Zara's Supply Chain and Marketing System
Introduction: Zara is a company that defines what the fashion industry has termed “fast fashion.” The flagship specialty chain of Spain-based clothing conglomerate, Inditex, Zara has built an information and distribution system that allows it to put the latest runway fashions in its stores in a matter of weeks at a fraction of what the big-name designers charge. In addition to fast, Zara is prolific. In a typical year, Zara launches about 11,000 new items. Compare that to the 2,000 to 4,000 items introduced by both H&M and Gap. Zara stores receive new merchandise two to three times each week, compared to four to six times per year for most clothing retailers. More and smaller batches of items translates into fashion exclusivity. This in turn results in fewer mark-downs and higher profits. Zara controls a true vertical marketing system. A good portion of the channel participants are centralized geographically around its corporate headquarters in a remote corner of Northeast Spain, rather than spread out around the globe. This and its IT system are what allow it to achieve the speed and responsiveness that it does.
Questions:
1.As completely as possible, sketch the supply chain for Zara from raw materials to consumer purchase.
2.Discuss the concepts of horizontal and vertical conflict as they relate to Zara.
3.Which type of vertical marketing system does Zara employ? List all the benefits that Zara receives by having adopted this system.
(Answer these three questions in about 400 words. Include excel chart)
Zara
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Zara's Supply Chain
Zara has a highly-responsive supply chain featuring an automated distribution center known as "The Cube." The company makes about 40 percent of its raw materials and manufactures more than half of its products. Clothes are designed by teams of more than 300 professionals based in La Coruna, Spain. Their work is based on the information obtained from the store managers. The initial stage of Zara's production stage is cutting fabric, done in high-tech automated facilities.
Cloth designs are then sent for sewing by one of the local cooperatives. Once they are sewed, the clothes are sent back to Zara's facilities for ironing. An assembly line of employees does this. The process is followed by wrapping clothing items in plastic and their transportation to a group of large warehouses. Conveyor belts are used in transportation. There are customized machines in the storage hub that help sort, packing, label, and allocating these items for shipment to the retail stores. Zara uses trucks to deliver goods to the stores located within a 24-hour drive. The company uses cargo jets to deliver items outside this jurisdiction. Zara attends to its customers at their retail premises, which are under retail managers' supervision. The managerial team provides feedback regarding fashion trends to the team in charge of design.
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