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    Zara

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    zain ansari
    Zara is able to achieve quick response capabilities through short design to store cycle times of 4-5 weeks compared to competitors' 6 months. This allows Zara to introduce new fashion items frequently, driving more frequent store visits. Zara controls most of its production internally and uses small batch sizes, half unfinished fabrics, and direct twice weekly store deliveries to maintain flexibility and minimize inventory costs and bullwhip effect.

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    Zara

    Uploaded by

    zain ansari
    68 views2 pages
    Zara is able to achieve quick response capabilities through short design to store cycle times of 4-5 weeks compared to competitors' 6 months. This allows Zara to introduce new fashion items frequently, driving more frequent store visits. Zara controls most of its production internally and uses small batch sizes, half unfinished fabrics, and direct twice weekly store deliveries to maintain flexibility and minimize inventory costs and bullwhip effect.

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    Zara is able to achieve quick response capabilities through short design to store cycle times of 4-5 weeks compared to competitors' 6 months. This allows Zara to introduce new fashion items frequently, driving more frequent store visits. Zara controls most of its production internally and uses small batch sizes, half unfinished fabrics, and direct twice weekly store deliveries to maintain flexibility and minimize inventory costs and bullwhip effect.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    68 views2 pages

    Zara

    Uploaded by

    zain ansari
    Zara is able to achieve quick response capabilities through short design to store cycle times of 4-5 weeks compared to competitors' 6 months. This allows Zara to introduce new fashion items frequently, driving more frequent store visits. Zara controls most of its production internally and uses small batch sizes, half unfinished fabrics, and direct twice weekly store deliveries to maintain flexibility and minimize inventory costs and bullwhip effect.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    1. Compare Inditex's financial results with its international competitors.

    What does that reveal


    about Inditex's relative operating economics?

    2. How do the distinctive features of Zara's business model affect its operating economics?

    3. Explain the linkages among Zara's choices about how to compete, particularly ones
    connected to quick-response capability.

    Zara’s competency lied in having shorter cycle time than their competitors. Zara was able
    originate a design and have finished goods in stores within 4 to 5 weeks whereas the
    competitors took 6 months for the same. Thus Zara used this competency to create a its
    Quick response capability and thus have a rapid turnover of inventory leading to sense of
    ‘buy now because you won’t see this item later’. This sense of scarcity Zara shopper visit
    the 17 times a year as compared to 3 to 4 times a year for its competitors.

    The various choices made to achieve these competencies are:

     Zara manufactures most of its fashion sensitive products internally in its own fully
    automated production facility in Spain whereas the production of other price
    sensitive products were outsourced. This allowed Zara to quickly respond to
    fashion changes and be the first mover in the market by having short cycle times.
     Zara’s designer continuously tracked customer preferences by attending trade
    fairs, fashion shows, referred to catalogues of luxury brand collections and used
    TV, internet, film content and inputs of store managers to create initial sketches
    almost 9 months before the start of the season and also to analyse customer
    demands. It allowed Zara to produce 11,000 distinct items with multiple variations
    as compared to competitors 2,000 to 4,000 key items.
     Production took place in small batch sizes with vertical integration into the
    manufacture of the most time sensitive items. The small batch size allowed Zara to
    gain more agility and also allowed it to create artificial scarcity to drive the demand.
     The items produced internally and externally were transferred to the distribution
    centres. The items were then directly shipped from the Distribution centres to the
    retail stores twice a week thus eliminating the need of warehouses and thus
    keeping the inventories low to reduce the Bullwhip and achieve Just in Time(JIT)
     Half of the fabric purchased by Zara was gray allowing Zara to bring in variation at
    a much later time and thus having maximum flexibility.

    4. What other strategic recommendations would you make to Castellano?


     Highly centralized supply chain would become a hindrance for Zara in their quest
    of International expansion as the operations and distribution are becoming more
    and more complex which could lead to diseconomies of scale. Thus a more
    decentralized production and distribution facilities especially in the new markets
    would allow Zara to reduce complexity and improve flexibility.
     Franchise and Joint venture models in international expansion reduces the control
    of Zara over its stores and places the impetus on the store owners. Thus, Zara
    needs to be more cautious about the store operations so as to ensure same quality
    of stores throughout the world by proper selection, audit and training process.
     Japan co. followed the similar model of supply chain as Zara but due to some
    strategic decisions like less emphasis on design, multiple brand identities and
    small store size, etc. led to its margin being stuck at 2% as compared to Zara’s
    10%. Thus, Zara should ensure that it continuously updates its strategy based on
    market research and trends so as to not make the same mistakes as Japan co.

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