and customer demands. This strategy also provides Zara more quality control and faster exchange of information on each level of supply chain.
The main reason using outsourced manufacturing is to reduce overall cost and increase company’s productivity.

Question 3; Compare Zara’s possible supply chain disruptions with that of Hewlett-Packard using the assessment matrix of Exhibit 2.4.

Outsourcing’s logistic failure would be more likely to influence Zara’s supply chain than HP, because its production and delivery spans are much faster.
Zara’s outsourcing method may not be influenced by commodity price risks because only labor intensive activities are outsourced.
Most of products are produced by Zara’s own factories, so regulatory risk would not be high.
The case does not provide any information about Zara’s sole sourcing method.

Natural/ manmade disasters
Country
risks
Supplier
failure
Network
provider failure
Regulatory
risk
Commodity
price risks
Logistics
failure

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