Zara's Supply Chain Management Strategies

This assignment examines Zara's effective supply chain management strategies. It analyzes key aspects like their agile manufacturing process, fast turnaround times, and integrated information systems. The report highlights how these factors contribute to Zara's competitive advantage and its ability to respond quickly to market trends. Additionally, it discusses the challenges Zara faces in maintaining its supply chain efficiency amid global environmental pressures.

Global Supply Chain
Management

Table of Contents
INTRODUCTION...........................................................................................................................1
Competitive factors in fashion and apparel industry...................................................................1
Impact and constituent parts of a supply chain in global environment.......................................2
Ways in which business environment affects business structure of GSCM...............................3
Supply chain management strategies for ZARA.........................................................................5
Developing performance management system for ZARA..........................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
In the modern world where businesses have become globalised and large organisations
have reached to each corner all around the world, it has become essential that companies
strengthen their global chain management (Brandenburg and et. al., 2014). Zara is one of the
biggest brands that deals in the business of retailing clothes and other fashion accessories. Since
it is not possible that a company can open its manufacturing unit in every country empowering
supply chain becomes more important. This report highlights the competitive factors in the
fashion and apparel industry. It also describes about the impact and constituent parts of supply
chain in global environment. Also, the report showcases strategies related to supply chain
management for ZARA.
Competitive factors in fashion and apparel industry
There are several factors that are shaping the apparel and fashion industry. All these
factors are influencing the business of ZARA and its supply chain management. Some of the
major factors in this regard are as follows: Costs and Prices: This is one of the most important factors that is shaping competition.
Every big rivalry firm is producing products that is almost similar to that of ZARA but it
is the cost or price that is making a product more attractive. Many fashion brands
compete in layered price tags to appeal to different customer price points. Zara offers a
premium pricing tags for most of its products. They also justify their price range
according to the market they are operating in as well as the cost of manufacturing. Technology: This is another important factor that is describing the supply chain. In this
industry there have been lot of innovation in the use of technology. Zara takes use of all
these advancements (Christopher, 2016). More advanced technology used greater will be
the chances of making quality products which gives competitive advantage in the market. Supply chain: Since any company cannot produce products in local markets hence, they
need to create a proper chain so that products will be available in every market. Lower
the cost of maintaining supply chain higher is the chances of making bigger profits.
Strong supply chain always helps in entering in the new market.
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 Brand management: Better a company manages its brand image; more will be the
chances of getting on the top of competition. In fashion industry, brand management is
dependent on the innovative design, quality, utility, status and value.
 Innovation: More the firm makes innovative products; more are the chances that it will
get a competitive edge over others (Fawcett, Ellram and Ogden, 2013). Since the variety
of clothing and design that Zara offers is large in number hence, company is having
capacity to attract a large customer base.
Impact and constituent parts of a supply chain in global environment
Supply chain does not only put its impact on company and their earnings but affect the
global environment. There are several types of impacts that supply chain produces in a global
environment. Some of the major impacts are as follows:
 Economy: In all around the world, there are many kinds of economic instabilities that are
faced by company. Managing a supply chain in a better way helps in affecting the
economy. It supports import and export which is necessary ingredients in any economy.
It provides growth to the transportation industry which is essential for the country.
 Sustainability: The businesses are trying to maintain the sustainability which is essential
for its long term growth. Importers and exporters collaborate with their suppliers to
communicate their expectations and values in the efforts of sustainability. If company
opens its production unit in many countries then there will be chances of using a large
amount of resources which is not good for the sustainability issue and hence, maintaining
better supply chain is essential.
 Environment: When a company establishes in different parts of the world then there can
be chances that there will be generation of toxic waste, less use of natural resources,
reduced amount of water pollution s well as long term damage to the ecosystem. These
problems can be reduced by the use of better supply chain (Fernie and Sparks, 2014). If
Zara delivers its products through better paths than they may have a chance of reducing
the carbon foot prints on ecology.
 Costing: Since the price hike is common all around the world hence, it is possible that
company can take use of effective supply chain to reduce the overall costing of whole
system as well as to decrease the over cost of industry. It might not be an effective way of
reducing the overall cost but certainly helps in managing costing.
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 Import and export norms: In many countries, there are restrictions on import and export
which restricts the firm in expanding its market reach in new regions of the world. If
there is an effective supply chain management then it can be possible that company can
perform business even after all these restrictions.
 Refreshing the product line: Since Zara has the policy of changing the whole product
range every week which cannot be possible without a proper distribution system which is
governed by effective supply chain management (Green and et. al., 2012). Since it
delivers products twice in a week this process becomes easier.
Ways in which business environment affects business structure of GSCM
International business environment has severe effects on the global supply chain
management and shows a direct influence in the whole process. Most common type of business
structure that is followed by maximum firms is through the distributors. Its impact on the GSCM
can be understood by the following points: Political: There are many changes in the political policies taking place all around the
world and hence, it has affected the business structures. Rules and norms related to trade
policies between different nations affect the global supply chain management. Zara must
focus on the political tie ups so that it can easily enter into new markets (Zara supply
chain analysis - the secret behind Zara's retail success. 2017). Exchange rates: If the currency value difference between the two nations is higher then,
it can be possible that Zara has to face many financial complications. Rates of products
automatically gets high which reduces the overall sale of firm's products. Managing a
different distribution channels at the same time can help in solving this problem. Technological: Since there are many products offered by ZARA by the online medium
hence, it can be possible that online demand of products increase which directly or
indirectly affect the supply chain (Hugos, 2011). However, high demand through online
mediums requires fast delivery which is not possible without managing the GSCM. Environmental: Use of more privatised transportation medium increases concern related
to carbon foot prints in the environment. An effective supple chain means a better link
with distribution which will ensure that company is managing the global concern related
with environment. More the company will focus towards their environmental business
more will be the chances that it can gets secured in the market.
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 Society: There has been a severe shift in the demands of society especially in terms of
choices they have in the fashion industry. Managing a better supply chain helps in
fulfilling all these demands. One of the major demands that is fulfilled by a global supply
chain is the availability of any particular type of fashion in other parts of the world
(Marucheck and et. al., 2011). As this is era of internet devices hence the fashion that is
followed in any part of the world is copied by the people in other part. Hence a strong
management of supply chain helps to avail it to the consumers. This gives a competitive
edge over others.
 Competition: Since competition all around the world is increasing at a fast rate, it has
become essential for company to manage its global supply chain which helps in
enhancing the product reach in different types of markets. Any lag in this may lead to
long term image failure which can be a serious problem for ZARA.
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Source 1: Zara Global supply chain management, 2017

