Zara's Agile Supply Chain Management

This assignment delves into Zara's successful supply chain management model. It analyzes various aspects of their approach, including agility, responsiveness, and their impact on achieving a competitive advantage in the fast-fashion market. The analysis draws upon case studies, research articles, and expert opinions to provide a comprehensive understanding of Zara's unique supply chain strategies.

Running Head: Logistics Management 1
Case Study of Zara

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Contents
Introduction......................................................................................................................................3
Logistics management of Zara.........................................................................................................3
Comparison with Dell (Successful Company).............................................................................3
Comparison with Myer (Unsuccessful Company).......................................................................4
Identification of issues.....................................................................................................................4
Recommendations for competitive advantage.................................................................................6
Planning and control....................................................................................................................6
Quality management....................................................................................................................6
Inventory management.................................................................................................................7
Lean synchronization...................................................................................................................7
Capacity management..................................................................................................................7
IT technologies and infrastructure...............................................................................................8
Quick response.............................................................................................................................9
Suitable for other company............................................................................................................10
Conclusion.....................................................................................................................................10
References......................................................................................................................................11
List of figures
Figure 1: Quick Response Process..................................................................................................9

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Introduction
This report mainly points out the logistics and supply chain management of fashion and
retail industry in the given case of Zara. It is well known that the company Zara is able to
achieve the growth and success in the operating market due to its effective logistics and supply
chain practices. This report will point out the issues grounded on the case and will also provide
some strategies related to supply chain to the company so that company will able to grow and
attain a better market share. The company Zara was established by Amancio Ortega Gaona in
1975. The main business of the company was to manufacture the products of fabrics which can
satisfy the needs and preferences of consumers in the market. By using active supply chain
management process, the company wants to focus on providing the best quality of cloths to its
customers. Zara is successfully operating itself above from its competitors like Benetton, Gap,
and H&M. This report considers the issues which are faced by the Zara in the market and also
provide logistics management strategies to get competitive advantage in retail world (Ferdows,
2003).
Logistics management of Zara
The prime activities in supply chain of Zara are crafting, trading, manufacturing and
providing the product to the customers on time. To control the activities of its suppliers, Zara has
adopted vertically integrated supply chain. Zara believes that there should be various designs
available to the customers in the market. In this manner the company launches new designs and
products in its showrooms all over the world as new arrivals. With the continuation of former
strategy, the company also tries to sell its products in the market as soon as possible. Both the
strategies lead to generate the curiosity among its customers. The company never used to
advertise its products as it believes to create a unique brand image of its products among its
customers. The company also adds up the philosophy of serving its customers by keeping focus
on their tastes and preferences according to their regions in its strategy. The company also has a
number of warehouses to store its clothes and to supply them to the market effectively and
efficiently (Bisen & Srivastava, 2011).

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Comparison with Dell (Successful Company)
Dell is a successful company in terms of its effective logistics management. In the supply
chain, customers place the order for the products and company provides the parts to the
suppliers. Suppliers supply those products to the customers. Dell has horizontally integrated
supply chain which is the key factor of its success. On the other hand, using vertical supply
Chain Company is able to fulfill the demands of its customers easily where production
philosophy of Zara always gives importance to new products and designs (Butler, 2015).
Comparison with Myer (Unsuccessful Company)
In case of Myer, the company does not divide the market into segments such as
demographic and psychographic lines of the customers and their demands. On the other hand,
Zara has divided the market based on the demographic and lifestyle segmentation. The business
concept of Myer with the logistics management is very unclear. Along with this, the customer
service of the company is unsatisfactory. Myer does not have well organized strategic plans for
the business operations.
Zara supply its products from its headquarters which is situated in Australia. The stocks
of the company are carried out to the Australian border and after it the logistics carriers take
them to the stores. If the sale of a particular product doesn’t reach the standard level the company
stops the production of that product. By following this strategy the company is able to remove
unnecessary products from the market.by using proper and effective communication techniques
the company is able to cut down its cost and make the process of manufacturing easy
(Gallaughar, 2008).
Identification of issues
It is well known that Zara is able to dominate the fashion industry all over the world by
adopting new and innovative strategies every time. The company is also able to connect with its
customers and designers by using effective communication system. Although there are some of
the factors on which the company has to focus on to get success for long term. Since the
company used to possess effective supply chain but now days customer’s preferences are more
dynamic and are creating challenges to all fashion retailers (O'Marah, 2016). Some of these
challenges are as follows-

