Logistics and Supply Chain Management of Zara: Competitive Analysis

This report provides an in-depth analysis of Zara's logistics and supply chain management, focusing on its competitive advantages and strategic tools. It compares Zara's approach with Dell and Myer, highlighting the differences in their supply chain models, including vertical versus horizontal integration, supplier management, production philosophies, storage, and distribution strategies. The report also explores Zara's Just-in-Time policy and its impact on customer value. Furthermore, it examines the key success factors of Zara, such as collaboration, incentive capacity, information, supply chain, and knowledge management, emphasizing its customer-centric approach. The study utilizes a five forces analysis to evaluate the competitive landscape and the sustainability of Zara's business model, providing valuable insights into its success in the international fashion retail market.

Running head: LOGISTICS MANAGEMENT
Logistics Management
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Executive Summary
The main purpose of the study is intended to study the logistics and supply chain management of
international fashion retailer Zara. The main aspects of the study have been further seen with the
purpose to boost the customer value. The main concept of the study has included sustainability
and competitive advantage with the application of appropriate business model and the same has
been evaluated with success of the company. Some of the other aspects of the report has further
able to compare and contrast the same strategy along with the business strategies of Zara with
Dell and Myers. The key success factors of the Zara have been seen with Inditex. The main
inputs of the collaboration, incentive capacity, information, supply chain and in the knowledge
management have given significant importance to the success of the organisation. The main
mindset of Zara’s strategy has been seen in terms of customer centric approach which is never to
contribute to gaining of competitive advantage.

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Table of Contents
Introduction......................................................................................................................................3
Comparison of Dell and Zara’s Logistics Management..................................................................4
Dell’s Supply Chain.........................................................................................................................4
Zara Supply Chain...........................................................................................................................5
Point of Difference..........................................................................................................................5
Type of supply chain of Dell...........................................................................................................5
Comparison of Myer with Zara.......................................................................................................9
Supply Chain Management Strategy...............................................................................................9
Just – in – time policy....................................................................................................................10
Zara’s competitive advantage........................................................................................................10
Conclusion.....................................................................................................................................11
References......................................................................................................................................12

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Introduction
Zara has been discerned to be founded in 1975 by Amancio Ortega Gaona. The main
store of the company has been seen to be dealing with the various ranges of products
of the manufacturing outlet. This was further seen to be the outlet for the cancelled
orders for lingerie and night wear for women. The dealing of this has ensured a strong
foundation of the association between the retail division and at the manufacturer’s
end. The main priority of Zara has been seen to be done based on the SCM strategy
focused on demand for the product and customers (Zara.com 2017).
Competitive Analysis of Zara
The suggestion on the sustainability and the competitive advantages of Zara has been
introduced with the fives forces analysis on the company. The various types of the detailed
analysis of the study have revealed a tough competition of the company with various types of the
competitors such as Benetton, H&M and GAP. It has been further discerned that in
2008, the Inditex contributed the way to reach to the top to be successful as a fashion retailer.
The deteriorating economic situation has changed the global perspective of the company’s
decision. In the recent times the products are having shorter lifespan, with the more unstable as
the company is not seen to be based on the glory (Hübner, Kuhn and Sternbeck 2013).
The logistics management of Zara is based on vertical integration and Just-in-time
deployment of the operations. The technology of the company has been further seen to be driven
by the key success factors. Some of the main form of the collaboration of the company has been

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observed with the main asks with the strategic use of the organisational resources and the core
competencies which has been able to contribute to the core competencies in Zara.
Comparison of Dell and Zara’s Logistics Management
The report has been able to analyse the strategic tools for the application of Logistics
Management, Competitive advantage, influence of supply chain and the customer value. The
Theoretical framework of the study has been further stated on the Just in Time manufacturing
and supply chain pattern which has been related to the various types o the important factors of
organizational culture, education, modernization and knowledge management with the
disposition of the core competencies of the companies. The business strategy of Zara has been
further seen to be considered as per the comparison with Dell and Myers.
Both Dell and Zara have been seen to consistent with their performance and the business
strategies. It has been further discerned one company is dealing in apparels and the other into
manufacturing of computers (Kuhn and Sternbeck 2013).
Dell’s Supply Chain
It has been seen that Dell has a consistent with consumer, company and the supplier. It
has been further seen that in the first stage the customer is seen to place the order, the second
stage is seen with how Dell procures the parts from the supplier and immediate assembly and the
final stage has been identified with supply to the customers(Ülgen and Forslund 2015).

