Just in Time Production

Zara, a renowned fashion brand, has achieved success through its well-organized and strategic operation management. The company's inventory management system is designed to minimize excess stock and ensure timely delivery of products to stores. Zara's centralized logistics process allows for efficient communication between departments, ensuring that products are delivered to the right place at the right time. The distribution network is also streamlined, with finished goods being delivered to European outlets within 24 hours and overseas stores within 40 hours. This fast-fashion approach has enabled Zara to maintain a high level of exclusivity and avoid inventory pileups, resulting in reduced unsold materials. Overall, Zara's operation management strategy has contributed to its global success.

Logistics and Supply Management- Zara-
A Case Study
1 | P a g e

Executive Summary
This article will highlight the success of Zara in respect of its operation management with special
emphasis on its logistic and supply chain management. This company is originated in Spain and
spread over globally with its state-of-the-art presentation of fashion garments for men and
women. In this article the main emphasis will be given on tracking the reason for its success with
the issues it faces for its business. Logistic and supply chain management is considered as one of
the main components for success of any present business and Zara is not any exception to this
concept. To enjoy competitive edge of the market is the basic criterion for any business and Zara
practices its own module to find the competitive advantage which is basic for proving
sustainability in long term.
2 | P a g e

Table of Contents
Introduction.................................................................................................................................................4
Vision and Mission Statement – Zara..........................................................................................................4
Vision statement.....................................................................................................................................5
Mission statement...................................................................................................................................5
SWOT Analysis- Zara.................................................................................................................................5
Internal Factors- Zara:.............................................................................................................................5
Strengths..............................................................................................................................................6
Weaknesses.........................................................................................................................................6
External factors- Zara..............................................................................................................................6
Opportunities.......................................................................................................................................6
Threats.................................................................................................................................................7
Competitive Profile – Zara..........................................................................................................................7
Logistics and Supply Chain Management- Zara..........................................................................................8
Coordination between operations and business strategy- Zara..............................................................8
Just in Time Production...........................................................................................................................8
Inventory management- Zara..................................................................................................................9
Centralized Logistics................................................................................................................................9
Distribution network.............................................................................................................................10
Fast Fashion- success story of Zara........................................................................................................10
Conclusion.................................................................................................................................................10
Recommendation.......................................................................................................................................10
Appendices:...............................................................................................................................................13
Appendix 1.............................................................................................................................................13
Appendix 2.............................................................................................................................................13
Appendix 3.............................................................................................................................................14
References:................................................................................................................................................15
3 | P a g e

Introduction
Zara has started its journey in 1963 through its entrepreneur Ortega with the set up of a factory
for dress manufacturing named Inditex. Gradually the company has started its journey through a
small store at La Coruna, Spain with the name as Zorba. The name had been changed as Zara by
the entrepreneur and the name is getting worldwide popular through their journey across
globally. This brand is known as one of the most popular fashion brand and had expanded their
operation from Spain to other parts of Europe. Since 1990, they have launched their expansion
plan to US and most parts of Europe. The company has existence over 88 global countries with
6500 stores to prove its global presence including Asia and other continents.
This present research will highlight on different reasons of the success of Zara, which are
responsible to provide them the competitive advantages in the segment of global fashion
industry. It is always indentified as the basic reason for success of business to have competitive
advantage in the market and for this purpose, certain unique business strategies are to be adopted
by the entrepreneur, which are not easy to imitate. Out of them, supply chain management with
logistics management plays a vital role in order to reach the target audience within the shortest
possible time. Other factor in this business segment is to provide unique designs for the target
audience. This article will provide logical discussion about these factors and comparison
between the competitors and Zara to find the proper reason for enjoying the best possible
competitive edge in the global fashion market.
Vision and Mission Statement – Zara
To understand the reason for success of any business, first we have to understand the corporate
objective of that entity. This can only be found and understood through vision and mission of
any organization. Zara also has vision and mission statement which clearly depict their objective
of where they want to see them in long term with sustainability.
4 | P a g e

Vision statement
The vision statement of Zara is to prioritize attainment of leadership in fashion segment by
providing unique quality followed by diverse and unmatched product-mix which is empowered
by professionals with best possible world class operation process and with the practice of highest
level of standard which endorses ethical and professional attitude by the management.
Mission statement
Zara textile emphasizes their focus on devoting to attain steady improvement through the
operation system to provide products and required services to the target audience through the
mode of on-time delivery which can enhance satisfaction of customers by providing quality and
value for money for the customers.
By the above vision and mission statement it is evident that the company ahs specific objective
of where they want reach and through which route. There is no scope of getting any easy route of
success and the same demands rigorous and continuous effort to attain the success and to stick to
that spot. The company is followed by strict commitment to ensure global quality standard which
make them able to stick to that place with the creation of a niche of their own within the
environment of highly competitive global market. Main route of success for Zara is to have the
business strategy which endorses innovative practice of designs and strong logistic management
network. This is followed by clinical perfection by technology and maintenance of standards of
quality. All these factors are instrumental for the success of Zara to prove them as the leading
brand of the world in the segment of fashion industry. (Textiles, 2011)
SWOT Analysis- Zara
To find the success factors for any business, a SWOT analysis is required which can highlight
the internal factors - strengths and weaknesses and external factors - opportunities and threats.
SWOT analysis can highlight the factors for success of Zara and will also highlight the gray
areas of its operations to make the discussion logical.
Internal Factors- Zara:
5 | P a g e