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 De-localization of textile and clothing manufacture companies.
 Increase in competitive pressure on Zara
 For getting success in long run, company will have to adopt more innovative techniques
and forward looking integrated strategies.
 More effective development of distribution chains,
 Increase in more companies and competitors
 Continuously growth in internationalization and commitment of flexibility to the
customers, and
 Zara has to increase its market share by increasing share in the customer’s wardrobes.
Although the company has well planned supply chain but it also has to face the
competition, pressure and issues related change in tastes and preferences of customers. Usually
the company has to combat the situations like distribution network configuration, contracts
related to inventory management supply and obvious customer value. So it is very important to
use active logistics supply chain strategies by the company to get permanent success and market
share in the fashion industry. As the supply chain management also has to face a number of
common issues related technical and managerial factors and hence these should be addressed by
the company in an effective and efficient manner and obviously it’s not easy to manage these
challenges by the company (Gattorna, 2012).
A company has always possessed the need of strong and operative leadership skills along
with good management system. Although the founder of the company has taken necessary and
best possible decisions for the company but now days in the dynamic economic conditions, it
becomes very essential for the company to plan new strategy for enter into new market and new
products according to needs and preferences of customers. There is also the need of strong
human resource development in the company so that low cost and high quality products can be
manufactured. Also the problem with Zara is that it has not yet developed distribution centers
and this leads to increase in cost causing manufacturing of bad quality of product (Maguire,
2012).

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Recommendations for competitive advantage
As it is clear that Zara is very famous brand among the customers however there is still
need for active and effective supply chain in the company. The brand has already connected
itself according to different values of the customers. The company has also possessed effective
strategies related to speed and response. Supply chain management is the crucial part of business
operations that is helpful in managing various processes of business. It can be seen that Zara
already has effective strategies in terms of response and speed and there is only need to improve
them to overcome from the above discussed issues ((LU, 2014). There are some strategies that
should be adopted by the company in its business operations.
Planning and control
The theory of planning and control leads to strong and operative effect on the operations
of a company. Concept of planning and control will help Zara in various areas of business
operations like IT resources and infrastructure development in decision making process. The key
factor towards success of Zara is the effective control by its management according to plan. This
would also help in understanding the changes which used to take place in the tastes and
preferences of customers (Cowe, 2011). Planning will help the company to manage the resources
on their optimum and efficient use. It will lead to sustainable development of the company on a
higher scale. By the effective planning and framing the ideas, company would be able connect
the new concepts and new ideas with the business to implement significant change in terms of
improving customer satisfaction and their values in the clothing industry. The key objective of
the company with planning and control would be to analyze different situations and trends in
market and the strategies of the company accordingly (Sadre, 2012).
Quality management
This concept is basically includes of understanding the expectations of customers
regarding the products of the company. Each and every customer has different perception
towards the provided products and services. Although company satisfies its customers in terms
of quality control, assurance and improvement in the products but still there is need of effective
quality management in performance and activities of Zara. The concept of quality management
would be able to focus on the quality of the products of the company and helpful in achieving the
quality standards of products in the industry (Macchion et al, 2015). A study show that Zara has
its image in the market due to its major participation in quality, so to further increase the market

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share it has to develop innovative products by maintaining quality standards. It will also help in
bringing a drastic change in the roles related to leadership, management responsibilities etc
(Lysons & Farrington, 2012).
Inventory management
This is the most crucial part of the supply chain management for any company. To
deliver the best products and services efficient and active inventory management is needed in
Zara. With the help of effective inventory management concept, Zara would be able to connect
the key factors of supply chain i.e. logistics and inventory with the business. For the financial
lead in the market, it is important for Zara to control and review the inventory management
process effectively. It will also help in keeping and maintaining strong connection with
customers as well as suppliers. So, it can be said that inventory management will be the
backbone of operative functions of Zara (CIPS, 2014).
Lean synchronization
It is well known that resources are limited in the business operations as compared to
demands in the market. So, the company has to utilize its resources in an optimum manner. Zara
is the most popular brand in all over the world (Kerber & Dreckshage, 2011). The company’s
operations are taken place in almost all the countries of the world. For effective management of
operations, the company must adopt lean synchronization strategy. It would be helpful in
improving the trust of the customers for the brand and its clothing products (Christopher and
Towill, 2000).
Capacity management
In the present and modern era, internet, e-mails and other social media platforms are
helpful in getting success to many companies. Now day’s factors and concept related to IT are
more important in applying marketing practices in business. Various digital media platforms are
very effective in analyzing the current trends of the market. In case of Zara, there is always need
of effective capacity management for effective functioning of the company. This concept will
help the organization in interacting with its overall performance. By monitoring the continuous
performance of data measurement, company would be able improve the capacity of storage of
products (De Brito, Carbone & Blanquart, 2008).

