Logistics Management: A Case Study of Zara

This paper discusses the logistics and supply chain management of Zara, a successful fashion retail organization. It also compares Zara's logistics with Australian fashion retail giant Myer and industry leader Dell. The paper highlights Zara's competitive advantage, sustainability, and strategies for success.

Running head: LOGISTICS MANAGEMENT
Logistics Management
Name of the Student
Name of the University
Author Note

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Executive summary
The purpose of the following assignment is to bring out the true story of the success that is
responsible in case of Zara. Zara is considered to be the best fashion retail organization in the
concerned industry because of their perfect logistics and supply chain management. The
important sections of the logistics strategy of Zara have been discussed in this paper. The reasons
that are behind the phenomenal success of Zara have been identified here. Some comparisons
have been made with the Australian fashion retail giants Myer. The major differences between
the logistics and supply chain between Zara and Myer have been discussed here as well. Another
set of comparisons has been made with Dell, industry leaders in selling laptops and computers.
The reasons that are there for the competitive advantage of Zara have been discussed here as
well. The sustainability issues of Zara have been described properly. The strategies that should
be suitable for the companies to attain the sustainability and gain the competitive advantage have
been highlighted in this context as well.

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Table of Contents
Introduction......................................................................................................................................3
Overview of Zara.............................................................................................................................3
Overview of Dell.............................................................................................................................4
Logistics management of Zara.........................................................................................................4
Competitive advantage of Zara........................................................................................................6
Comparison with Myer....................................................................................................................6
Logistics and supply chain of Zara..................................................................................................7
Comparison between Dell and Zara................................................................................................8
Logistics supply channels of Zara and Dell.....................................................................................8
Sustainability of Zara.......................................................................................................................9
Suitability of success formula to other companies........................................................................10
Conclusion.....................................................................................................................................10
References......................................................................................................................................12

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Introduction
The following paper is about the comparison between the two giants in the clothing and
accessories retail industry Zara and Dell and Myer. These two companies have been the potential
competitors for a long time now. The prime focus will have to be on the logistics and supply
chain management of these two companies. The logistics and supply chain management of the
two companies will be discussed and contrasted in order to find the basic differences. Zara has
been one of the most successful companies in the clothing and accessories retail industry
(Zara.com 2017). Supply chain management is one of the main aspects of success for all the
companies. Another company is Myer that will be discussed in this paper as well. Myer is one of
the Australian fashion retailer organizations that have been very popular.
The companies should look for better supply chain and logistics management so they can
reach to their customers faster and smoother. The customer segmentation should be fixed
properly by the organizations and they should look to utilize on these things in a better way. The
logistics management of Zara has been looked upon as one of the best in the industry. This is
why the delivery of the products is done on the correct time. The decision making process of the
officials should be proper and Zara has been efficient in executing all their plans of serving the
customers with proper logistics supply.
Overview of Zara
Zara is located in Spain and this organization was founded in the year 1975. They are
considered to be the largest retailer in the world. Zara is the main brand of the Inditex group
(Zara.com 2017). They have expanded in various countries so they will require a strong logistics
supply. Their online presence is quite strong so they have acquired the trust of millions across

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the globe. The inventory management of the company is exclusive in the sense that they have
used the RFID technology to respond better to the requirements of their customers (Zhu,
Mukhopadhyay and Kurata 2012). The manufacturing process of Zara is quite fast as well since
they are able to innovate new designs and spread them into the market (Caniato et al. 2014).
They have upgraded their distribution of the merchandise through reverse milk-run production
and distribution facilities (Zara.com 2017).
Overview of Dell
Dell and Myer has been one of the companies that work in the telecommunications
industry. They produce laptops and other accessories (Dell.com 2017). This is why the logistics
and supply chain management between the two companies will be very useful indeed. The
organizational structure of these two companies is also very different. This is why the logistics
supply chain will be different as well. Both these companies have their individual logistics
supply chains (Dell.com 2017).
Logistics management of Zara
The logistics management of Zara is unique. They have also focused a lot on the
inventory management as well. The main thing that is responsible for so much success of Zara is
the centralization. Their centralized logistics management has earned them a huge place in the
concerned industry (Fawcett, Ellram and Ogden 2013). The decision making of this organization
is done with much co-ordination. The rhythm of Zara’s logistics is deep and fast. They are
always concerned about the fulfillment of orders at their stores. All the outlets of Zara send two
orders per week on specific days and times. The trucks leave from the warehouses at specific
times and they arrive at the stores with the shipments at specific times. The garments that are

