Analysis of Zara Case Rapid Fire Case Study

This report analyzes the supply chain strategy of Zara, its competitive edge in the fashion industry, and sustainability measures. It also compares the logistics management of Dell and Myer with Zara.

Running head: ANALYSIS OF ZARA CASE RAPID FIRE CASE STUDY
ANALYSIS OF ZARA CASE RAPID FIRE CASE STUDY
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Author Note

1ANALYSIS OF ZARA CASE RAPID FIRE CASE STUDY
Executive Summary
The report is based on the analysis of the effectivity of the supply chain strategy of Zara and
the competitive edge of the organization in the market. The sustainability related measures
taken by Zara have also been discussed in the report. The supply chain management of the
company is compared with two other companies namely, Dell and Myer. The strong
company among these two based on supply chain is Myer and the weaker company related to
supply chain is Dell. The analysis has proved that the supply chain approach of Zara is the
most operative and efficient in the fashion industry.

2ANALYSIS OF ZARA CASE RAPID FIRE CASE STUDY
Table of Contents
Introduction....................................................................................................................3
Discussion related to the logistics and supply chain management of Zara....................3
Supply chain management of Zara.............................................................................3
Competitive advantage of Zara over other organizations..........................................5
Intangible assets of the value chain of Zara...............................................................5
Sustainability in Zara.................................................................................................6
Major issue in the vertical supply chain of Zara........................................................7
Logistics management of Dell and Myer...................................................................7
Comparison of the supply chain strategies Dell and Myer with Zara........................8
Conclusion......................................................................................................................9
Recommendations..........................................................................................................9
References....................................................................................................................10

3ANALYSIS OF ZARA CASE RAPID FIRE CASE STUDY
Introduction
The report is based on the case study of Zara which an organization related to fashion
accessories and clothing. The company was established in the year 1975 and has its origin in
Spain in the Galicia port of La Coruna. Zara has been able to prove itself as an innovative
retailer in entire fashion world. The parent company of Zara is the Inditex Group and it has
contributed around 64.8% of the entire sales of the group. The organization has been able to
reach more than 82 markets in the world and has created a network comprising of 1830
stores. The revenue of the company has been increasing over the years from 2477 Euros in
the year 2001 to 8938 Euros in the year 2011 (Alexander, Walker and Naim, 2014).
The main reason behind the immense success of Zara is the supply chain of the
organization which is super-responsive and buyer-driven in nature. The customers of the
organization play an important role in its business model. Zara is quite well-known in the
fashion industry for the fast fashion related features. The supply chain of the company is
designed in such a way so that the production process begins according to the demands of the
consumers (SuccessStory, 2018). The information related to the latest trends in the market
and the feedback of the consumers are continuously fed to the headquarters of the company.
The teams in the organization and the designers then use this information for the creation of
new and trendy designs. The products of the company are supplied to the stores directly from
the central distribution centres (Brandenburg et al., 2014).
Discussion related to the logistics and supply chain management of Zara
Supply chain management of Zara
The supply chain management related policy of Zara is the main reason behind the
competitive edge that they have gained in the fashion industry. The management system of
the enterprise related to supply chain is known as the “rapid-fire” system. This system mainly

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requires the support of top-notch system of communication. The organization mainly focuses
on the communication channels that are highly responsive in nature. The information related
to trends in the market flow regularly in the company. Zara collects the information related to
fashion and sales in the industry from different sources like, internet, TV, venues like
university campuses (Diabat, Kannan and Mathiyazhagan, 2014).
The other major way of collecting latest information of sales are the phone
conversations that take place between the store managers the customers of the organization.
The latest tools related to exchange of information are deployed by Zara so that fast exchange
of information is facilitated. The information that is collected in this process is then instantly
transmitted to the headquarters of the company. This process helps in keeping the designers
of the company updated about the latest fashion trends and gives the company a competitive
edge in the market. The 300 designers of Zara create the new product lines and thereby
modify the existing products as well (Fahimnia, Sarkis and Davarzani, 2015). The
distribution and sourcing strategy of Zara is counter-intuitive is also a major secret behind its
success. Zara has total control over the value chain and they have the ability to design and
produce and further deliver the new garments so that these products can be displayed in the
stores.
The outsourcing strategy of Zara aims to keep 50% of the total production within the
organization itself. This strategy helps the company from getting involved with a huge
number of suppliers. The production facilities in Europe takes place mainly in Spain and
Portugal and in many countries in Asia. The schedule related to the placing of orders and
stock receiving is made rigid so that the time taken in the process is less (Fernie and Sparks,
2014). The orders related to the centralized centre of distribution of Zara are prepared
overnight by the company. The logistics system of the organization uses software which is
designed by the teams. The business model of the organization is integrated with the concepts

