MGT804 - Value Chain Analysis of Inditex: Case Study Report

This report provides a comprehensive analysis of Inditex's value chain management, focusing on its primary and secondary activities. It details the company's inbound and outbound logistics, operations, marketing, and services, alongside its firm infrastructure, human resource management, technology development, and procurement processes. The report identifies Inditex's target customers, key suppliers, and competitors, and evaluates the performance of its logistics and supply chain. It highlights the company's strengths in supply chain management and the importance of technology and flexibility in its operations, while also acknowledging potential challenges related to transportation and global expansion. The report concludes with recommendations to protect the company from potential threats and maintain its competitive edge in the fashion industry.

Running Head: INDITEX 0
Value Chain Management
INDITEX
(Student’s Details)
9/5/2019

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Contents
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................3
Value Chain of Inditex.....................................................................................................................3
Primary Activities........................................................................................................................3
Inbound Logistics.....................................................................................................................3
Operations................................................................................................................................3
Outbound logistics....................................................................................................................4
Marketing and sales..................................................................................................................4
Services....................................................................................................................................4
Secondary Activities....................................................................................................................4
Firm Infrastructure...................................................................................................................4
Human Resource Management................................................................................................5
Technology development.........................................................................................................5
Procurement..............................................................................................................................5
Target Customers.............................................................................................................................5
Key suppliers...................................................................................................................................5
Partners............................................................................................................................................6
Competitors......................................................................................................................................6
Logistics and Supply Chain Analysis..............................................................................................6
Conclusion.......................................................................................................................................7
Recommendations............................................................................................................................7
References List................................................................................................................................8

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Executive Summary
Value chain is the process which includes every stage between the manufacturing of
product and reaches the product to the end user. The following report described about the value
chain management, supply chain, logistics, target customers, key suppliers, partners and
competitors of the Inditex. The report also evaluated the performance of the logistics and supply
chain of Inditex.
Value chain management has nine stages which are distributed in two parts. First part is
primary activities which involve the inbound logistics, operations, outbound logistics, sales and
marketing and services. Second part is secondary or support activities which involve human
resource management, firm infrastructure, technology development and procurement. The report
comprised of all this information.

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Introduction
Value chain management refers to a process of produce the good and it is comprises of all
the information about the activities of company such as financial flow, human resource
department, logistics, supply chain and stores. The following report will describe about the value
chain management of Inditex. Inditex is one of the globe’s leading fashion retailers and it has
eight fashion brands. Its most popular brand is Zara and everyone is aware about the popularity
of Zara. The other brands of Inditex are Massimo Dutti, Pull&Bear, Bershka, Oysho,
Stradivarius, Uterque and Zara Home (Inditex, 2019a). Inditex has more than 7000 stores
throughout 96 markets and also selling products through online platforms in 202 markets
(Inditex, 2019b). It has very effective value chain. The following report will highlight the stages
of value chain management, target customers, partners, key suppliers, and competitors. With all
these things, report will also analyze and evaluate the functions of logistics and supply chain.
Value Chain of Inditex
Value chain is a combination of primary and secondary activities of the company.
Primary activities include actions which are directly connected to creation and distribution of
products whereas secondary activities are actions which provide support to primary activities
(Inditex, 2019c).
Primary Activities
Primary activities comprise of inbound logistics, operations, outbound logistics,
marketing and sales and services.
Inbound Logistics
Inbound Logistics is a term which refers to the arrival process of raw material. In the
context of Inditex, it takes raw materials from different suppliers across 43 countries and its
preference of fabric is cotton. Its 50% of the products are manufactured in Spain and 25% of
products come from the Europe. Its 10 logistics centres are located in Spain.

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Operations
Operation is the process of production of products and services. Inditex produces its
products in own factories. In this stage, Inditex starts the process to make the products and
launch products in the market. Operations include the activities such as packing, machining,
testing and assembling.
Outbound logistics
Outbound logistics is the way to reach the products to end users or customers. Inditex
follows a process after products sent to the centers. Health and safety technicians carefully check
the products and send to the stores. Inditex has more than 7000 stores to reach the products to the
customers. Inditex refresh the collection in physical and online stores twice a week to deliver the
new and stylish products.
Marketing and sales
Marketing and sales is the next activity in value chain. At this stage, Inditex attract and
convince the potential customers to purchase the products. Inditex has a strong hold in the
market with the help of Zara because Zara gets more than half of the sales for the Inditex. Its
stores are mostly located in the major cities and its advertising expenses are very low.
Services
Last stage of the primary activities is services. It focuses on the way in which company
provides the assistance to the customers. Attend every customer and provide products as per the
choice of customer are the very good service of Inditex.
Secondary Activities
These activities are known as support activities because these are not directly involved in
the making and evaluation of product. But these activities support the secondary activities. These
activities include the infrastructure of firm, human resource management, technology and
procurement.
Firm Infrastructure
First stage of secondary activities is firm infrastructure and it refers to the way in which
firm is organized. Decentralized and quick decision making is essential business model of

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Inditex because it leads to the short time to introduce more stylish outfits. IT technology is also
an important part of the Inditex organizational structure.
Human Resource Management
Human resource department of the Inditex id well developed in every country. All brands
of Inditex have different HR directors which support and handle every issues in particular brand.
Inditex follows the pyramid hierarchy to develop the products. The most interesting thing of HR
department of Inditex is that the store managers work in their autonomy. The owners of Inditex
develop this idea to motivate the managers and give an opportunity to manage the stores with
freedom and feel like owners of their own store.
Technology development
Inditex uses the technology very effectively. Every step of supply chain is connected by
the continue flow of information and it also developed the method to transfer all the information
through technology. Inditex invested a higher amount in expansion of business through internet.
Inditex takes help from the technology to design the new market trends (Dehmer & Niemann,
2018).
Procurement
Inditex takes fabrics and other materials from the external suppliers and design the
products by own. It has many internal manufacturing factories and it purchase raw materials by
the regional offices of company which are located in UK, Holland and China (Presutti &
Mawhinney, 2013).
Target Customers
The target customers of Inditex is people who are very trend conscious and fashion
forward as well as residing in urban areas. Inditex has different product lines for women, men
and kids. Customers of Inditex are very sensitive about the fashion, latest clothing and
accessories designs.