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ordered by the customers are always labeled and they are priced as they reach their destination.
This is a very smooth process and all the staffs from all the departments have a clear idea on
what things they have to do (Christopher 2016). These departments are procurement, production,
distribution and the retail ones. This is how Zara carries out a proper logistics network.
The distribution channels of the company are so good that it takes about only twenty four
hours to deliver all the goods (Stadtler 2015). This is applicable for the European outlets of Zara.
Tn the countries of Asia and America, it takes about 40 hours to deliver the goods. Zara
maintains some of the basic of the logistics and supply chain management. These are:-
 They always segment their customers according to their service needs of various groups.
They adapt the supply chain management properly so they can give the customer
segments what they need.
 They have customized their logistics network according to the requirements of service
and profits of their customer segments.
 They tend to listen to the market signals and arrange the supply chain according to the
service needs.
 They are able to make difference between products that are closer to the customer and
speed conversion of the supply chain (Jacobs and Chase 2013).
 Zara is able to manage the total costs of supply and manage the sources with proper
technological strategy.
 Zara is able to develop a supply chain wide strategy that backs up the several levels of
decision making.

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Competitive advantage of Zara
Zara has been extremely successful in their quest to become the most successful
organization in the fashion retail industry. They have been extremely successful in global
retailing. They have also received the best points in the stock market index for the social
responsible investment (West, Ford and Ibrahim 2015). They have been focusing on innovation,
improvement and collaboration. These things have contributed a lot to the learning organization.
The new product development and innovative thinking process of Zara has been acclaimed all
around the world. The other causes for the competitive advantage for Zara are the fact that they
have been constantly fostering for the international expansion and constant invention. They have
been the global leaders in this industry for a big reason indeed (West, Ford and Ibrahim 2015)
The approach of Zara has been continuously customer-oriented and this has driven them to focus
on the requirements of the customers. In the modern international market, one of the key
components is the brand credit. Zara has been largely successful in establishing a brand
supremacy over its competitors. The value chain analysis of Zara shows how they have
dominated the market.
Comparison with Myer
Myer has been considered as one of the most famous clothing retail chains in Australia
(Myer 2017). However, it has not been so much successful as that of Zara. This is because Zara
has segmented their markets along with their quality of products with a division between their
customers on the basis of psychographic and demographic lines (Riefler, Diamantopoulos and
Siguaw, 2012). Myer has not yet shown any intention to do all these things. This is why their
target segmentation is not quite appropriate for the benefit of their customers. The brand value
of Zara is so much high that they offer money value to their customers. It has been observed by

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certain experts that the concept of ‘My Store’ by Myer is quite full of ambiguity (Myer 2017).
The target market of Myer is a simple general target market of all groups. Whereas, the target
market of Zara is the fashionable young people between 20 and 35 years of age. Myer has been
considered as a departmental store along with an extensive collection of products. Their
customer service is not much satisfying contrasting that of Zara (Riefler, Diamantopoulos and
Siguaw, 2012). The logistics service of Zara is always on time. This is why the ‘Just-in-time’
policy of Zara is considered to be the market leaders. Myer always offers several discounts as
part of their sales strategies to attract the customers. However, it has been seen that Zara offers
their young customers with many fashion products that lures the customers with promotional
marketing (Powell 2013).
Logistics and supply chain of Zara
It has been observed that Zara has achieved its competitive advantage through the proper
logistics and supply chain strategies that they have adopted so far. In this way, they have been
able to land with many effective marketing strategies that will benefit their customers and they
will be able to receive their orders within the specified time indeed. The inventory management
costs have been minimized by Zara that would help them to focus more on the production costs
and improve the product quality (Qrunfleh and Tarafdar 2014). All the manufacturing units of
Zara try to utilize these sources. Zara has focused more on the costs of technology that will be
beneficial for them to strengthen their operations and improve the level of customer satisfaction
(Best 2012). They are very active in the social media marketing process as a part of their
integrated marketing communications. In this way Zara has modernized itself. They have
increased their customer value proposition by the use of these means.

