Zara: Case Study Based Question & Answers
There are four activities of planning and controlling that Zara can implement in their supply chain. These are scheduling, loading, sequencing, and monitoring. Scheduling provides the time of working that when to do the things. It is the familiar statement that provides the volume and timing of the provided things that have to do in a systematic way.
Zara is using the scheduling in the supply chain that provides the designing in garments with the demanding time of the customer (Sodhi and Tang, 2012). Zara is the biggest fashion retailer in the world that can be declined due to lack of the scheduling. But Zara provides the scheduling with the sequence of the work with the timetable of the job completion.
An amount of the work is known as Loading that is allocated according to the operation. Zara is a big company so it also has the loading of the work that is managed by the availability of the machines. Additionally, Zara utilizes the machinery as much as possible and it can be free on the weekend and holidays (Qrunfleh and Tarafdar, 2014).
Zara also uses the machinery according to the scheduling time period and rest time thinks about the repair and maintenance to save the cost of the breakdown. This provides the valuable operating time to the working and provides the up to date machinery to the workers.
Sequencing is also a part of the supply chain because the work is done in the proper way and tackled according to the order. The work is completed by the Zara in a sequence according to the priority of the customer, physical nature of the material and due date of the work.
Mostly, Zara prioritize the due date of the work to make a good sequence with the quality in the design. It improves the delivery reliability of the operation and also increases the average delivery speed of the work (Khan et al., 2012). The customer priority is also good technique but in the case of Zara, it can show the negative effect of the company.
Monitoring is the final part of the Planning and control actions that ensure the planned activities are completed or not at the given time period. In this, the plan for the operation is measured and monitored to control on the planning. The company has got the success because it provides the best control on the supply chain management and monitors all the work time to time.
If there is any problem in the activity then it replaces the control on work center for the good result. Additionally, Zara also repeated whole the cycle if there is a big mistake or work didn’t complete on planned activity.
The supply chain of the Zara is very effective that uses the planning and controlling activities. The proper scheduling, loading, sequencing, and monitoring are the key point that helps to success Zara group (Chopra and Sodhi, 2014). It has a strong performance than the competitor to make success in the retail sales fashion products.
Zara is a well-recognized brand of clothing and accessories which cater or deliver its products globally and it has a huge customer base. It has an effective and well-managed supply chain which helps the company to deliver its products to its customers on time and satisfy them accordingly.
As the company has the huge customer base so it becomes the responsibility of the company to cater to the needs of the customers and also pay attention towards the changing customer behavior, and fashion.
The company has a strong supply chain as the operations of the company are spread globally. The company has to satisfy the needs of the customers who are spread in different countries so it becomes necessary for the company to handle or manage its supply chain effectively (Terwiesch, et al., 2011).
Every company to operate and satisfy its customer globally should have enough capacity of stock. The company should manage the capacity accordingly and should also ensure that there are no capacity constraints in the company that can affect the performance and sales of the company.
Zara can handle its capacity constraints by adopting the product-based tailored sourcing. In this, Zara can obtain the products which have low-volume from a more flexible source, these low-volume products are having an uncertain demand so it is better to obtain them from a flexible source (Wang, et al., 2011).
At the same time, the products which have high-volume are obtained from an efficient source as they have less uncertainty in the context of the demand.
Additionally, it can manage them by ordering and managing the capacity in advance and also producing some of its stock locally which allows for instant replenishment.
Every company which has its operations internationally all over the globe has to ensure that it has a strong and an effective supply chain. Zara to satisfy its customers effectively should also ensure that it has an effective supply chain or distribution network that is efficient enough to deliver its products at the right time and at the right place.
Zara can manage its level of demand throughout its supply chain effectively. It has a strong supply chain network that can be observed by the fact that Zara changes its stock in its stores or outlets twice a week (Christopher and Holweg, 2011).
They even get the ordered inventory within just two days after they place their orders. The items come already on hangers and also with their price tags which make it easier for the store manager to place them as soon as they are unloaded from the trucks and go straightly to the sales floor.
This helps the company to manage the demand level effectively and efficiently. The drum-buffer-rope of constraints can be used to overcome bottlenecks as it helps by using a buffer in the constrained resources to decrease the unnecessary WIP inventory of clothes and also allows for a continuous and smooth flow of products throughout the supply chain.
This DBS also is helpful in providing the company better quality of products to the customers (Nagurney, 2010).
Zara is one of the well-recognized clothing brands which deals in clothing and accessories. It is been headquartered in Spain and was founded back in 1975. It has its stores all over the world and it has a huge customer base. Zara not only caters to the international markets but the entire globe.