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Zara Supply Chain
The supply chain of Zara has been particularly seen to be dissimilar with one another.
Some of the main components of the supply chian management of the company consist of
manufacturing, supply chain functions and facilitation of the distributing outlets.
Point of Difference
Type of supply chain of Dell
Based on the case study it has been identified that Zara follows a vertically integrated
supply chain, on the contrary Dell has been seen to follow the horizontal integration of supply
chain. Dell has been further seen to be isolated from the production process which is seen to fire
third party suppliers for the processing of the various types of the delivery of the finished goods.
In compare to the supply chain strategy of Zara, it has been identified that the country is
having full control with the different phases of the manufacturing of the garments. It has been
further discerned that the company is having complete control for the trading activities from the
manufacturing to the delivery process. The full control over the company has further enabled
them respond quickly for the changing fashion and the customer preference. This has allowed
Zara to issue new designs in a very short span of time. Another important benefit has been
further observed with the following of the horizontal supply chain which may considered with
the least amount of responsibilities which are shown with the assembly line. On the contrary
Dell is needed to coordinate with several numbers of the procedures which has been seen to
control the entire process and proceed with the necessary changes which are seen to be simpler

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process. Both are seen to be correct for the respective organisations (Bouzaabia, van Riel and
Semeijn 2013).
 Suppliers
The supply chain of Zara follows the integration of vertical supply chain, which is seen to be
in charge of over the suppliers. Dell is further observed to control the supply chain process with a
total of 15 supplier’s whit delivery of more than 85% for the services. Despite of having a
number of the suppliers, the accuracy and speed of Dell is seen to be the primary concern of Dell
to provide service to their clients. Several risks have been further seen to be involved with the
uncertainty and shortage of goods. Some of the risk has been also observed with the delay in the
delivery process. However instead of the reduced stocks, Dell has stressed on speedy delivery of
the products. This has been further observed to be possible with 95% of the suppliers located
close to the manufacturing (Goworek and McGoldrick 2015).
 Production philosophy
Zara has been seen to be keen in introducing new products and designs, thereby launching
the same very quickly. The company believes in application of more styles with variety of
choices. It has been further discerned that the company launches its product in limited
showroom. In some of these stores, it has been identified to receive new products. This strategy
has been applicable in making of products exclusively sold out the stock which generates
curiosity among the customer and making the next launching of the product demanding in
nature. The various strategy of lower quantity has been seen with the limited supply equal to the
purchase compulsion. It has been further observed that Zara does not advertise the products as
the brand image. The target is customer’s expectation and the actual product. As product are

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limited, the customers frequently checks for the new arrivals. Some of the main forms of the
products are limited and the customers are seen to frequently visiting the store to check for new
arrivals. The clothes are observed to highly demanding in some of the regions and the clothes are
seen to be available in the various types of the other region. For example, the eastern countries
have a very high amount of demand for the summer clothes, due to the tropical nature of the
climate. Whereas in the European countries it has been observed that the demand of the winter
clothes are very high due to the cold climate throughout the year. As Europe is recognised as the
fashion capital of the world, it can market its product in various types of the other regions in
Asia. These types of the philosophy of the production are seen to serve the taste and preference
of the customers. Dell has used this theory to make in order products.
Dell on the other hand is seen to follow make to order strategy. This strategy has been
seen to custom made in a very short period of time from the respective customers made with the
customer requirement at a reasonable time. At times the core competencies have been further
seen to be leveraged with internet and these incorporate elements from value chain. Dell has bee
further identified to customize their products in their website. The products are also seen to be
designed as they can be customized easily (De Souza et al. 2016).
 Storage
It has been discerned that Dell has been identified to have a low inventory costs with no extra
charge on warehouses. They have been seen to be having 7 hours of inventory instead of 10
days. Some of the other costs have been further observed with the costs like warehouse,
direct delivery, supplier storage with the retail storage and with the direct pickup with the
cutting costs. Dell has not been seen to be having any policy on the inventory. On the other

