Purchasing Management and Operational Strategies of Zara

This report provides an in-depth analysis of Zara's purchasing management and operational strategies. It begins with an executive summary and table of contents, followed by an introduction to the topic. The report explores Zara's supplier selection criteria, emphasizing the company's unique approach of having its own resources and a strong supply chain without vendors. It examines purchasing cost and market analysis, including cost-effectiveness, delivery time, and the impact of currency fluctuations. The report then discusses the impact of information and communication technology (ICT), particularly cloud computing and ERP systems, on Zara's business operations and customer engagement. It highlights innovations such as Digital Assistance Styling Shopper. The report concludes by summarizing the key findings, emphasizing the importance of effective purchasing management, supply chain optimization, and the strategic use of ICT for enhancing business value and customer satisfaction.

Running head: PURCHASING MANAGEMENT AND OPERATION
PURCHASING MANAGEMENT AND OPERATION
Name of the Student
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Author Note

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Executive Summary
The report shed light on the purchase management of Zara, one of the finest retail
companies in the world. The purchase management structure and supply chain
management process are being discussed in this report along with the sharing
innovation that may increase their brand value and imposed the technical assistance to
them. The purchasing cost and the cost related issues have been discussed here so for
the better engagement of business procedure the quality analysis of purchasing
operation is systemically and elaborately presented in this report.

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Table of Contents
Introduction............................................................................................................3
Supplier Selection Criteria.....................................................................................3
Purchasing cost and market analysis....................................................................5
Impact of information and Communication technology..........................................6
Conclusion.............................................................................................................7
References............................................................................................................8

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Introduction
Purchase management is direct and costs benefit business expansion that needs
legitimate planning and preparation for the acceleration of business. Purchasing
management pushes the organization to the greater opportunity and evaluates the
situation for achieving a long-term goal. Purchase management needs to get focus
about the strategies and concepts of marketing so that the involvement of cost they
deliver for the product will be regained with some, thus their business expansion
upgrades a bit. Purchasing management or managers have to understand the internal
organizational task and external collaboration task. In these two forms of the task,
managers have to validate the necessary requirement of the company and have to
define the purchasing strategy to make join activities and develop the supply chain.
Zara is one of the best fashion brands retailing house which produces the quality
product and has gained the customer trust and belief. Zara is the third largest retail
brand in the World. Zara has 2169 stores in all over the world and has gained the
revenue of $15.9 billion as per the report of 2016. Zara has accumulated with men and
women clothing and now they are introducing the kid's sections as well named as Zara
Kids. Zara has produced 450 million items per year and all their products are based on
the contemporary customer trends (Zara.com/sg 2017). Zara has launched 12,000 new
designs in every year and they have the policy of zero advertising. Instead of
advertising the company prefers to open a new store from the percentage of revenue
they have gained through the process. Zara aims to develop new design instead of copy
from the other. Zara has no vendors thus they used to sell their commodities from their
own stores. As the company manufacturing price is considered only thus they maintain
a low cost while selling the product (See-To & Ho, 2014). Zara has the competitors like
Hennes and Mauritz, GAP and Mark and Spencer. All these are reputed brand and they
have a different base too. As the currency fluctuation is there in European market thus
company may have tagged some high price that decreases their sales growth. Supply
chain management and affordable purchase costing are the major issues that impact on
the growth and sales of Zara.
Supplier Selection Criteria

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A supplier selection criterion is a strategic decision that accomplishes company’s
growth for executing the objectives of the company on a long-term basis at a low risk.
The organizational resources must have the conventional impact over the supply chain
so that proper supply can be provided by the parent company in any adverse situation.
this may engross the structure of the company as well as infuse the characters of their
belongings (Uhl et al. 2017). In case of Zara, they have their own resources and all
these made from their parent company thus they have a strong supply chain, they do
not have any vendors thus the product they have produced has been distributed to all
their stores for selling. Products are in affordable rate as there is no retailer or
franchises intervention. There are two types of sourcing are noticed like single sourcing
and multiple sourcing. In case of single sourcing, the production method is linear, where
the products are depending on the customer judgments (Wengang & Suicheng, 2015).
It has a cost ratio too which provide the financial information about the marketing
structure of the product. In case of multi-sourcing, the goal operating programming and
mixed integer programming are the main formulation of process handling. There is a
maintained structure of supplier selection where performance assessment, human
resource, quality system assessment, manufacturing, business criteria, information
technology all these are associated with the development of the company (van et al.
2015). There is a standard certification that has to be taken and maintained by the
organization which is different from the country’s perspective. Thus the trend of
business and the expansion of it depend on the supplier selection processing of that
country. Quality of the product, environmental issues, customer response, revenue
generation, place selection all these important aspects of establishing or enhancing the
business market (Wee et al. 2014).
The effective approach of suppliers’ selection method is important as well as
relevant for the improvement of the organization. The organization needs to revise their
screening process. In case of Zara, the quality of the product should be maintained so
that the screening can be done in an effective way (Monczka et al. 2015). Another
important aspect that needs to shed light on is the specification that needed by the
customer. In case of Zara, the quality and product specification and the demand of the
customer for the better design and apparels are the main and primary concern for the

