SALES AND DISTRIBUTION STRATEGIES

The marketing channel may have different structures. There are manufacturers who have a direct or
one-step channel structure. There are also market channel structures with 6 or more steps. What sets
Fashion apart from other companies is its well-designed supply chain network. Fashion started its
operation in the 1970s. It was opened in Spain. From then on, Fashion continued to grow and now has
nearly 900 stores around the world. One of the elements of Fashions success as a fashion empire is its
highly effective supply chain system that enables the company to control the entire marketing channel
and its processes and steps from textile manufacturing to retail. Fashion also has an extremely effective
global network which is consist of buyers and trend-spotters. The responsibility of these people is to find
inspiration by walking around the metro in different locations, navigate the world-wide web and to scan
newspapers and magazines, and visit fashion shows in search for new trends for men, women, and
children clothing. From the information and inspiration that they gather, they create clothing pieces that
have the catwalk look but at the same time affordable. Fashions clothing products are very attractive
to people of all ages and all walks of life. The success of this fashion brand can be attributed to its
marketing channel and supply chain management. Supply chain or value chain management is
composed of the operational or tactical activities and can be defined as managing the entire chain of
raw material supply, manufacture, assembly and distribution to the end consumer (Jones 1989 cited in
Lowson 20002). Christopher (1998) defines supply chain management as the management of upstream
and downstream relationships with the suppliers and customers to deliver superior consumers value at
less cost to the supply chain as a whole.
Steps in Fashions Marketing Channel
In order to make sure that the marketing channel is streamlined for success and that Fashion is able to
produce quality products in just a short period of time, the management organized every business
process and activities from design to retailing.
1. Design and Order Administration
In order to support the strategy of the company to have a strategic supply chain management, changes
and improvements were introduced in the design and order administration process. In order to ensure
product quality, the company designs its own products. There are more than 300 people who work in
the order and administration department. These people produce designs that the company will make
into clothing items. In order to make the supply chain more effective, the order and administration team
works on designs for the current season as well as the next season, making the process more efficient
and enabling the company to update and develop the current designs very quickly.
2. Production
The companys production process supports the companys strategic supply chain management. Fashion
manufactures approximately 50 percent of its products in its own network of 22 Spanish factories but
use subcontractors for all sewing operations. This enables Fashion to focus on the processes that adds to
organizational capabilities. Many of Fashions suppliers are based in Spain and Portugal and Fashion

exploits this geographical proximity in order to ensure quick response to orders which is critical for
fashion products.
3. Distribution
All products pass through Fashions major distribution center in La Corua. The 5-storey, 50,000 square
meter distribution center employs some of the most sophisticated and up-to-date automated systems.
With a workforce of 1200, the distribution center normally operates four days per week with the precise
number of shifts depending on the volume of products that have to be distributed. Orders for each store
are packed into separate boxes and racks (for hanging items) and are typically ready for shipment 8
hours after they have been received. Fashion manufactures and distributes products in small batches.
Instead of relying on outside partners, the company manages all design, warehousing, distribution, and
logistics functions itself.
In 2001, the distribution center shipped 130 million pieces. 75 percent of these shipments were to
stores in Europe. Fashion garments represent around 80 percent of Fashions products and the rest are
more basic items. Contractors using trucks bearing Fashions name pick up the merchandize at La
Corua and deliver it directly to Fashions stores in Europe. The trucks run to published schedules.
Products shipped by air are flown from either airport in La Corua or the larger airport in Santiago.
Typically, stores in Europe receive their orders in 24 hours, the United Sates in 48 hours and Japan in 48
to 72 hours. Compared to similar companies in the industry, shipments at Fashion are almost flawless
98.9 percent accurate with less than 0.5% shrinkage.
State-of-the-art distribution facility functions with minimal human intervention. Approximately 200
kilometers of underground tracks move merchandise from Fashions manufacturing plants to descents
that ensure each order reaches its right destination. The merchandise does not waste any time waiting
for human sorting. Optical reading devices sort out and distribute more than 60,000 items of clothing an
hour based on its bar code. Fashion has a centralized distribution system which operates out of two
primary warehouses located in Spain. About 2.5 million garments could move through the distribution
center each week. This location periodically receives shipments of finished clothes from suppliers and
ships replenishment inventory directly to every Fashion store in the world twice a week. These
shipments are made by truck to Europe and by airfreight to stores outside of Europe, so that stores
received good s within 24-36 hours of shipment in Europe and within 1-2 days outside of Europe. No
inventory was held centrally, and there was almost no inventory at the stores that was not on the selling
floor. Fashion applies the Forward Integration strategies. Since Inditex demands a high integration
between the headquarters and all branches across the globe, therefore Inditex controls its retailers and
distributors all around the world in order to standardize the overall business performance.
In the distribution system, Fashion control most of the supply chain and distribution of its products from
the headquarters. Fashion has their main manufacturing place in three different contingents. 50% of the
products are produced in Spain, 26% in the rest of Europe, and the rest 24% percent is outsourced in
Asia and Africa. Then the products were transferred to Fashions distribution centers located in Spain to
be exported to Fashions stores around the world. We can see that their distribution strategy is vertically

integrated. This requires a high concentration and control form the headquarters in Spain, and that is
exactly what Inditex does.
Since the distribution strategy is integrated, combined with their high technology, the products can be
distributed globally in just a short amount of time. This is the uniqueness of Fashion. They are able to
adapt to the latest trend in limited time, using the Hybrid Communication system, then produce those
latest trend with available materials to cut production time and cost, and after that the products are
immediately transferred to all the stores. We found out that this is strategy has become their strength.
An effective distribution, therefore, has a higher weight of 0.12. In our opinion Fashion deserves 4 rating
for this factor since this is their specialty. There is a unique concept of fast fashion that might become a
trendsetter in international fashion industry
4. Retailing
Stores usually place their orders and receive shipments twice per week. Orders have to be placed at predesignated times.
The store plays an important role in the Inditex business model that ranges from production up to end
distribution. The overall experience of the customer in the store in considered. Apart form the fashion
supply, the interior design of the store, coordination of collections, maximum care over window displays
and customer care are some of the elements that guarantee this experience. The stores where Fashion
concentrates the majority of its investment are the essence of the groups chains, for which reason the
location in the main commercial areas of cities and care over interior design take on vital importance for
the company. The store is Fashions main image vehicle.
Apart from its location, its window designs and interior design, customer care is one of the elements
that Inditex takes most care of: its relationship with consumers. Personnel receive specific c training on
customer care as one of the main intangible values of the store. Inditex establishments are thought out
so that the encounter between the customer and fashion can take place in a pleasant environment.
Store personnel with supervisors as the main drivers of quality of service, encourage freedom and
comfort of the visitor by taking an active role in the shopping process exclusively when the customer
requests this