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of frequent delivery and regular design and they produce limited batches of the products. This
process proves to be expensive for the company, however, the short amount time taken for
the supply contributes to the sales of Zara (Hazen et al., 2014).
Competitive advantage of Zara over other organizations
The frequent changes in the stocks of the stores adds to the freshness of the product
line of Zara. The customers also tend to visit the stores of the company more frequently due
to the constant changes in the stock. The customers can constantly enjoy new products in the
stores of Zara due to the replenishment of the product batches. The designers of the company
create more than 40,000 designs within a single year and 10,000 products among these are
selected for the production. The variety of products that are offered by Zara are helps the
company in beating huge fashion companies in the industry. The company tends to invest
more on the store locations in the prime areas, visual merchandising and the interior design as
compared to the advertisement of products (Martínez-Jurado and Moyano-Fuentes, 2014).
The organization also aims at refurbishing its stores more frequently as compared to the other
competitors. The company mainly aims at promoting the marketing activities with the help of
the stores.
Intangible assets of the value chain of Zara
The value chain of Zara comprises of three major intangible assets like, platform of
supply chain, process model, brand image. The competitive advantage of Zara has been
gained with the help of these three intangible value chain assets. The information of Zara is
related to the structural capital of the company which supports the processes and
infrastructure of the company. The system of information is not only related to the
communication and information technology, however, it is also related to the ways of
interacting with people or the consumers of the company (Mena, Humphries and Choi, 2013).

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The IT infrastructure of Zara is advanced and well-functioned which supports the
business processes and is a key factor of their success. The process capital of Zara mainly
includes, the procedures, programs and the procedures that are able to improve the delivery of
the services and goods. The intangible elements that are related to the process capital of the
country are, the cycle time, productivity, on time delivery and process yield. The rapid fire
quality of the supply chain of Zara is a great example of the external and internal network of
value chain. The brand image of any organization is the most important intangible asset of the
value chain of Zara. This asset has made Zara one of the most sought after brand in the
fashion market (Monczka et al., 2015).
The vertical supply chain of Zara has been advantageous for the sales and revenue of
the company and it requires high level of compatibility between the different functions
related to business. The tight control of the management related to the various functions of
the company had become the key of the business model. This model of Zara cannot be easily
imitated by the other organizations in the industry, which gives Zara the much required
competitive edge.
Sustainability in Zara
The fast-fashion related strategies of Zara had a huge impact on the environment and
this issue has been addressed by Zara. The organization had taken steps to promote the
drivers of the changes in climate and sustainability has been enhanced in the operational
strategy of Zara. The retailers in the stores of Zara have been trying to mitigate the damage
that has been done by the processes of the company to the environment (Parkhi et al., 2015).
The major impact of the fast-fashion related products on the environment is related to the
high emission of carbon in the air. This has been addressed by Zara and their parent company
Inditex with the help of the strategy involving avenues of sustainability including, products
and suppliers. The usage of organic raw materials for the production processes and recycling

7ANALYSIS OF ZARA CASE RAPID FIRE CASE STUDY
of products are the major steps taken by the company. The organization also promotes and
advocates for the sustainable ways of forest management which is related to the production of
synthetic materials (Schaltegger and Burritt, 2014).
Major issue in the vertical supply chain of Zara
Managing this type of supply chain becomes much more complex on a global level,
when it is related to the addressing of the clothing preferences in the various regions. The
more the organization expands its operations globally, the more pressure is created on the
vertical supply chain strategy of Zara. This is the main issue related to the otherwise
successful supply chain strategy of Zara. Zara can be further compared with two
organizations, namely Dell and Myer, so that the efficiency of the supply chain can be
compared (Seuring, 2013).
Logistics management of Dell and Myer
Dell is a global organization which operates in the industry of computer machineries
and the origins of the company is in Texas. The organization has a base of more than 138,000
employees. The products that are manufactured by the company include, personal computers,
data storage related devices, computer software, servers, printers, cameras and many more.
The strategy related to supply chain of Dell mainly consists of a multifaceted network of
organizations that are interconnected and are a part of the industry of technology. The
suppliers of the company need to be shared by the other companies in the industry who are
competitors of Dell itself. The supply chain of Dell is ethical as well as diverse in nature and
they believe in the improvement of different resources of the company (Sorbi et al., 2017).
Myer is an organization with their origin in Australia that mainly serves the mid-to-up
market areas related to the chain of stores in Australia. The organization depicts a huge
variety of products related clothing chain of males and females. The international supply

