Zara Operations Management

Topics: Inventory, Supply chain management, A Coruña Pages: 7 (2572 words) Published: December 7, 2014
Executive Su Zara is a Spanish clothing and accessories retailer based in Arteixo, Galicia, and founded in 1975 by Amancio Ortega and Rosalía Mera. Zara is a chain of stores Belonging to the Spanish fashion group INDITEX founded by Amancio Ortega Gaona. It is the company's flagship chain and is represented in Europe, America, Africa and Asia with 1412 stores in 69 countries, 324 of them in Spain with the headquarters in La Coru;a. During 2007 it opened 560 stores across the group. Zara is committed to satisfy the desires of its customers by continuously innovating the business operations to improve the experience. The ability to offer new clothes styles faster than its competitors is KEY to Zara’s market position. It offers the latest fashion in medium quality at affordable prices. It has been very successful in doing so with short cycle time, small batches per product, extensive variety of product every season and heavy investment in information and communication technology. Zara has segmented the production line into 3 categories; women the strongest target(78%) men and children. The company has set 3 goals for its operations. To develop a business within a short lead time, decrease quantities produced to decrease inventory risk and increase the number of available styles and choices.

In the case of Zara the inputs of the organization are comprised of the raw materials, such as the fabrics that after design and manufacturing-retailing will produce the garments, information such as products protocol, human resources such as the designers that has the skills and knowledge to produce the garments. The transformation process consists of the manufacturing and services operations that are necessary to transform input into output.


From conception to distribution, Zara only uses six months by maintaining production, design and distribution processes in-house which enables its business model to respond quickly to shifts in consumer demands. This showed the speed and responsiveness to market. This new production style also changed the way the clothing industry by using the local strategic partnership rather than outsourcing in Asia. 80% of Zara’s material (input) is manufactured in Europe, with 50% produced in the headquarters in Spain. The proximity of local suppliers also provides greater flexibility to adapt to product lines and manage to turn all inputs into outputs more effectively as well as increasing the speed of delivery and the overall dependability. The proximity of the suppliers help Zara decreasing the costs of holding inventory which is a key sustainable advantage as it enables Zara to manufacture and sell its products at cheaper prices. Thus, Zara has linked speed, flexibility and dependability in the production process that ensure Zara can meet almost all the fashion requirements by customers of all ages and keeping costs to a minimum in the same time. Design and delivery

In Brighton Zara, the staffs always use wireless handsets to communicate inventory levels to the store manager in order to transmits the information back to the headquarters as soon as possible. Zara’s adaptive model is a very fast process that the whole design and distribution cycle of the company takes just 10-15days which is one of the strengths that Zara can react to unexpected demands faster than rivals and capitalize on this speed by designing new garments. Inventory costs are also higher for competitors because orders are placed for a whole season well in advance and then held in distribution facilities until periodic shipment to stores. Lower inventory cost is a key sustainable advantage as it enables Zara to manufacture and sell its products at cheaper prices. Furthermore, based on Information Systems, the designs are developed using CAD to speed up the process and ensure the quality. The practice of total quality management has also been implemented to...

References: Amit, R. (2010), "Business Model Innovation: Creating Value in Times of change", IESE Business School-University of Navarra, vol. 1, pp. 1-15.
Pearson, A. (2010), "The Story of Zara – the Speeding Bullet", Unique Business Strategies, vol. 1, pp. 1-3.
Luo, D. (2010), "How to manage a brand to be strong: a study of Zara ", University of Nottingham-MSc International Business, vol. 1, pp. 1-78.
Ferdows, K., Lewis, M., Machuca, J., (2004)
Christopher, M. (2010). Logistics and Supply Chain Management, 4th ed. Prentice Hall.
Ferdows, K., Lewis, M. A., & Machuca, J. A. (2005). Zara 's Secret for Fast Fashion. Havard Business School Working Knowledge
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