Supply Chain Practices of Zara Assignment
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Added on 2019-10-18
Supply Chain Practices of Zara Assignment
Added on 2019-10-18
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SUPPLY CHAIN PRACTICES OF ZARA
2SUPPLY CHAIN PRACTICES OF ZARA2. Economic Environment:It is very significant to understand the Economic environment where Zara operates. Here adetailed analysis of Zara’s economic scenario would be analysed. It would help to understand allthe economical traits of this reputed fashion company. Zara had always been favoured by Spain’sfast-growing “Economic environment. Economic stability of Spain had favoured Zara’s overallsales margin. Thus Zara had earned huge profitability in its overall business. Such economicfavour had undoubtedly strengthened Zara’s overall business scenario. Zara had got immenseeconomic favour for its unique fashion attires in the overall clothing and retail industry. This isindeed one strong point for Zara (Christopher, 2016). One reason behind this is that Spainincludes huge level unemployed people. The prime reason behind this unemployment is highpopulation of the country. Therefore the wages of per labour is quite low and Zara has to bearlow costs of its production. High-quality products are manufactured in this company through low“production costing”. Such low costing of manufacturing and production is undoubtedly one great economical gain forZara. The consequence of it is that Zara often offer high-fashioned and high-quality clothingproducts through reduced rates. Now such reduced prices undoubtedly attract the attention andsatisfaction of the customers. It is one major reason behind Zara having so much large consumersbase. The exit of British from the Union of Europe has also resulted huge pound depreciation.Such pound depreciation led to immense inflation rates. It had also increased the living costingbut less “disposable income” for its consumers. The result of this is that Britons are slashed upontheir spending for new clothes. The overall sales margin of Zara has also decreased thus. It had
3SUPPLY CHAIN PRACTICES OF ZARAundoubtedly created huge impact upon Zara and the overall “clothing and apparel industry’s”profitability. Zara had always targeted Indian, Russian and Mexican markets as its prime targets. Russianmarket is the most stable one among all these three markets. All these targeted markets’ percapita income of people also matters a lot for Zara’s overall sales. The clothing companies likeZara could not succeed properly without strong economic background. Thus economic stabilityis very essential for the further growth and profitability of Zara (Aggour, Moussaid & El Hassan,2016). The overall supply chain management of Zara is also dependent much upon this economicscenario of the company. It is because the supply chain practices like “Inventory Management”,timely delivery and “whip effect lean management” might not perform properly without strongfinancial background. 5. Supply Functions’ descriptionsThe functions of “Supply Chain” include certain principles. These functions’ “principles andconcepts” are very crucial for any company like Zara. It is those unique and relevant strategies ofsupply chain that have enabled Zara to react the Zenith of apparel industry. The following supplychain principles are mainly used by Zara for increasing its brand standard and net income. Zarahas retained its standing to be both an affordable and fashion forward brand name. Quick demand’s response: One “pull model” is thoroughly followed by Zara in its“Supply Chain Management” and inventory. More than 1000 designs are made up eachmonth regarding recent trends and store sales (Chu, 2016). All the consumers’ spending
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