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IT technologies and infrastructure
Zara being a popular brand always gives priority to its activities related to IT and
infrastructure. Zara being a dynamic organization has always adopted efficient technology and
infrastructure in its business. IT infrastructure of the organization use various resources like
networks, software, data center and hardware facilities which are generally helpful in making
basic functioning of the organization. This efficient and prominent factor will definitely add up
the value in the business process of Zara. By adopting technologies, the company will also able
to increase customer’s value in the business and maintain healthy relations with both external
and internal environment (Gorrepati, 2016).
The IT sector leads to great impact on fashion industry by providing resources of
integrated and better value. With the use of his infrastructure, the company will be able to
transfer its goods to major centers and stores. Adoption of this strategy will be very helpful in
balancing the position of the company and also help in collecting important information
regarding business matters of Zara. So it can be said that technology is the biggest factor which
will help the company in expanding its business along with quality (Romano, 2009). Following
are some important technologies which can be used by Zara efficiently-
Enterprise resource planning-
It is very important factor which helps the company in visibility of supply chain. ERP is
regarded as backbone of supply chain management in which the entire element related to
functions is connected. ERP has the quality of developing specialized solutions for the
identification of needs and preferences of customers. However Zara uses SAP and people soft
factors but there are some more technologies like categories, season which will help Zara in
proper understanding of its customers (Lashen, 2012).
Computer-aided design-
CAD is another technology which can be used by Zara. This technology will help the
company in fulfilling the ideas of designers associated with fashion into finished products. There
are many competitors of Zara which used to follow this technology to improve the life of their
product cycle management. By coordination in work of employees and implementing CAD, Zara
can easily improve its production and development process (Mihm, 2010).

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Quick response
The main goal of providing quick responses is that it will help the company in
understanding needs and preferences of customers based on the designs of the products and their
willingness to pay on it. It is regarded as classic “pull” philosophy which can be adopted by
Zara. This strategy will aid the company in improving the flow of information across supply
chain to the customers. It is clear that information and communication technology is very
important resource for an organisation and it will be very helpful for Zara to increase it market
share.
Figure 1: Quick Response Process
(Source: Lashen, 2012)
Basically, it is not suffieceint to gather the infoarmation so, the inforamktion must be
shared for the growth of the company. for all the business level activities, information
technology is the most essentail part as it includes operation, planning, execution communication
with the customers and decision supprt (Jones & Robinson, 2012).

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Suitable for other company
Zara is known for its effective and operative supply chain in the business process or in
another words supply chain is the key factor of Zara for its success. This chain includes sourcing,
designing, manufacturing and distribution of outlets. As customer is the kingpins for Zara and
hence it manufactures its clothes and accessories only on that level which can satisfy the
preferences of its customers. Above discussed strategies would also be effective for other
companies i.e. Myer. The reason is that when any customer buys from the retail store then he
expects that product will be in good quality. In such case, effective supply chain and other
strategies would be helpful for the company to improve the quality of products. To make system
of the company efficient and relevant and to get success in long run, above discussed strategies
would be very effective and helpful.
Conclusion
Above discussion about the company Zara provide the proposals to the company to
present a stromg competition in front of its competitors. It is the fact that Zara is already doing
well in supply chain management of its busines. Hhowever it is very important to stay connected
with the customers in dynamic conditions of market. The demand of the customers is
continuously increasing and hence there is the need for the company to adopt efficient
technologies so that changes are easily identifiable and accordingly corrective actions are taken.

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References
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Butler, S., (2015), Zara owner Inditex faces fines in Brazil over poor working conditions
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De Brito, M.P., Carbone, V. & Blanquart, C.M., (2008), Towards a sustainable fashion retail
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