ZARA – the excellent example of supply chain

About Zara

Zara became successful but accurately predicting the forecast of supply and demand which was possible by innovative use technology along with applying agile technique of operations and strategy.

Image by Free-Photos from Pixabay

The basic was providing PDA’s for not only transaction of customer purchases but for generation of ideas of new fashion creation the business model has its agents whenever and wherever get inspired they quickly share fashion sketches to main head office and the approved new items will be available in the stores by six weeks. (Hugo, 2020). Due to this concept Zara is the only fashion retail to have a new fashion design range of clothing every two weeks on average, the result is 11,000 distinct items are produced over a year. This is all possible due to highly sophisticated distribution system of Zara called Cube, in 2019 Zara was ranked 46th most valuable brand.

The manufacturing is not done based on cost instead it is preferred based on market demand. The shortest throughput ratio of manufacturing creates various verities of unique products and usually the new styles are sold out in stores also this creates trendy and each time customer visits the store they find new verities and purchases immediately due to products sold out in the future.

Challenges

Zara have outsourced manufacturers in China, Bangladesh, European countries and other regions, to maintain high quality each batch of products produced is compulsorily shipped back to Spain main headquarters for final design adjustments and packaging then again packages are shipped and distributed all over the globe. However Zara can expand its design centric appealing to more regional areas like China where another global cube can be created. This will reduce the cost however the coordination can be complex and just in time manufacturing may fail. So the challenge for Zara is to keep up the fast fashion trend with high cost.

Today due to Covid-19 the model of Zara is effected and cannot meet the high demand, in 39 countries Zara has closed over 3,785 stores globally. The sale is dropped 24 percent in first two weeks of March 2020. (Chapman, 2020)

Climate activists

Climate activists are fighting against through away fashion trend by Zara and this is the core strategy of business model perfected over decades.

Climate activists criticizes the culture of throwaway to save planet as the fashion industry consumption is lot of energy and water.

The demand and pressure to have sustainable clothing, the idea to have recycle large quantities of clothes to be recycled however the high quality and fast fashion demand is still new along with recycled clothing range. (Müller, 2020)

The good thing is parent company Inditex is among few top players investing in recycling technology.

Rent the clothes

New trend to have fast fashion without throw away is possible renting clothes on subscription business model which already exists in US. (Müller, 2020)

References

Chapman, B. (2020, March 18). Coronavirus: Zara owner Inditex shuts 3,785 stores globally as sales plunge. Retrieved from Independent: https://www.independent.co.uk/news/business/news/coronavirus-zara-shut-stores-covid-19-sales-fall-inditex-a9408841.html

Hugo. (2020, January). Zara’s Unique Business Model is Driven by Its Supply Chain Capabilities. Retrieved from SCM Globe: https://www.scmglobe.com/zara-clothing-company-supply-chain/

Müller, S. (2020, January 27). Zara’s fast-fashion problem in focus. Retrieved from DW: https://www.dw.com/en/zaras-fast-fashion-problem-in-focus/a-52161858

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