Zara is Spanish based fashion company with its famous clothing brands that can be found around the world. Zara was founded by Amancio Ortega, which it quickly spread throughout the country and it became the leading Spanish fashion. Zara mostly targeted the young people, and since its expansion throughout the country, Zara has grown beyond its borders of Galicia throughout Spain. Then the company set their eyes on the international market and found great success since it set itself as a global fashion phenomenon. Zara supply chain relies on the contrarian strategy of the vertical integration in retail apparel this enables the introduction of new items each and every year which also sustained more visits to the shop to their stores by more frequent shoppers, fast cash conversion cycle and fewer sale are made on the markdown.
The key to success of the organization is the because the vertical integration supply was designed, the production, distribution and its retailing were all integrated. It is estimated that the product to be designed takes a period of 15 days hence the industrial average is 6-9 months the annual inventory turnover which is an industry average of about 3-4 times. The supply chain suppliers are always close to the factories hence the orders are carried out on a daily basis the clothes are then ironed and packed on hangers, price tags affixed with security are done overnight. Trucks are then used to deliver to different stores within Europe and airfreight is used to ship to the other countries. The advantage of the company is that it can place its garment in any store all around the world within a period of about two to three weeks. Therefore allowing the customers to be able to access Zaras clothing for that time.
The advantage of vertical integration gave a chance for the company to be able to sell some of the garment at any store across the world. Zara concentrates on the winning formulae by making a more fashionable clothing of more choices and more chances of hitting it. Furthermore, they avoid conflicts that may emerge from different channels. Zara has a good manageable schedule, therefore, focusing on one program. Zaras another advantage is that it quickly reacts to the trending fashion thus supplying to the customers with the latest fashion outfits as soon as in few weeks times. Zaras does not make its product to a significant amount this is to reduce the loss of those fashion styles that do not sell therefore they do not loose much.
Zaras competitive advantage is their fundamental value they created to their customers whereby the can adapt the offer to their client's desires in the shortest period possible. Zara achieve competitive advantage were they not only provide their product to the youths but they also provide their products to the women, children and the men, in general. The company heve their products in some of the major shopping stores and streets in most cities on the world, created high-quality fashion coming at a reasonable market prices. Zara also has highly experienced external suppliers who can allow Zara to manufacture their products and to have it for sale in various stores worldwide within two weeks of its shipping.
All the supply chains owned by Zara has been one of the biggest disadvantages of its supply chain since it will be expensive to expand to the distant location to distribute its products. Zara has been managing the distribution on their own therefore the designing, and the production process might nit be at its best process. Through diseconomy of scales, the cost gets higher and higher and higher in a long time. Zara has only one distribution center in the world making it hard to reach customers from some parts of the globe. Zara does not spend most of its money in advertising this is because they use the opportunity from the online market. Zara faces competition from different fashion company in its locality and the globe competitors. Most country at which the stores are based losses revenue, Spain is where Zara is based is dented in revenue is one of the many countries that loses revenue.
Zara reacts quickly to its customers becoming one an expert in fast fashion chain supply by quickly responding to the changes in the supply. Zara maintains its customers by meeting the current needs of its customers this way they also attract new customers they achieve this by collecting the annual data of the demanded customers needs this way they also avoid the possible losses. Zara uses the actual application on the market, and the existing customers need to satisfy the customer's needs and also to increase their customer's loyalty. Zaras success is based on their ability to understand the customer's innate needs and their desires and with innovation strategies which they use this new approach in their businesses.
CLARA LU (4 DEC 2014)Zara supply chain analysis - the secret behind Zara's retail success
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