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BY
SAWAD
BAHADUR
SANGITA SHRESTHA
DAIVIK PATEL
MOHAMMAD NAVEED
AGENDA
Industry Overview
Zara Overview
Supply Chain
Conclusion
INDUSTRY OVERVIEW
INDUSTRY OVERVIEW:
COMPETITION
Gap, Inc.
H&M
Benetton
Zara
Production
Outsourced
Outsourced
In-House
40% In-House
60% Outsourced
Production
Lead Times
High
High
High
Low
Net Margins
-.06%
9.6%
7.05%
10.47%
INDUSTRY OVERVIEW:
POSITIONING
Price +
Benetton
Gap
Fashion -
Fashion +
ZARA
H&M
Price -
ZARA OVERVIEW
ZARA OVERVIEW:
ADVANTAGES
Vertical Integration
ZARA OVERVIEW:
SUPPLY CHAIN
Manufacturing
Design
INDITEX
MANAGEMENT /
DESIGNERS
Determine apparel
designs and
manufacturing locations
ASIA
(20%)
Low QR
Low Cost
Sale
DISTRIBUTION
CENTER
IN-HOUSE
(40%)
High QR
High Cost
EUROPE /
N. AFRICA
(40%)
High QR
High cost
STORES
Increased shipment
frequency increases QR
Decentralized store
management supplements
QR
Managers determine
products to sell and return
IT SYSTEMS
Provides accurate
demand information to
determine
manufacturing locations
and production levels
Zaras
Activity
PRIMARY ACTIVITIES
Inbound Logistics
Information systems support decisions about the fabric, cut and price points.
Operations
Price tags are already on the products.
Zara produces 60% of its merchandise in-house.
Fabric is cut and dyed by robots in 23 highly automated Spanish factories.
Outbound Logistics
Clothes move on miles of automated conveyor belts at distribution centers and reach
stores within 48 hours. Distribution cost is high but timely.
Limited inventory allows low percentage of unsold inventory (10%); POS at stores
Marketing and Sales linked to headquarters to track how items are selling;
Customers ask for what they want and this information is transmitted through cloud
computing daily from stores to designers over handheld computers.
Customers can scan any barcode in the store and view product details via the mobile
application. It is really convenient for a customer who is in a hurry.
Service
SUPPORT ACTIVITIES
Organization
IT supports tightly-knit collaboration among designers, store managers,
market specialists, production managers and production planners.
Human Resources
Zara has more than 200 young talented designers, who create designs
based on the latest fashion from the catwalk and fashion hotspots and
adapt them for the mass market (Kumar and Linguri 2006, p.80-84).
Zara uses laser barcode scanners to deliver its products punctually to
different destinations; these scanners operate with less than 0.5%
error (Zhelyazkov, 2011).
Technology
Technology is integrated to support all primary activities. Zaras IT staff
works with vendor to develop automated conveyor to support
distribution activities.
Purchasing
Vertical integration reduces amount of purchasing needed. Zara buys
raw fabric from suppliers in Italy, Spain, and Greece and suppliers
deliver to Zara within 5 days (SCM Globe, 2015). It has short
production runs which creates scarcity of a particular design and
creates a sense of agility to purchase while supplies last.
CONCLUSION
REFERENCES
Burgen, S. (2014). Zara owner's online sales jump to 42% to 553m. THEGURDIAN. [Online]. Available:
http://www.theguardian.com/business/2014/nov/19/zara-owner-onlinesales-553m-inditex
Kumar, N. & Linguri, S. (2006). Fashion sense. Business strategy review,17(2), pp.80-84.
SCM Globe. (2015). Zara clothing company supply chain. SCM Globle. [Online]. Available:
http://blog.scmglobe.com/?page_id=1513 [Accessed 24 December 2015].
Zhelyazkov, G. (2011). Agile Supply Chain: Zara's case study analysis. Design Manufacture & Engineering
Management. [Online] Available:
http://galinzhelyazkov.com/wpcontent/uploads/2011/09/AgileSupplyChainZaracasestudyanalysis.pdf
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