Zara Case Study: Logistics, Management, and Competitive Advantage

This report examines the logistics and management strategies of Zara, a leading fashion retailer. It analyzes Zara's supply chain management, highlighting its "Fast Fashion" model, differentiation, and customization approaches, and explores its competitive advantage in the global market. The report provides a comparative analysis with companies such as Myer and Dell, to identify similarities and differences in their business models and strategies. The report covers Zara's innovative business strategy, its emphasis on customer satisfaction, and its integrated approach to production and manufacturing. It also discusses how Zara can maintain its competitive edge through sustainability practices and corporate social responsibility. The report concludes with an overview of Zara's impact on the retail industry and the broader economy, including the importance of its supply chain in achieving success and remaining competitive in the future.

Running head: LOGISTICS AND MANAGEMENT
Logistics & Management Assignment 1
Zara Case Study

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Kings Own University
João Ricardo AbellaGenroJornada 11500734
May 2016

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Executive Summary
The aim of the report is to understand the overall performance of the Zara industry using
logistics and management process. It provides the supply chain management of the Zara
Company. Zara Company is a retail industry specialised in fashion and clothes established in
Spanish. In order to analyse the business performances and the growth strategy, the report
provides a comparative analysis of the Zara Company with Myer and Dell. It draws a
conclusion statement by giving a short description on the overall business strategy of Zara
Company and its impact on other industries and economy.

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Table of Contents
Introduction................................................................................................................................3
Discussion and Analysis............................................................................................................3
Historic roots of Supply Chain Management.............................................................................3
Zara’s case..............................................................................................................................5
The Fundamental reasons for success, with a comparison to another successful and an
unsuccessful company................................................................................................................6
How can Zara maintain its competitive advantage, here the concept of sustainability may be
introduced?.................................................................................................................................7
Are there similarities between Zara Dells and Myers formula for success and could this be
suitable for other companies and if so explain why, if not explain why?..................................8
Analyse the issues in the case and identify logistics management strategies that enable the
company to become successful, and or will be necessary for the company to maintain or
improve its success in the future................................................................................................9
Analysing the issues in the case, and identify logistics management strategies that enable the
company to become successful, and/or will be necessary for the company to
maintain/improve its success in the future.................................................................................9
Analysing the issues in the case, and identify logistics management strategies that enable
Zara (page 71 in the text) to become so successful. Contrast this with Dell and Myer and a
top 500 listed company on the Fortune 500. (Apple)...............................................................10
Conclusion................................................................................................................................11
Reference List..........................................................................................................................12

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Introduction
The following essay will have a brief explanation of the history behind Supply Chain
Management necessary to introduce anyone in the subject and then will proceed to analyse
Zara (one of the fastest growing fashion retailers in the world) successful use of Supply
Chain Management. The company made use of logistics, differentiation, customization and
it`s “Fast Fashion model” (among other things) to gain a strategic advantage over its
competitors. This essay aims to highlight the key components in Zara`s strategy that enabled
them to be successful while also contrasting with different but also successful companies like
Myer and Dell in order to establish differences and similarities in their models that enabled
them to become big players in a global scale.
Discussion and Analysis
Historic roots of Supply Chain Management
Supply Chain Management (or the management of the chain of supplies) is a very
broad concept used to describe all of the processes involved between the suppliers of raw
materials, whatever they might be, to their arrival on the hands of the main consumer. One
could break down most of this process (in a very simplified manner) into purchasing
inventory (the purchase of goods to be later sold), physical distribution, logistics involved
and customer relationship management (Bechelet, White, Sims & Jaworski 2015).
Even though the advance of technology has vastly improved the way supplies are
moved around the world, the efficiency of the process, the means of transportation, feedback
response etc. The necessity of moving goods from point A to point B in order to profit (or to
obtain goods of similar value before monetary transactions were created has been around
since the dawn of humanity’s earliest civilizations. Rome, one of the biggest and most
complex empires of human early history illustrates the importance of this process

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exceptionally well. Rome not built in a day, and neither was Supply Chain Management
(Hugos 2014).Its birth can be dated back into the year of 300 AD in the Roman Empire (or
even before that). In those ancient times, the Roman Empire got most of its Wheat and Olive
Oil from its provinces in North Africa (as the image bellow shows).
(Hugos 2014)
As one can imagine, this was already a much-complicated process back then,
especially considering all the technology involved available in those times was rudimentary
but for the most part the key elements involved were very similar if not the same. It involved
products (wheat and olive oil in this case), facilities in which to store them safely and secure
from the elements (rain, wind, sun etc.), vehicles and routes used in the operation. Meaning in
order for the operation to be successful it was already necessary to plan the volume of
products demanded, how much stock it would be necessary to have to meet demand and how
efficiently take them to their final destination. Even in those ancient times, there was already
the necessity for a Supply Chain Management system.

