Zara's Distribution Strategy and Competitive Advantage

This assignment examines Zara's distribution strategy, focusing on its unique approach of combining internal operations with outsourcing for product delivery. The analysis explores how this strategy contributes to Zara's competitive advantage within the European market and globally.

Running Head: Manage Operation
Zara
Manage Operation

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Table of Contents
Question 1 Activities of Planning and Control................................................................................2
Question 2 Drum-buffer-rope..........................................................................................................3
Question 3 Inventory Control Methods...........................................................................................4
Question 4 Zara’s Current Supply Chain.........................................................................................6
.................................................................................................................................................6
References........................................................................................................................................8

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Question 1 Activities of Planning and Control
Zara is Spanish fashion retail brand based in Arteixo, Galicia. This brand is a part of Inditex
group and various other popular brands such as Massimo Dutti, Pull and Bear, Bershka,
Stradivarius, Oysho, Zara Home, and Uterqüe are also part of Inditex group. Zara was first
founded in 1975 by Amancio Ortega. From the total revenues of the Inditex group, two third is
being contributed by Zara only (Gorrepati, 2016). They are known for manufacturing and
distributing unique types of fashion wears and along with the different styles, they are also
known for delivering new styles consistently and this is the reason they managed to introduce 20
new styles in 2017. After getting the success in Arteixo, Inditex group started expanding Zara
across the globe as per the demand of the Zara’s fashion products (Jones & Robinson, 2012).
Scheduling: This is the step under which all the activities are scheduled in the manner of their
importance. Taking right decisions at the right time, planning to introduce new range of products
in the target market, delivery of the products, distribution of newly launched products, etc. Apart
from this, designers of Zara are so talented that they have the ability to produce those fashion
materials which will be liked by the audience. This is the reason they are expanding their
business activities continuously across the global market and today they have made their
presence in approximately 68 countries (Gattorna, 2012).
Loading: This is the step under which the work is being allocated to the appropriate person for
extracting the adequate results. As per the case study given, Zara has performed this activity in
the most adequate manner which has become the major reason for organization’s success in the
global market. Supply chain activities of the organization are done in the manner through which

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all the stores can get the same types of products at the same time. For instance, the range of the
products introduced in the Spanish store, the same collection will also be launched at the same
time in the other stores also (Ferdows, 2003).
Sequencing: This step describes the sequence of the activity which is required to be performed
in relation with the supply chain management. Under the term, sequencing, appropriate measures
are being used in order to manage all the activities of the organization. Being an iconic brand of
fashion wear, Zara has reached to the place where all the activities with regards to the supply
chain are managed in order to attain the organizational goals (Donald & Stephen, 2014).
Monitoring: This is the last step of planning and controlling activity in the Zara’s
functionalities. All the activities are reviewed in order to analyse the errors present in the above
activities. After determination, appropriate measures are being taken in order to remove them so
that functionalities of the organization do not get affected (Deogratias & Harorimana, 2009).

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Question 2 Drum-buffer-rope
As referring to the case study, Zara has managed its activities in an effective manner which is
quite impressive in terms of fulfilment of its consumer’s demand across the globe. Effective
supply chain management helps the company to gain the adequate competitive advantage in the
dynamic business environment. Apart from the competitive advantage, it is also capable enough
to fulfil its consumers’ demand in an appropriate manner. Efficient supply chain management
helps the organization to organization the activities in an effective manner through which all the
tasks related to the organizational activities are performed in order to manage the control over
the activities of the organization.
The process of distributing fashionable and trendy cloths across the global market through
considering its consumer’s preferences with an integrated process is included in the drum buffer
rope technique. This technique is linked with the integrated management of the inventory in an
appropriate manner. Bottleneck is the terms used to describe the slowest step which reduces the
efficiency of the process. In other words, the team’s performance will be affected through the
performance of the slowest person in the team. While evaluating the crux of drum-buffer-rope, it
is observed that as referring to the case study that rope is medium through which organization
could raise the demand of its products. Marketing techniques will act as the rope in terms of
enhancing the demand of the products in the overseas market. While buffer is the term which
describes the organization’s targets set up by the management to attain for reaching to the
desired destination of growth and success. Buffer could be termed as the strategies adopted by
the Zara to attain its desired goals and the objectives. Apart from these two techniques, drum is

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another major factor which describes the strategy to enhance the performance of the bottlenecks
of the team (Dalton, 2010).

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Question 3 Inventory Control Methods
Zara has various inventory control measures in relation with the various stages of supply chain.
Zara uses optimisation model for controlling its inventory. Following are some of the methods
used by Zara for controlling its inventory in terms of various stages of supply chain:
Stage 1 Plan: Under this stage, planning is done in relevance with the manufacturing the certain
products as per the domestic and international market’s demand. While analysing the demand of
the various markets, determination of the suppliers is another crucial aspect of inventory
management in respect of the supply chain. Selection of the supplier is also done in this step only
(Cowe, 2011).
Stage 2 Source: This stage defines the process of the delivering the procurement of goods
available at Zara and delivering them at the right time from the right place. If the products will
not be delivered to the consumers at the right time, product’s value will be decreased
(Christopher & Towill, 2000).
Stage 3 Make: Under this stage of supply chain management, the manufactured goods are
released, packed and tested in order to avoid mistakes in the products. This will help the
consumers to get the fresh and adequate products. If the products will be manufactured as per the
demand of consumers and delivered them at the right time, this will develop the positive image
of the organization in the consumers’ as well as in supplier’s mind (Romano, 2009).
Stage 4 Deliver: The manufactured products will be delivered from the authorised stores of the
organization in order to save the consumer’s interest. The new varieties introduced in the market

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in order to satisfy the consumers will be managed in the warehouses of the organization so that
consumer’s requirements could be fulfilled in an adequate manner (O'Marah, 2016).
Stage 5 Return: Providing return facility to the consumers is another major factor of managing
the inventory in terms of supply chain. As return is also included in the supply chain activities,
Zara has developed appropriate provisions for this policy. Customer can return the defective
products with the certain timeline (LU, 2014).
Apart from this, their inventory controlling measures are effective enough through which within
regular intervals, customers can avail the benefit of new designs. This is the reason, in 2017
only; Zara has launched more than 20 collections (Charles & Gareth, 2012).