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hand the total number warehouses for the products of Zara are associated to garments, which
are circulated effectively (Cullen et al. 2013).
 Distribution
The various types of the concern for the indirect distribution of Dell has included
assimilators, suppliers, end customers and retailers. The Business to business model by
Dell accounts for 90% of the supplier’s order which are procured online. Dell has been
further seen to make online orders for its products such as laptops, PC with. This is in
between the stages which are removed with the added time and cost. Also the company is
directly associated to its clienteles. This further escalates the costs of the Dell.
The distribution strategy for the products of Zara is seen with manufacturing site
situated in Spain through Corunna Depot which is also known as Zara Logistica. These
inventories are not stock and are distributed in the stores of Zara twice every week. The
overseas distribution is taken care of by carrying most of the inventory to the border of
Spain and the rest is carried over by the Logistics carrier the respective stores. The stores
are seen to order more number of stocks from the offers and a commercial manager is
responsible for passing his orders to the logistics department was responsible for handling
the stock. The stores are seen to be traded at for the sales and model accuracy. This is
seen to govern the level of priority for the supplier’s orders. In case a product is not
selling, it is made sure that the production of such product is stopped immediately. This
further implies that no amount of stock shall be stored in the inventory or piling up. This
particular process is able to attract customer preference quickly (Vijayan et al. 2014).
 Communication

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Several types of new designs and collections are updated weekly and showcased
in the stores. This particular component for this whether a product requires any change or
new designs are to be created are not. This particular communication system is not only
fast but also observed as a cost efficient process. The main weakness of Dell that bed
with lack of foresight related to new international standards. The customer’s orders are
considered as their only feedback.
Comparison of Myer with Zara
On comparing Zara with Myer it has been discerned that, Myer has made no effort for
segmentation of the market along the psychographic lines and demographic lines of customer. It
is also not made proper allocation of users of the products whereas Zara has segmented product
along the lifestyle and demographic lines of the customer. Zara has been further considered to
brand itself a leader in the fashion industry by offering money value. The “My Store” concept of
Myer has a particularly seen to be ambiguous and the target market is very general in nature.
Zara’s main target group is between 20-35 year age group of young fashion. Whereas the main
focus of Myer seen with departmental store which has unsatisfactory customer service.
Supply Chain Management Strategy
The main focus of the company has been put on strategic SCM concept of occupational
achievement and improvement. The strategy is a further identified as the major source of
competitive advantage and customer satisfaction. The new model of SCM is focused for
handling physical information and products which involve both downstream and upstream
customers maximise the value.

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Just – in – time policy
The Just in Time (JIT) is seen with the pioneer Japanese technology of monitoring
inventory. This particular technique eliminates the holding costs, reduces defects and production
time. In the recent times JIT is seen to be utilised by most of the manufacturing units along with
clean thinking strategy.
Zara’s competitive advantage
In the recent times the World Retail Congress has newly named “International Retailer of
the Year‟ to Zara for its best practice in global retail business. It has been further seen to be
awarded with maximum score in the stock market index for being the most socially responsible
investment. It has importance in the quest for competitive advantage in customer driven market.
The new product development line of Zara along with the innovation is recognised by its
leadership in the service. The strength of its suppliers is identified as the key to modern-day
business ideology (Orcao and Pérez 2014).

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Conclusion
In general it can be concluded that the supplies analysis has been able to provide a deep
understanding of the Internet value chain. Various types of interpretation of the logistics
management concept has been able to focus on its customer’s technology, vertical integration
and customer centric services focused towards higher economies of scale with the parent
company. The key success factors of the company have been seen with Inditex. The main inputs
of the collaboration, incentive capacity, information, supply chain and in the knowledge
management have given significant importance to the success of the organisation. The main
mindset of Zara’s strategy has been seen in terms of customer centric approach which is never to
contribute to gaining of competitive advantage.