It has an effective supply chain that ships or delivers the products to its outlets or Zara stores twice in a week. It has 2400 stores all over (Wong and Yazdanifard, 2014). The inventory control methods are these methods which are adopted by any company in order to exercise a control over its inventory.
These inventory control methods help the company to increase their profits and at the same time help it to reduce the wastage. The inventory control methods adopted by Zara at its various stages of the supply chain are as follows:
- Just in time production– The company Zara adopt the method to deliver the fashionable and trendy apparels that suit the different tastes of the customers by an integrated process that is called as just in time.
- Zara keeps a considerable amount of stuff in-house so that whenever a demand occurs instantly it can cater to the needs of the customers. It, therefore, reserves nearly approx 85% of their production in their own factories for in-season demands.
- This helps the company to become flexible as per the demands of the customers (Caro and Gallien, 2010). It also shortens its product lifecycle that helps to bring greater success in meeting the needs and wants of the customers.
- Inventory optimization model– This model is adopted by Zara Company to have a control over its inventory. This model, therefore, helps the company to identify what exact quantity should be delivered to each and every single outlet.
- The stock which is delivered should be strictly limited in the sense that each and every outlet only receives the stock which they need. This helps to minimize wastage and also helps to reduce or decrease the unpopular stock in the company (Ali, et al., 2013).
- This further helps the customers to get new and latest fashionable apparels quite often as Zara changes its stock twice a week.
- Bulk shipments– Zara delivers its apparels or accessories in bulk so that it has to replenish its inventory less frequently. This technique or method is useful when the company has the huge customer base and high demand from the customers.
Inventory control also gives Zara Company a competitive advantage. By adopting these inventory control methods gives flexibility to Zara in adapting their product lines. It also helps the company to reduce its cost of holding inventory.
Another competitive advantage Zara has over its competitors is that it responds instantly to the changing needs or demands of the customers which help it to acquire a larger market share in the market. Its technology infrastructure, the strategic partnership also provides it a competitive advantage (De Marco, et al., 2012).
Zara uses the unique supply chain as it produces approx. 450 million clothes in a year. This performs by Zara through producing the clothes of the same style in small batches rather than produce more at a time. These small batches delivery happen with clockwise twice a week in store.
At the same time, Zara is achieving the growth through using the diversification and vertical integration as it adapts the tailoring design, manufacturers and distributes its own product etc. (Qrunfleh & Tarafdar, 2014). Zara has their own warehouse to distribute their own labels.
Zara is vertically integrated as it manages the design, production, shipments, promotions, sales and receives feedback itself etc. The vertical integration approach also helps the Zara to take control over every operation. Due to this approach, Zara controls the maximum cost and maintain their quality.
Moreover, this approach also helps in making smooth and regular communications between the different stages of the Zara product lifecycle. These areas are the design, distribution, manufacturing etc. Thus, such vertical integration strategy provides the competitive advantage to the Zara in the field of supply chain network.
On the other hand, Zara to expand their market in the areas of Asia and Europe where the vertically integrated strategy proves to be quite costlier for the company so in that case, Zara outsources with the local labors of Asia and Europe in order to create the fashionable brand at affordable price.
This strategy helps the Zara to make the mark at the Asia and Europe market. The outsourcing strategy contributes Zara quite effective as in Europe have approx. 66% and in Asia have 20% sales etc (Wang et al., 2011). Thus, Zara use both the strategy such as vertical integration and outsourcing but maximum Zara rely on the vertical integration strategy for expanding their business operation in the global market.
This diagram clearly signifies the Zara supply chain through indicating that Zara mainly use the vertical integrations way as it has own design, manufacturing units, distribution network, shops etc. But for the expanding their operations in the Asian market, Zara switch towards the outsourcing by taking services of Asia labor in order to save their maximum cost.
This strategy helps them to achieve the profits but Zara currently follows the vertical integration in their supply chain. This will give them the distinct advantage to Zara among its competitors like H&M, mark & Spencer and Westside etc.
Zara supply chain could be compared with the global competitors like H&M who is also considered as a leading company in the fashion industry. Zara and its competitor H&M can be compared on the basis of the supply chain as it indicates that H&M does not rely completely on the vertical integration (Wong et al., 2011).
They have their own design and distribution channel but they outsource manufacturing and shops for the expansion of operations in the global market. Thus, it can be stated that the unique and distinct nature of supply chain network of Zara is their more following the vertical integration process as their competitors more use of outsourcing strategy to expand their business.
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