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Question 4 Zara’s Current Supply Chain
Vertical integration is the process under which Zara controls its various activities and procedures
in relevance with the production as well as distribution processes in order to maintain and
develop the strong market share in the competitive business environment. Zara’s production
activities are managed and controlled within the house only i.e. all the production activities are
performed within the authorised factories across the globe and the fabrics and supporting
materials used in the production of apparels are designed and imported from the headquarter
only. While distribution activities’ functionalities are performed in such a manner that overnights
trucks are being used in order to supply the apparels within the whole Europe and for other
places, airfreight is used. As per the case study, vertical integration is a major advantage for the

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firm whereas it has various limitations also. This integration leads to inability to acquire
appropriate economies of scale which defines that organization is unable to produce huge
quantity of apparels at reduced rates. In order to expand the Zara’s business in the various parts
of the globe, Inditex has made big capital investments to make the organization strong in terms
of technology and skills (Gorrepati, 2016).
As per the case study, Zara produces only 60% of its own products while rest are outsourced
from the global market. Zara has approximately 22 factories and all are operated at one shift and
perform its functions on the basis of seasons and demand from the consumers. From the all
functionalities of Zara, they do cutting functions within the house whereas sewing activities are
majorly outsourced. This helps the organization to control its cost of the production as well as it
also provides adequate flexibility to the organization in terms of meeting the deadlines and
controlling the designs of the organization (Gallaughar, 2008).
As per the diagram of supply chain management of Zara, there are four stages involved in this
function i.e. purchasing raw materials, suppliers, manufacturing and distribution. Amongst these
activities, majorly functions i.e. 60% activities are being performed by the organization while
remaining 40% are being outsourced. The first stage i.e. purchasing raw materials includes
designing, cutting and sewing works. Amongst these activities, sewing activity is being
outsourced while other activities are being performed within the house. The second stage is
suppliers, all of them are chosen on the basis of their locations i.e. only nearby suppliers are
being given contracts to collect the materials and the products easily and conveniently. Moving
further, the third stage is manufacturing and this activity is also being performed within the
house only and the style of packaging of the organization is quite unique which cannot be copied

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and outsourced. This helps the organization to maintain the uniqueness of the organization’s
products. The last stage is distribution and in this, partial is done within the house while rest is
outsourced. In the whole Europe, distribution of products is performed by the organizational
sources within the European countries and in the rest countries, organization is suing outsourcing
platforms for the distributing the Zara’s products (Mihm, 2010).

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References
Charles, & Gareth, J., (2012), Strategic Management: An Integrated Approach, Cengage
Learning, Pg 94- 109
Christopher and Towill, (2000), Supply Chain Migration from Lean and Functional to Agile
and Customized, Supply Chain Management: An International Journal, Vol 5(4), pp206-213
Cowe, (2011) Sources of Competitive Advantage, (3rd), Essex, Pearson Education Ltd
Dalton, (2010), Leadership and Management Development, UK: Pearson Education Ltd
Deogratias, & Harorimana, (2009), Cultural Implications of Knowledge Sharing,
Management and Transfer: Identifying Competitive Advantage: Identifying Competitive
Advantage, IGI Global, Pg 144
Donald, W., & Stephen, R., (2014), Global Logistics: New Directions in Supply Chain
Management, Kogan Page Publishers
Ferdows, (2003), Zara Case study. Supplier Chain Forum: an International Journal, 4 (2),
pp 62-67.
Gallaughar, (2008), Zara case: Fast Fashion from Savvy Systems, PhD Case, accessed on
12th October 2016 from http://www.flatworldknowledge.com/node/440129#web-621509
Gattorna, J., (2012), Challenges of global fast fashion supply chains, accessed on 12th
October 2017 from https://www.supplychainmovement.com/challenges-of-global-fast-
fashion-supply-chains-part-i/

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Gorrepati, K., (2016), Zara's Agile Supply Chain Is The Source Of Its Competitive
Advantage, accessed on 12th October 2016 from http://www.digitalistmag.com/digital-
supply-networks/2016/03/30/zaras-agile-supply-chain-is-source-of-competitive-advantage-
04083335
Jones, P. & Robinson, P., (2012), Operations Management, Oxford: Oxford University Press.
LU, C., (2014), Zara supply chain analysis - the secret behind Zara's retail success, accessed
on 8th December 2016 from https://www.tradegecko.com/blog/zara-supply-chain-its-secret-
to-retail-success
Mihm, (2010), Fast Fashion in a Flat World: Global Sourcing Strategies. International
Business & Economics Research Journal, 9 (6) pp 55-63.
O'Marah, K., (2016), Zara Uses Supply Chain To Win Again, accessed on 12th October 2016
from http://www.forbes.com/sites/kevinomarah/2016/03/09/zara-uses-supply-chain-to-win-
again/#3032002b63ae
Romano, (2009), How can fluid dynamics help supply chain management? International
Journal of Production Economics, 118, 467.