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Comparison between Dell and Zara
Dell is one of the leading firms in the production of electronic devices like laptops and
computers. The supply chain management strategy of Dell and Zara are quite different from each
other since they deal in two different segments of products. However, their purpose is the same
and i.e. to do good business. The supply chain of Zara is totally vertically integrated where Dell
does not take part in the production process actively. They tend to hire the third party suppliers
for their completed goods (Sodhi and Tang 2012). These goods would be delivered by the third
party suppliers within a given time. Zara keeps their control over all the phases of production of
the garments. All the units including manufacturing, crafting and delivery process is looked after
the company. This is why Zara has received such an immense success in fashion retail industry
(Qrunfleh and Tarafdar 2014). The customer preferences change very quickly and the company
has to be aware about these things very cautiously. This is one of the most important factors that
the entire control of the company has made this possible to hold all sections of the operations.
This total control helps Zara to launch new designs of clothes within a very short time. Dell
makes these operations through third party suppliers so they take some more time to execute
these operations. This is one of the main contrasts between Zara and Dell (Qrunfleh and Tarafdar
2014). Dell has to make a coordination of several small processes to execute this. However, this
is quite proper for Dell since they can make the necessary changes that are needed (Sodhi and
Tang 2012)
Logistics supply channels of Zara and Dell
Dell follows an indirect distribution channel that includes the retailers, suppliers,
assimilator, distributors and the end customers. Dell follows the business to business marketing
process that permits their customers to order the laptops online (Sodhi and Tang 2012) Dell

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connects to their clients directly and they get rid of all the channels that fall in between. On the
other hand, it has been observed that the manufactured products of Zara are shipped from
Corunna depot or Zara logistica in Spain. They do not stock and pile up their inventories at the
warehouse. Rather they send them to the Zara stores from where these orders are distributed.
Zara would stop the production of all those products that are not selling. This would mean that
Zara does not want to pile up their old stocks rather they only want to make new stocks be
available to their customers. They send the ordered products to their customers and the
customers can track their orders anytime after they are being shipped (Lehmacher 2017).
Sustainability of Zara
Zara has been named as one of the most sustainable organizations in the fashion retail
industry. They have been manufacturing their products with quality cotton that will be very
much important for keeping the quality of the products. Zara has built up the eco-efficient stores
that will be very helpful for all the customers indeed (Joy et al. 2012). They have begun to focus
on the lower electricity consumption. This will be beneficial for the customers to avoid the
greenhouse gas emissions. They have taken up the pledge of zero landfill waste because of which
they began to reuse the packing supplies and they want to achieve that goal within 2020. They
have produced an enormous amount of textile waste, paper and cardboard waste in the year
2015. They are looking forward to reduce it so that their production can be eco-friendly. It is
very obvious that the textiles cannot be recycled. This is why Zara has made partnerships with
the famous universities, social organizations and the leading organizations to find out the proper
effective solutions to these problems (Joy et al. 2012).

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Suitability of success formula to other companies
The formula of success that have been showed by Zara, Dell and Myer are very much
dependent on the proper service delivery and building of a proper logistics and supply chain
management. The new startup companies who want to become successful in the future with a
huge profit margin should always keep in mind the fact they should give the utmost priority to
their customers at first (Perreault Jr, Cannon and McCarthy 2013) Next, they should think about
changing preferences of the customers. This will drive them to promote their products with the
innovative marketing strategies. There are some similarities between Zara, Dells and Myer. All
of them want to provide their customers with the best service quality with the best quality
products. They have given much importance to supply chain strategies. However, the target
segmentation of Myer has not been that much effective indeed (Perreault Jr, Cannon and
McCarthy 2013) The marketing strategies along with the logistics strategies have been the most
appropriate indeed. The strategies taken in by Zara are the most appropriate ones indeed. This is
why the just in time policy, proper dispatching of the goods from the warehouses to the shipping
addresses and a strong presence in the social media should be highly recommendable. These
strategies will be indeed suitable for their growth (Perreault Jr, Cannon and McCarthy 2013)
Conclusion
This paper can be concluded by saying that Zara has been the leading fashion retail
industry in the world and they have been operating in the universal basis. Their marketing and
promotional strategies, logistics and supply chain strategies have been very much in demand to
follow for the startup companies. The other companies like Myer and Dell have also their own
strategies. These strategies would not be that much effective especially for Myer. Their target
segmentation process has not been that much effective. The companies should be putting in some

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effective logistics and supply chain management strategies to enhance their business capacity. If
they follow these ways and with a timely delivery of the quality products, they will surely be
getting a good place in their industry.

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