29-06-2012, 03:48 PM
Supply chain practices of Zara
19488507-Supply-Chain-Practices-at-Zara.pdf (Size: 3.44 MB / Downloads: 40)
ZARA’S PROFILE
Zara is the flagship chain store of Inditex Group owned by Spanish tycoon Amancio Ortega.
Zara is the most internationalized of Inditex’s chains. The group is headquartered in A
Coruna, Spain, where the first Zara store opened in 1975. As of August 2009, there are more
than 1,500 Zara stores around the world.
It is claimed that Zara needs just two weeks to develop a new product and get it to stores,
compared with a six-month industry average, and launches around 10,000 new designs each
year. Zara has resisted the industry-wide trend towards transferring fast fashion production to
low-cost countries. While it spent little on ads, it spent heavily on stores.
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. The business system
that had resulted was particularly distinctive in that Zara manufactured its most fashionsensitive
products internally. Zara did not produce "classics", clothes that would always be in
style. In fact, the company intended its clothes to have fairly short life spans, both within
stores and in customers' closets.
FASHION INDUSTRY – OVERVIEW
The fashion industry is characterized as a chain, in which profits derived from “unique
combinations of high-value research, design, sales, marketing, and financial services that
allow retailers, branded marketers, and branded manufacturers to act as strategic brokers in
linking overseas factories” with markets.
There are various types of fashion and each type has its own characteristics. e.g. Fast fashion
is one of them which are used to describe clothing collections which are based on the most
recent fashion trends, whereas classical fashion on the other hand describes those clothing
collections which are evergreen. The recent trends are generally the ones that are presented in
various “fashion week” organized around the globe.
Fashion is a thing which constantly changes. Its value depreciates slowly after the time is
gone. In the time period when the product has just become “out-of-fashion” till its value
[SUPPLY CHAIN PRACTICES OF ZARA] August 31, 2009
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becomes zero, the product is generally sold on sale. As a result, this industry tends to extract
as much profit as possible when the product is in fashion then give “heavy” discounts.
FASHION INDUSTRY – GROWTH DRIVERS
There are many factors on which the future growth of fashion industry depends:-
1. World GDP – The GDP growth will determine the buying capacity of people and also
the condition of other industries on which fashion industry depends.
2. Policies – As many countries are plunged into recession, the countries are changing
the import and export policies. These policies will have a major impact on the
industry growth as most part of fashion accessories are exported to other countries.
3. Development of logistics – Logistics is the backbone of fashion industry. As the better
the logistics, faster the product hits the market, cheaper the cost, better it is for the
customers and so for the companies.
4. Growth of retail chains – Most of the companies do not have their exclusive
showroom only. They depend a lot on multi-branded showrooms across the world to
sell their products. Hence the growth and stability of the retail chains will go on to
improve the condition of fashion industry.
5. Development in IT – Speed of the process, the customer’s order from ordering the
raw material to the final selling of the product, greatly depends on the technology
used in the system. E.g. use of RFID, clipped tags, faster printers, better
communication channels etc. Better the technology available and used the better the
responsiveness of the fashion industry towards customers demands.
6. Others – There are various skills (of people or computer) which influence a lot the
fashion industry such as forecasting etc.