Strengths
 Strong brand name
 Professional team of designer
 Unique network of logistics management
 Financial liquidity
 Distribution strategy
 Variety of designs
Weaknesses
 Limitation of stocks
 Brand image close to the competitors
 Price
 Marketing lack
The same had been projected in Appendix 1 with Internal Evaluation Factor (IEF) Matrix. It is
evident from the table of IEF Matrix score of 2.35 for Zara out of total 4.0, that the company is
effectively managing their strength to cover their weaknesses
External factors- Zara
Opportunities
 Increasing population of middle class in Asia
 Cost effective proposition for distribution centers in target market of developing
countries
 Introducing fresh designers for new and innovative designs
 Enhanced environmental issues
 Global recognition of brand
Threats
6 | P a g e

 Stiff global competition
 Litigation related to sweatshops
 Probable copying of products
 Diluted strength of brand equity
The same had been projected in Appendix 2 with External Evaluation Factor (EEF) Matrix.
From the same table of EEF matrix, it is evident that with the score of 3.45, Zara has proved its
response for the external factors of opportunities and threats. (Adam, 2013)
Competitive Profile – Zara
There are different factors considered to understand the competitive profile of Zara with respect
to its close competitors H & M and Uniqlo.
The factors considered are:
 Selection of target overseas market
 Strategies of entering into new market
 Timing of entry in new market
 Recognition of respective brand
 Knowledge of customers
 Marketing strategic support in overseas market
 Selection of location
 Innovation of new designs
 Human resource
 Pricing policy
 Promoting sales
 Organizational capability to control business
7 | P a g e

The Competitive Profile Matrix as given in Appendix 3 can show the comparative score analysis
of three major stakeholders of global apparel industry. It is being observed from the table that
Zara is leading the table in respect of competitors’ performance with the overall score of 3.11
which put them way ahead from the competitors with their score found above average. (Adam,
2013)
Logistics and Supply Chain Management- Zara
One of the major factors of success by Zara in global fashion industry is its operation
management, out of which Logistics and Supply Chain management plays the most vital role.
The company was launched in 2012 by Ortega as the unique retail concept. Out of the total
turnover of US $ 20.7 billion, Zara has represented through their major share contribution of 66
percent amounting to US $ 13.6 billion.
The normal production trend of Zara is 450 million annually it is amazing to note the efficiency
level of the company to manage such big and enormous volume produced every year through
supply chain with the logistics management efficiently controlled to meet the requirements of the
stores in time globally. (Anon., 2015)
Coordination between operations and business strategy- Zara
The coordination between operations and business strategy of Zara is found unique by
prioritizing the need of the business with proper emphasis on the need of the customers. The
company is accomplishing its growth objective by diversification of operation empowered with
vertically integrated system. The company is engaged in specialized mode of design through
couture with the operation process of manufacturing, distribution and retailing of clothes within
the period of two weeks of the original design as displayed in catwalks. Thus the concept of
Rapid Fire Fast Fashion Strategy is applied to Zara.
Just in Time Production
Main feature of fashion industry is to deliver the fashionable and trendy outfits for different class
of target audience in such integrated and controlled system so that the customers can feel it Just
8 | P a g e

in Time. It is the normal operation practice of Zara to keep significant inventories for its in-house
production to assure that the factory reserves of Zara should be maintained in the level of 85% of
total capacity to meet the timely requirement. This feature can provide the flexibility for Zara to
fix its priority regarding the amount, variety of new products and frequency of products for
launching. The company mainly depends upon headquarters in Spain for the production process
including its sophisticated raw materials. The statistics shows that Zara runs its production
process with the commitment of six months advance of 15 to 25% of benchmark line of season
with the locking of 50 to 60 percent of its production process during the tart of the season. This
effort results to conformation of 50 percent of its new products are designed and produced during
the middle of the season. This practice ensures the company to sale 85% of its product with full
price where as the industry trend is 60 to 70 percent. The percentage of unsold materials is only
10% of finished goods inventory which is phenomenal comparing to the industry average of 17
to 20 percent. As a result of this manufacturing strategy, Zara can sell most of its items in full
price and the total overhead costs is mitigated through reduced merchandising cost as compared
to that of competitors. For this factor the company can afford extra overhead costs in labor and
shipping to match customers’ demands.
Inventory management- Zara
It is rarely found in the inventory system of Zara that there is stacking of inventory of obsolete
products in the warehouse as the company is more concentrating on the concept of lean for the
rolling process of raw materials to finished goods in the stores.
The model of optimizing inventory is practiced by Zara so that the company can determine to be
delivered to the respective stores through arranged shipment of twice of each week. The quantity
of delivered stock is limited to ensure that each store should have the product as per their
requirement. This practice enhances brand image to exclusiveness by avoiding pile up of
unwanted inventories. The company has the capacity for quick turnaround within the season in
their manufacturing facilities in Spain which allows the company to make frequent shipment of
smaller size of batches. These small batches mitigate the harm of getting unpopular products
stacked in the stores with the lesser loss for the company related to unsold inventory.
Centralized Logistics
9 | P a g e