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Zara’s case
Zara is a Spanish clothing and accessories fashion retailer company, founded in 1975
Zara now has almost 2000 stores in over in over 77 different countries. Its parent company,
Inditex had a turnover of more than 19 Billion dollars in fiscal 2014 (ending in January 31,
2015), helping reclusive founder Amancio Ortega. A railway worker`s becoming one of the
richest persons in the world today and the Zara the fastest growing apparel company brand in
the world(Nick George 2011).Zara's HQ is a futuristic building known as "The Cube" in La
Corunna, north-western Spain. From there, staffs churn out 30,000 designs a year, near
carbon copies of fashion's big names. Lightning-fast, locally targeted designs are Zara's
specialty: when Madonna played three weeks of European concerts in 2001, teenage girls
went to her later shows wearing knock-offs of the outfit from her first performance.
Zara's 'vertically integrated' business model limits outsourcing, making most of its
catwalk copies in-house and ensuring better quality control. When it does use cheap labour, it
mostly uses poorer European countries over the developing world. Garments hit shop floors
within three weeks of design -- blitzing the industry average of six months. Fashion used to
sell in four seasons. Zara wants you to buy for one-hundred-and-four. New clothes arrive in
every store twice a week -- days known by fans as "Z Days" -- and fuel the need to turn over
your wardrobe. The brand's global distribution centre, also in Spain, moves 2.5 million items
per week. Nothing remains warehoused longer than 72 hours. Clothes ironed in advance,
packed on hangers with security and price tags affixed, saving store staff 'prime selling time'.
Records kept of any clothes tried on but not bought, sent back to Spain along with all cash
register data. Customers visit Zara on average six times more often than they visit its
competitors, causing rival stores to dread its arrival on their turf on average.

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When Zara opened a store in China last year, one industry commentator noted, "it just
murdered everything around it". In addition, when the doors of Zara's first Australian store
opened in Sydney in April, 80% of the stock was snapped up within three minutes. Shoppers
might love Zara but fashion's elite are not so happy. One unnamed designer complained, "We
spend a fortune researching and working up ideas, then Zara comes along and walks off with
them for nothing". Zara has achieved global success with almost zero advertising, which its
founder calls a "pointless distraction" Zara being fast, affordable, pre-packaged fashion. A
business built on speed, designed for addiction.
The secret of fast fashion retailing is the ability to generate quick turnover of
merchandise in the stores. New fashion designs are shipped at a rapid rate, there are few
basics and reorders are rare. The customer knows that she should buy an item she likes when
she sees it. The Inditex Group prides itself to deliver quality merchandise in as little as three
weeks from its own factories. Designers develop new models daily – sometimes three or four
a day reviewed and put into production. It is no wonder that versions of new designs by
fashion designers in Paris are in Zara stores within a very short time of appearing on the
runway.
The Fundamental reasons for success, with a comparison to another successful and an
unsuccessful company
Zara with its innovative business strategy it created a robust position in the market.
Being a challenging dominating retail cloth market, it is making huge sales and opening the
success doors globally. Zara with well integrated in the production and manufacturing of
trendy clothes led to the high growth to the industry (Aftab, Yuanjian and Kabir 2017).
Various factors that made Zara to reach success are like innovation, integrated business
strategy, creation of Omni scale of distributions, customer friendly. With respect to customer
friendly, The Company give more importance to time and preferences of the buyer (Anwar

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2017). The sale of clothes are for a short duration, once that period of sales gets over there are
availability of new clothes with new demands and preferences as per the latest designs. This
creates huge demand and customers for the sales leading to the income and growth of the
business. The duration is for four weeks and after four weeks, the company creates
availability of the new clothes. It also creates competition among buyer in terms of
purchasing the product (Beheshti-Kashi 2017).
Omni channels include multiple channels of distribution. This creates more
customers, more demands, and more selling of the products leading to more profit (Camman
et al. 2017). They know about the customer requirements and demands, and as per their
demands, they create new designed clothes in order to gain customers satisfaction
(Christopher 2016). It creates more encouragement to innovation and competition in the
market leading to a good growth in the success of the business. They have their own supply
chain due to which they dominate the entire supply chain by creating fast and trendy sales
that led to quick turnover.
How can Zara maintain its competitive advantage, here the concept of sustainability
may be introduced?
Zara Company marked as the greatest supplier in the market. For them customer
satisfaction and their demand is everything while dealing in business transactions. Use of
creative skills and talents in manufacturing the products, the business achieve d a good
growth in terms of economy and financial (Deshmukh and Mohan 2016.). On addition to
multiple lines of distributions, it expanded its business everywhere to achieve more success.
Sustainability involves three factors of growth that are economical, social and
environmental factors when carried out efficiently without any wastage of resources create
sustainability at work place (Ganji, Shah and Coutroubis 2017). Economic factors deals with

