Importance of Total Quality Management and Sustainability in the Supply Chain at Zara

OPERATIONS
MANAGEMENT
OPERATIONS
5/9/2019
ZARA
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Organization Summary
The important information about the chosen organization for this assignment are given below:
 Name of the organization: Zara
 Industry: Retail
 Parent Company: Inditex Group
 Founding Country: Spain
 Founding Year: 1974
 Chief Executive Officer: Oscar Perez Marcote
 Size of the Organization: Zara has more than 2200 stores currently operating in all
major countries worldwide. Its size can be estimated from its revenue which is
approximately $18.9 billion annually.
 Geographical Areas of Operation of the Company: It is headquartered in Arteixo, in
Spain. The outlets of sale are spread in all major American, European and Asian
countries.
 Examples of Products and Services: Zara has clothing items for both men and women.
It also has a kid’s chain. Zara is said to produce more than 450 million items per year. It
does not offer any services per se.
 Key Competitors: The main competitors are Channel, Prada, H&M, Christian Dior,
Ralph Lauren, Burberry, Gucci, Louis Vuitton, Hugo Boss, Hermes International,
Versace, etc.
 Main Customer Segments: Zara has its eyes all customer segments across all countries
of the world. The most common customers of Zara are females within the 18-30 age
group.
 Target Focus: The focus is on customers with a medium to high purchasing power and
those who want clothes for both work and play.
 Known for: Its quick production to sale outlet process. The processing time from
designing to selling of items is done in less than a few weeks.

Task 1
Total Quality Management (TQM)is an approach which helps to improve quality and
performance in the organization by integration of all quality related functions throughout the
organization. It looks at improving overall quality actions in the organization at all levels of the
organization structure (Murray, 2019). Total Quality Management includes management of
quality performance and control, quality design and development, and quality improvement and
assurance. The principles on which TQM focusses on are – executive management, training and
placement, customer focus, decision making, appropriate use of all equipments and tools, and
continuous improvement in the overall organization. In this task, the purpose is to assess whether
or not there is need for adoption of total quality management at Zara, our chosen organization.
In today’s competitive world, businesses no longer can exist on the basis of following a
traditional approach to quality. At Zara, innovation, transformation of fashion and bringing
sustainability are the three core factors that add to the success of the fashion chain. Total quality
management is needed in Zarafor the maximization of production efficiency and the
minimization of costs (Golden, 2018). The justification of the reasons why total quality
management is needed in Zara are given below:
 Cost Reduction: The major reason for implementation of Total Quality Management at
Zara is that it will lead to reduction in cost of production. When the principles of TQM
are applied constantly over time, it leads to reduction of costs of production as well as
distribution throughout the organization (Kanji, 2010). At Zara, these costs of production
and distribution flow directly into the bottom-line profits without any extra costs being
incurred and therefore, application of TQM in this fashion giant will help add to its
profitability. The areas where special focus is required for implementation of TQM for
cost reduction are management of scrap, areas of rework of designs, field service among
others.
 Fast Movement of Inventory: Zara is known for its incredible speed of movement of
inventory – from sketches of the latest designs on fashion to reaching stores within a

couple of weeks. This is because Zara does not rely on production in far-off Asian
countries. Instead, production is carried out in neighboring countries. For smooth flow of
this quick production process, there is need for implementation of a total quality
management system. TQM helps in improvement of quality of processes and focusses on
inclusion of quality into the process itself rather than just the outcome of the process. It
helps in improvement of movement of inventory rather than just the inspection of the
movement (Tinsley and Ormsby, 2010). Also, another advantage of TQM here is that it
not only reduces time involved in movement of inventory and fixation of errors but also
reduces the need for employment of a large number of quality assurance personnel.
 Customer Satisfaction: The customer satisfaction is a measure of the number of
customers who are satisfied with their experience at a business unit. At Zara, customer
satisfaction is considered as one of the key philosophies of work. With the
implementation of TQM at Zara, the focus is on how quality management can be assured
in the business processes in such a manner that it leads to its ultimate aim – customer
satisfaction. TQM ensures that all the business processes at Zara are streamlined in a way
in which reduces errors. Reduction of errors means that the resources which are aimed at
solving problems can be reduced, thereby serving two purposes – customer satisfaction
and reduction of investment in problem solving methods. TQM, by increasing customer
satisfaction at Zara, will eventually lead to increased market share and reduced customer
complaints.
 Defect Reduction: The tools of total quality management focus on reduction of defects
in processes, goods and services.The principle of ‘zero defects’ is an integral part of the
process of total quality management. At Zara, the focus is on introducing the principles of
TQM into the baseline production processes in such a manner that it helps reduce the
defects in production. TQM helps in changing the groupthink towards the process of
production, analyzing customer requirements, and altering the production processes in
such a manner that it reduces defects (Dahlgaard and Park-Dahlgaard, 2016). At Zara, the
ultimate goal is to improve the management processes with the implementation of TQM,
and reduction of defects helps in achieving this aim.
 Improvement of Morale: The implementation of total quality management helps in the
improvement of morale of workers in such a manner that it leads to high tolerance