Zara has the integrated practice of placing two orders from stores weekly with specified days and
time which are being catered in time with specific items properly labeled and priced as per the
practice of Zara. This process can ensure involvement of human resource in all levels of
operation management right from procurement to retail with the defined timeline with
coordination between departments.
Distribution network
The strong practice of distribution network of Zara ensures deliverance of finished goods to the
European outlet by 24 hours while for overseas stores of US or Asia the cut-out time form
delivery is specified as maximum 40 hours. As per by the case study wrote Nelson Fraiman in
2010 , a professor of Columbia Business School, the lean time for getting shape of the product
from design to stores is 15 days for Zara while the other takes 6 months as industry standard.
Fast Fashion- success story of Zara
This success story is not any magic, but is the result of well organized and strategic application
of the operation management of Zara. The entire process consisting of design, procurement,
manufacturing, distribution and placing in the shelves are working in such way that the success
of the system is only announcing its successful implementation. (Lu, 2014)
Conclusion
Zara is a big name in global fashion industry and with its unique operation management; it
proves its worth to be on top of the industry globally. Different steps of operation management
are working in well coordinated manner and this proves the worth of the brand.
Recommendation
Recommendations for Zara:
 Think of low cost trendy garments to match pocket of low ability customers
 Make exclusive brands restricted to the premium stores
10 | P a g e

 Open regular stores for pocket friendly budget products
 Expansion process to be continued in countries of lower GDP
11 | P a g e

12 | P a g e

Appendices:
Appendix 1
Appendix 2
13 | P a g e

Appendix 3
14 | P a g e

References:
Adam, P., 2013. The Strategic Management Analysis of ZARA (Relative to the Case in
Developing Countries). [Online] Available at:
15 | P a g e

http://www.academia.edu/5492552/The_Strategic_Management_Analysis_of_ZARA_Relative_t
o_the_Case_in_Developing_Countries_ [Accessed 13 September 2017].
Anon., 2015. LOGISTICS MANAGEMENT OF ZARA – A CASE STUDY. [Online] Available at:
https://progressivewritingskills.wordpress.com/2015/04/28/logistics-management-of-zara-a-case-
study/ [Accessed 13 September 2017].
Anon., 2016. Strategy-The Secret of Zara’s Success: A Culture of Customer Co-creation.
[Online] Available at: https://martinroll.com/resources/articles/strategy/the-secret-of-zaras-
success-a-culture-of-customer-co-creation/ [Accessed 13 September 2017].
Chettupalli, S., 2016. Supply Chain Managment of Zara. [Online] Available at:
http://blog.scmglobe.com/?page_id=1513 [Accessed 13 September 2017].
Lu, C., 2014. Zara supply chain analysis - the secret behind Zara's retail success. [Online]
Available at: https://www.tradegecko.com/blog/zara-supply-chain-its-secret-to-retail-success
[Accessed 13 september 2017].
Sowray, b., 2015. The 5 ingredients of Zara's success. [Online] Available at:
http://www.telegraph.co.uk/fashion/brands/the-5-ingredients-of-zaras-success/ [Accessed 13
September 2017].
Textiles, Z., 2011. Zara Textilesd Pvt. Ltd. [Online] Available at:
http://www.zaratextiles.com/vision.php [Accessed 13 September 2017].
Zhelyazkov, G., n.d. Agile Supply Chain: Zara's case study. [Online] Available at:
https://www.google.co.in/url?
sa=t&rct=j&q=&esrc=s&source=web&cd=6&cad=rja&uact=8&ved=0ahUKEwiIo7PQ6qHWA
hUBu48KHZ6UBKsQFghLMAU&url=https%3A%2F%2Fwww.researchgate.net
%2Ffile.PostFileLoader.html%3FassetKey%3DAS
%253A273761356451852%25401442281201894%26id%3D55 [Accessed 13 September 2017].
16 | P a g e