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purchase and sale of commodity with a motive to earn income. Economic variables like
production, consumption, demand supply and income effect, when carried out efficiently
achieves profit. Social factor includes social welfare maximization with an aim to maximize
social welfare. The environmental factor includes encouragement of more of natural
resources and protection of the environment (Viardot and Nylund 2017).
Corporate social responsibility helps to understand the stakeholders’ activities for
sustainability in relation to various factors like economic, social and environmental factors
that leads to creation of sustainable business environment (Irani et al. 2017). Sustainability in
business deals with the production of the natural resources using environmental and human
capital. Therefore, sustainability at work place will maintain the stability in the business for
long-time and it will encourage more environment friendly business.
Are there similarities between Zara Dells and Myers formula for success and could this
be suitable for other companies and if so explain why, if not explain why?
All the three firms have achieved growth and success in their respective domains in
relation to supply distribution process. There is presence of lean management system in all
the three-business strategy (Ivanov, Tsipoulanidis and Schönberger 2017). Zara is the
world’s largest retail shop for fashion and clothes with periodic invention of new arrivals.
Dell created a made to order process with less time and maintained its supply chain in order
to respond faster to the customer. These are not similar in their way of doing business
although they all achieve their success in their work (Jamil and Jamil 2017). The focus is to
fulfil customer demands and create customers’ satisfaction with the best services in order to
maintain business standards and growth.

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Analyse the issues in the case and identify logistics management strategies that enable
the company to become successful, and or will be necessary for the company to
maintain or improve its success in the future.
Logistic management deals with systematic management and functioning, controlling
of the organizational activities in order to achieve long-term goals. It includes various process
of supply distribution that includes planning, efficient production and flow of resources, stock
of goods and services, and adequate resources for production process and the consumption
process in order to achieve customer satisfaction (Köksal, D., Strähle, J., Müller, M. and
Freise, M., 2017). Zara achieved its success using the proper planning and marketing
strategies with addition to logistic supply chain management (Sheehan and Foss 2017). The
company by using logistic supply strategies, it increases the number of sales growth, thereby
led to the rapid increase in production, consumption of resources (Moon et al. 2017).
Efficient and modern means of productive resources created more demand for the purchase of
the clothes, leading to maximum profit.
Analysing the issues in the case, and identify logistics management strategies that enable
the company to become successful, and/or will be necessary for the company to
maintain/improve its success in the future.
Dell includes suppliers, consumers and dell. Whatever consumer places demands to
the seller of dell, as per the required demands the order is accepted with the demands that
forwarded to the manufacturer (Mukherjee 2017). Therefore, keeping such a good focus on
the customers’ needs and requirements for the computers, created a great success in the
history of dell (Yip and Huang 2016). Dell invested in the updated technology and modern
means of resources led the company with maximum profit (Sandber 2017). Zara with its
passion and focus on day-to-day lifestyle and trends of the people it always provided with

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trendy and stylish clothes that made Zara today a success and a leading retailer in cloths and
fashion( Zhu et al. 2017). In terms of global markets, it had made a strong impact in terms of
competition as well as in terms of economy (Yu and Solvang 2017).
Analysing the issues in the case, and identify logistics management strategies that enable
Zara (page 71 in the text) to become so successful. Contrast this with Dell, Myer, and a
top 500-listed company on the Fortune 500. (Apple)
Myer
 According to Bernie Brooks (Ceo Myer) they would disappear if only kept cutting
costs all the time. Invested over 26 million dollars into service which increased their
compliments/complains ratio in their stores.
 Decide the best results come from investing in areas that are high service orientated.
 Believe that their competitive edge comes from the experience when the customer is
at the store plus the online experience.
 According to him due to online sales they can diminish their overall inventory and
size of stores, because you can order items online and have them delivered on stores
on the following day
 Invest more in technology and service due to competitors (including Zara) doing the
same and also to compete with the growing numbers of fast fashion shops around the
world
 Moved towards loyalty, personalization rather than mass market media approach
 Strategy on getting exclusive lines, nearly 20% of their business stands as reputable
and significant brands
 Smaller stores, but highly productive, optimizing space