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company. Creating a Professional supply base is important, in case of Zara their cohort
and criticizer are so qualified and they impose such suggestions that ultimately engross
the quality of resourcing. As their source is their own production house, hence those
inputs are making a change as the production has been going on throughout the year
(Wiengarten et al. 2017). Systematic supplier selection and method of inculpating the
process of Zara has given a blend of Formation, design, length, color, style, fabric,
material, texture which make customer-centric business.
Purchasing cost and market analysis
In case of Zara, the products they deliver to their customer are affordable in
price, catchy in texture and color and have the touch of innovation within it. These are
the purchasing requirement for a customer and that engage the cost-effectiveness
within for the organization. Delivery time analysis is another cost related issue that
customer has the concern. This is all about the more production in less amount of
investment and makes engage more gain in terms of financial assistance. There are
certain costing effects that influenced the business scenario and make a traditional
approach to the customer as well as the world. There is a different analyzing system
that makes a mark on the actual cost price of the product is. Cost is not being stopped
there and that emphasis on the cost analysis structure (Schniederjans, Cao & Triche,
2013). Ordering a large item of goods make delivered into this section where the cost
analysis is being implemented where a huge amount of dealing in business going on. In
case of Zara the product analysis and their culture determine the quality and brand they
deliver to the customer hence they have these amount of potential to mitigate the cost-
effective as well. Considering the fact of optimum future of the business it is essential to
understand the inventory designed those products proceed by a retail company,
become an eye soothing and exiting one (Sirgy, 2015). In this kind of case, a deadline
of delivery must be maintained for the inventor's end, so that customers have the belief
and trust in the organization. Purchasing cost is a simple arrangement that an
organization or investor pays for a particular product and that has become the investors
cost (Leppelt et al. 2013). The investor has to sell the product with a major calculation of
gain or loss when the product has been sold. If investor sold it out with higher prices,
gain some extra amount if not then inventor could get confront of loss. Careful control

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and inventory needs are important for the maintaining behavior of the customer, in each
case the cost affectivity is in an engagement. Activity-based costing, actual cost system,
and conception and appraisal cost are in for the company like Zara where they have to
put their brainstorm and make an innovation that needs those extra costs.
Purchase costing can be affected by a suitable use of centralized purchasing. The
procurement of saving and appropriate strategy needs to implement for the proper
purchasing cycle. The involvement of obtaining the business and making use of their
stores is the legitimate outsourcing and analyzing the process (Kim & Choi, 2015).
Short-term goals can be enriched and companies need to concentrate on their entire
principle of marketing and business attire. The supplier optimization and the required
quality service must be enhanced as the customer can get the product with affordable
price rates. The total quality method may enrich the best purchasing practice that
impacted on the customer preference and quality (Patel, Wise & DelGaudio, 2017).
Impact of information and Communication technology
In case of Zara, Cloud computing has been used. As they are not giving their
advertisement in media devices thus they want to make a streamlined channel and use
ERP for their promotional purposes. The company has implemented the process so that
channel marketing and web marketing can enhance. The underscore ERP solution
provides more acrimony and sheds light on the resource planning of Zara. Information
and communication technology is a rending service that incorporates more justification
in business. Business can be enhanced by the effective use of the technology thus any
acceleration that business wants can be viable by that technological assistance
(Wagner & Bode, 2014). There are numerous advantages that assured the disseminate
information about the company. In this globalized world, businesses are based on
multiple parameters. Networking is one of those where mass promotions and
advancement of a product is being seen through the device. In use of cloud computing
business model innovations and fashion trends and collection of innovates can be done
by the customized handle held by the computer (Wilhelm et al. 2016). The execution of
their IT infrastructure and real-time decision making have imposed the proper
maintaining of their fame and extend their market in the globalized arena. Impact of
Information and Communication Technology (ICT) and the development of strategies

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are the important attributes that presented by the company to produce more value and
information to their customers. Effective use of communication for enhancement of
business and the traditional inclusion of advertisement through television, newspaper,
and magazines are also there for getting a better increase in business (Li, 2017).
Zara is one of the biggest retail brands whose purchasing management is engrossed
by the effect of critical inputs of customer belief and trust. The innovation like Digital
Assistance Styling Shopper is a process where the customer can take a look at the
material and innovators define the product quality by the communication process with
customers (Tuta et al. 2014). This is the visual audio process where the use of mobile
or tabular device people can connect any of the Zara executives and ask any query like
face to face and the executive delivers all the probable answer and demonstrate the
product as well as try to impress the customer but that process. If the customers like the
product they can buy that instantly and will give the payment through a card. Zara
service executive will be delivered the product within 24 hours at the customer
residence.
Conclusion
Therefore, the report can be concluded that purchase management and the
operational aspect of the purchasing enhance the supply chain management and
provide extra value on purchasing cost with the effective use of information and
communication technology. The process where the innovator invented products and
customers will take the product; this will create the bonding of belief. In case of Zara,
the quality they maintained for years is the best. They have numerous outlets and they
share good business activity to their customers. The product quality, minimized cost and
enhanced technical assistance provide a validating performance so that buyer-supplier
relationship can be sustained. In comparison with other retail companies cost-
effectiveness and supply market distribution play a great role to make proper
importance to the adequate level of sharing the relationship with a customer. The
performance of Zara in this globalized market is brilliant as their service, products, and
quality is the classic in their part so that makes enhancement of their business.

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References
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(2015). Purchasing and supply chain management. Cengage Learning.
Patel, Z. M., Wise, S. K., & DelGaudio, J. M. (2017). Randomized Controlled Trial
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