Supply chain management strategies for ZARA
There are several kinds of strategies related to supply chain that is followed by ZARA.
All these strategies helps them in making competitive edge over others. They are as follows:
 Just in time production: Zara always keep account of its production units and ensure that
all of them produces around 85% of the total capacity. It is using production unit that is
capable of bringing flexibility in the frequency, variety and amount of new products that
have to be launched (.Monczka and et. al., 2015). Most of its products are manufactured
in the middle of the season and checks that if some fashion becomes trend then it makes
more such kind product and takes the help of fast shipments.
 Inventory optimisation model: By applying such kind of model Zara identifies the
quantity that must be delivered to every single one of its retail store through shipments
that go out twice in a week. The stock that is delivered is limited. Unpopular stocks are
removed continuously. It delivers its products in smaller batches.
 Centralised Logistics: Zara believes in sticking to deep, predictable and fast rhythm,
based around order fulfilment to stores. Every Zara store is send a two order per week on
specific days. Trucks leaves at specific time and reaches to the store at specific time.
Hence it ensures products are available right on time to the stores (Seuring, 2013).
 Solid distribution network: This has helped the company to deliver all its product in the
European market within 24 hours and in other continents within 40 hours. While the
fashion industry standards suggest to deliver products in 6 months while this company
does it in 15 days.
Developing performance management system for ZARA
In the modern day business it is essential for ZARA to manage the performance of its
employees. In this context performance management system is highly crucial. There are several
steps that are taken in the performance management system. They have been developed after
checking the strategies for business of ZARA. It is as follows:
Mission and Vision for the success: It is essential that every organisation sets its mission and
vision for the performance management. The system must work under these mission and vision
only. It describes about the basic idea that a firm has has before developing a performance
management system. Mission and Vision for Zara is as follows:
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 Mission: To make the system that is capable of making the standards of employee to the
world class level by applying nurturing their abilities within the organisation.
 Vision: To understand the requirement of training programs for each employee so that
they can be trained in the similar fashion by taking use of performance management
system.
Measure: Take the measurements of performance of each employee based on some of the
selected indicators. This measurement must be done by the senior or HR managers. This helps in
finding the actual position of employee as compared to what is required by the firm.
Report: It is another essential part of the process where where every activity is being
documented (Tayur, Ganeshan and Magazine, 2012). It is the role of the managers to report any
kind of variances in what is actually required and what has been done. Better the communication
better is the chances of performing this activity.
Learn: Extract knowledge from data, determine opportunities for improvement and take
decision that is data driven. This is essential for improving the overall performance of the firm.
More is the efforts to learn more is the chances of achieving success.
Improve: Implement decisions to improve activities and operations. This improvement is based
on the requirement which further depends on the above mentioned stages.
CONCLUSION
From the above based report it can be concluded that ZARA which is one of the biggest
retailer brand of Clothings and fashion accessories needs to have excellent supply chain
management. Better the supply chain better will be the chances of facing the factors of
competition in an efficient manner. Supply chain and global environment has impact on each
other. There are various strategies that is applied by the Zara for its supply chain management. It
helps in making the whole process a more successful one. It is essential that Zara must have an
effective performance management system that helps in enhancing the quality of the work
performance within an organisation.
REFERENCES
Books and Journals
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Brandenburg, M. and et. al., 2014. Quantitative models for sustainable supply chain
management: Developments and directions. European Journal of Operational Research,
233(2), pp.299-312.
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Fawcett, S.E., Ellram, L.M. and Ogden, J.A., 2013. Supply Chain Management: Pearson New
International Edition: From Vision to Implementation. Pearson Higher Ed.
Fernie, J. and Sparks, L., 2014. Logistics and retail management: emerging issues and new
challenges in the retail supply chain. Kogan page publishers.
Green Jr, K.W. And et. al., 2012. Green supply chain management practices: impact on
performance. Supply Chain Management: An International Journal, 17(3), pp.290-305.
Hugos, M.H., 2011. Essentials of supply chain management (Vol. 62). John Wiley & Sons.
Marucheck, A. and et. al., 2011. Product safety and security in the global supply chain: Issues,
challenges and research opportunities. Journal of Operations Management, 29(7),
pp.707-720.
Monczka, R.M. and et. al., 2015. Purchasing and supply chain management. Cengage Learning.
Seuring, S., 2013. A review of modeling approaches for sustainable supply chain management.
Decision support systems, 54(4), pp.1513-1520.
Tayur, S., Ganeshan, R. and Magazine, M. eds., 2012. Quantitative models for supply chain
management (Vol. 17). Springer Science & Business Media.
Online
Zara supply chain analysis - the secret behind Zara's retail success. 2017. [Online]. Available
Through: <https://www.tradegecko.com/blog/zara-supply-chain-its-secret-to-retail-success>.
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