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Key suppliers
The priority of Inditex is creating values for the customers as well as suppliers. All the
key suppliers of Inditex follow the code of conduct of company. Its key suppliers are well trained
by the professionals. Inditex collaborated with 7500 suppliers in Spain and their revenue is
reaching 4.6 billion Euros (Inditex, 2019d).
Partners
There are many organizations which are working very effectively with the Inditex
environmentally and socially. Key partners of Inditex are ACT (Action, Collaboration, and
Transformation), Better cotton initiative, Better work, Canopy, Caritas, CEO water mandate,
Cotton Campaign and many more (Inditex, 2019e).
Competitors
Inditex’s top competitors are UNIQLO, PVH, Forever 21, Gap and American Eagle
Outfitters. These all competitors are giving the competition in clothing and fashion industry
(Craft, 2019).
Logistics and Supply Chain Analysis
The supply chain and logistics is the biggest strength of Inditex because its concept of
company’s supply management is connected with the time to allow sourcing of products at the
global level. The process of Inditex’s supply chain is depending on the cross functional teams
which cooperate with the design department of company and this is located in La Coruna. The
marketing specialists of the Inditex decide the prices, costs and margins of the products which
are an important part of supply chain (Christopher, 2011).
As discussed above, Inditex refresh its stores twice a week which make brands very
trendy and fashion follower. Company is very particular about the time to refresh the stores. To
meet the deadlines and volume of production, the policy of global sourcing provide a range of
fabrics which are supplied from various nations. Mostly, 40% of the products are produced in
Spain (Farooque, Zhang, Thürer, Qu, & Huisingh, 2019). Additionally, the finished garments or
products are labeled and price tagged in La Coruna which is a distribution center of company.

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To control the cost the sales and marketing, Inditex chooses the well-developed locations to
attract the customers and spending less on the advertising and promotions. The headquarters of
Inditex is located in Spain and the 80% of the products manufacture in the Europe. The inventory
management uses technology very effectively to communicate and transfer the information ( Li,
2011). The manager of company is allowed to work flexibly and successfully with the help of
technology. They can check all the deadlines of production and fashion trends to develop the
business. The inventory model of Inditex is depending on the three main points:
 Store inventory
 Warehouse inventory
 Demand forecast
In the context of transportation, Inditex is very liable to use advanced technologies. Not only
finished products, but fabrics and other materials are also distributed very quickly because the
headquarters are center point in all the supplying centers.
The supply chain and logistics process is very strong but it can face various challenges
regarding the system of transportation, excess prominence on technologies, shipment of
materials and many more. The transportation system can face problems because of the weather,
natural disaster, labor strife, political disturbances and terrorism (Sauer & Seuring, 2017).
Conclusion
From the above discussion, it can be concluded that the value chain of Inditex is very
strong and effective but it has vertical integration system which can leads to the unusual threats
to the global expansion of company. The overall business of Inditex is depending on the
processes of manufacturing the products but not depend on the functions. Every employee is
involved in the business. Hence, human resource is very important aspect of the business of
Inditex.
It can also be concluded from the above report that supply chain and logistics is the
biggest strength of Inditex because its concept of company’s supply management is connected
with the time to allow sourcing of products at the global level.

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Recommendations
To protect the company from these threats, it should develop and establish other creative
departments which can control the certain regions. The competitors of Inditex are also well
established. But Inditex can compete with all these competitors by developing its business and
store.

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References List
Li, P. (2011). Supply Chain Management. Germany: BoD – Books on Demand.
Christopher, M. (2011). Logistics & Supply Chain Management (4 ed.). New Jersey: Financial
Times Prentice Hall.
Craft. (2019, September 7). Inditex Competitors. Retrieved September 7, 2019, from
https://craft.co/inditex/competitors
Dehmer, J., & Niemann, J. (2018). Value Chain Management Through Cloud-based Platforms.
Procedia - Social and Behavioral Sciences, 238, 177-181.
Farooque, M., Zhang, A., Thürer, M., Qu, T., & Huisingh, D. (2019). Circular supply chain
management: A definition and structured literature review. Journal of Cleaner
Production, 228, 882-900.
Inditex. (2019a, September 7). Our Brands. Retrieved September 7, 2019, from
https://www.inditex.com/en/about-us/our-brands/zara
Inditex. (2019b, September 7). Who we are. Retrieved September 7, 2019, from
https://www.inditex.com/en/about-us/who-we-are
Inditex. (2019c, September 7). Our Model. Retrieved September 7, 2019, from
https://www.inditex.com/en/how-we-do-business/our-model
Inditex. (2019d, September 7). Our Suppliers. Retrieved September 7, 2019, from
https://www.inditex.com/en/our-commitment-to-people/our-suppliers
Inditex. (2019e, September 7). Partenrships. Retrieved September 7, 2019, from
https://www.inditex.com/how-we-do-business/right-to-wear/partnerships
Presutti, W. D., & Mawhinney, J. (2013). Understanding the dynamics of the value chain. New
York: Business Expert Press.
Sauer, P. C., & Seuring, S. (2017). Sustainable supply chain management for minerals. Journal
of Cleaner Production, 151, 235-249.

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