Zara's Supply Chain Management Practices
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Case Details:
Case Code : OPER055
Case Length : 13 Pages
Period : 2002-05
Organization : Zara
Pub Date : 2006
Teaching Note :Not Available
Countries : Spain
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts
Spotting Trends
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One of the secrets behind Zara's success was its ability to spot emerging trends
and react quickly. Zara had a dedicated design team in Arteixo, A Coruña, in
northern Spain. Ideas for new designs or for modifications to be made in
existing designs mainly came from Zara's stores.
The store managers and sales staff updated the head office every day about the
moving stock and about customers' demands. Across all the stores, Zara's sales
staff was equipped with wireless handsets which provided data to the store
manager about the pieces sold. The manager consolidated the data and sent it to
the company headquarters through the Internet...
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Reaping the Benfits
Instead of projecting sales for a certain color, fabric, or style and
launching such products, Zara reacted swiftly to emerging trends in the
fashion industry. The company ensured that its stores were stocked with the
products that the customers wanted at that point of time. In contrast, other
retailers took between 8 and 12 months to forecast and arrive at a style and
send it for production. Zara's initial forecast was limited to the kind of
fabric and the amount of fabric it would buy. The fabric thus procured was
unprocessed and undyed and Zara colored the product only before selling it,
based on the need and demand by consumers. Zara sourced undyed fabric from
the Far East, Morocco, and India...
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Looking Ahead
Industry analysts were of the opinion that Zara could not continue with its
supply chain model for too long. With many retailers moving their
manufacturing processes to India and China to control costs, Zara would have
to follow suit sooner or later in order to remain competitive. However, if
the production was to move out to low cost countries, Zara could lose its
advantage and might not be able to refurbish its product lines in quick
succession, the analysts felt.
By 2008, the quotas imposed on the Chinese textile industry by the US and
the European Union would be removed... |
ExhibitsExhibit I: Zara - Global Presence (January 2006)
Exhibit II: Inditex - International Expansion
Exhibit III: Manufacturing Process of Zara
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