The Key Elements of Zara's Supply Chain Strategy | Free Essay Example (2024)

The success of Spanish retailer Zara can be measured by the number of its stores found in the most prestigious capitals around the world as well as in comparatively small towns in the middle of nowhere. The brand belongs to the INDITEX group and can be put under the umbrella of fast‑fashion alongside Stradivarius, Bershka, and Pull&Bear that are owned by the same individuals as the brand in question (Ivanov et al., 2018). Zara is known for its style that aims rather young, price-oriented but still wanting to feel trendy demographic (Aftab et al., 2018). The extent of the brand’s popularity may be traced to Amancio Ortega’s, the cofounder’s of INDITEX, approach to supply chains.

The mixture of price with up-to-date trends within fashion embodied in Zara’s products serves as a crucial agent for its rapid development. Combined with the principles of responsiveness and control that guide Zara’s supply chains, the brand’s strategy manifests the lesson that Ortega learned early in his career – the significance of the equal attention distribution between production and customers. The company decides not to depend on the outside suppliers, investing in capital assets, which give it greater command over timing and facilities (Ferdows et al., 2004). Zara’s strategy allows products that are not labor-intensive to be outsourced; nevertheless, the items that require more resources are produced in the brand’s factories (Ferdows et al., 2004). This determination of production needs for each type of item warrants higher cost-effectiveness.

Another element that the brand incorporates in its supply chain strategy is information circulation between all of the production and retailing links, which results in the promptness and agility of their response to customers’ needs. The brand organized product teams that report to the designer teams’ current demands and feedback on the already fabricated items, creating a constant flow of information (Aftab et al., 2018). The continual and sustained data exchange helps to build an optimized information infrastructure. This process results in Zara’s ability to continually replenish their stores in accordance with data of what goods are favored by customers. In this way, they are motivated to attend the shops more frequently, as they can find the desired items, increasing overall satisfaction from the visits.

This information infrastructure allows Zara to react faster than its rivals to the ever-changing market needs. To sustain this system, the brand uses personal digital assistants “for transmitting order and offer information consisting of a large amount of minute stock-keeping unit (SKU) level data to and from headquarters to all the retail stores” (Aftab et al., 2018, p. 216). The aptness in predicting trends and demand distribution among stores is the outcome of a successful supply chain management strategy that helps a business to survive and flourish in today’s competitive economy. An effective supply chain is a way to help a company increase its revenue, which is often a central goal, by lowering the costs associated with operating and inventory management (Ivanov et al., 2018). For many third-party logistics companies embody a way to economize financial and time resources, as they procure personnel and equipment for inventory management and shipping (Ivanov et al., 2018). Nevertheless, Zara, seemingly, limits its utilization of third-party services, opting for capital asset investment.

Zara’s strategy disregards most of the components for a successful supply chain. Unlike many clothing suppliers that actively use outsourcing, Zara manufactures a significant number of its products using its own resources. The brand itself is engaged in the processes of design, storage, distribution, and logistics. Zara does not seek to maximize production volumes and uses the strategy of constant replenishment. In this way, there seem to be no universal components that would make a supply chain successful – in some cases, outsourcing and bulk production bring favorable outcomes, in other cases, such as Zara’s, the opposite works greatly.

References

Aftab, M. A., Yuanjian, Q., Kabir, N., & Barua, Z. (2018). Super responsive supply chain: the case of Spanish fast fashion retailer Inditex-Zara. International Journal of Business and Management, 13(5), 212–227.

Ferdows, K., Lewis, M. A., & Machuca, J. A. D. (2004). Rapid-fire fulfillment. Harvard Business Review.

Ivanov, D., Tsipoulanidis, A., & Schönberger, J. (2018). Operations and supply chain strategy. Global Supply Chain and Operations Management, 81–110.