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chain of Myer works along with the workers related to freight and overseas suppliers. They
are mainly responsible to provide world class services globally in all parts of the world. The
main objective of the company is to provide efficient, effective and fast service of
international levels. The close relationships are developed with the suppliers by Myer so that
they can improve their revenues. Huge number of changes have been made in the supply
chain of Dell followed by the acquirement by TPG Capital in the year 2006 (Stadtler, 2015).
Comparison of the supply chain strategies Dell and Myer with Zara
The strategies related to logistics management or supply chain management of the
three organizations namely Zara, Dell and Myer are different in nature. The strategy of
supply chain implemented by Zara is customer oriented in nature as has been seen in the
discussion. The organization aims at taking care of the desires and needs of the customers
keeping in mind the recent trends of fashion in the fashion industry. This helps in preventing
the increase of stock related to unwanted products in the stores of the company. Zara has
been able to clear unwanted stock much faster than the other fashion houses in the industry
who sell their products for lower prices (Tatoglu et al., 2016).
The supply chain management related strategy of Dell is considered to be different
and is not customer focussed as compared to that of Zara. The products that are manufactured
by the organization are also different in comparison to the other two companies that are taken
into concern. The organization mainly supplies the products to various countries in the world
and thereby has set the standards for suppliers from around the world. Dell does not have
different approaches related to the countries in which they have their operations. This feature
of the supply chain is the major drawback for Dell (Touboulic and Walker, 2015).
The supply chain management related strategy of Myer was not suitable for the
organization and had further affected the profitability and the revenues within the years from

9ANALYSIS OF ZARA CASE RAPID FIRE CASE STUDY
2002 to 2006. Myer was then acquired by an equity firm owned privately. The new systems
were applied in the strategy of Myer from 2006. The management of Myer mainly aimed to
reduce the costs associated with costs of transportation and production as well. The online
existence of the organization was a major problem which was responsible for the collapse of
Myer (Turker and Altuntas, 2014).
The comparison between the three organizations thereby depicts that the strategy
related to the supply chain of Zara has been the most beneficial for the company. The
strategies formed for the logistics management of the organization has been able to provide
Zara an edge over other companies in the market. This case analysis highlights the main point
of discussion related to the other companies in the fashion industry as compared to that of
Zara. The competitive edge that has been achieved by Zara is associated with the effective
supply chain strategies of the company.
Conclusion
The report can be concluded with the learning that the supply chain and logistics
strategies of Zara have been most effective as compared to the other organizations. The
organization has been able to create an edge over the giant fashion houses in the industry.
The fast fashion related aspects of Zara have is related to the speed of supply chain of the
company. The highly efficient communication system of Zara helps the organization in
collecting the information related to latest trends in the industry. This increases the speed of
the entire system of production of the organization. The sustainable strategies of Zara have
also been able to create a strong position of the company in the market.
Recommendations
The strategy that can be recommended to solve the issue related to vertically
integrated supply chain system and the problems in global organizations is the outsourcing of

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activities in other countries. Outsourcing can help the company in getting useful information
related to the trends in the different countries where they operate and design their products
accordingly.

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References
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management: a literature review. Supply Chain Management: An International
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sustainable supply chain management: Developments and directions. European Journal of
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Diabat, A., Kannan, D. and Mathiyazhagan, K., 2014. Analysis of enablers for
implementation of sustainable supply chain management–A textile case. Journal of cleaner
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Mena, C., Humphries, A. and Choi, T.Y., 2013. Toward a theory of multi‐tier supply chain
management. Journal of Supply Chain Management, 49(2), pp.58-77.
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