Zara case study

1. Design cuts fabric sewing ironing wrapping selling transportation Zara is a

vertically integrated retailer. Unlike similar apparel retailers, Zara controls
most of the steps on the supply-chain: It designs, produces, and distributes
itself. Firstly, Zara designs the apparels itself, and sends the design draft to
cut fabric in-house. After that, they will be sent to the local co-operatives
for sewing. When items return to Zara’s facilities, they are ironed by an
assembly line of workers. After complete ironing, they are wrapped in
plastic and transported on conveyor belts to a group of giant warehouses.
Finally, they would be sold at the stores.
2. The concept of vertical and horizontal conflict as it relates to Zara is shown
by the reluctance of Zara to extend its vertical supply chain by not
accommodating distant and slow suppliers. In fact, Zara promotes the
horizontal chain by relying on its own resources to make it the market
leader. This it does by manufacturing or even growing its own raw materials
and fabrics. In effect, Zara minimizes conflict between the distribution and
production system by running their own efficiently ahead of its
competitors, of course with a little help from technology.
3. The type of vertical marketing that Zara exhibits is called Contractual VMS
(Vertical Marketing System). A vertical marketing system is a form of
cooperation between multiple levels of a distribution channel. The
members work together to promote efficiency and economies of scale in
the way products are promoted to customers, credit is provided to
customers, and products are inspected and delivered to customers.
4. One of the disadvantages in this ‘fast-fashion’ system is the risk of
misreading the fashion trend for a particular period and paying the price by
disastrous losses in sales. Another disadvantage is that as owner or CEO,
you must keep track of what is happening in several departments at the
same time. This is especially true in Zara, where quality checks must always
be regularly conducted among the cooperatives doing the sewing of the
designs. You must place some of your trust in others from time to time and
hope that they perform as expected. Another disadvantage is the high cost
involved in maintaining the complex high-end supply chain of the whole
system. However, such disadvantages can be offset when Zara becomes the
market leader among those who follow the ‘fast-fashion’ system. This
translates in capturing a bigger market share resulting in increased
revenues and profits.
5. One of the number ways of Zara's strategies to create value to their
customers is providing them with the latest and most up to date fashion.
The customers get to wear the latest fashions as they enter the market due
to the rapid way of Zara distributing their inventory for all the stores
around the world.