Evaluating Zara's Sourcing and Supply Chain Management Practices

This report provides an analysis of Zara's sourcing and supply chain management strategies, highlighting its unique approach within the fast-fashion industry. Zara, operating under Inditex, emphasizes rapid stock turnover and efficient supply chain operations to maintain a competitive edge. The company's vertically integrated supply chain, featuring both in-house manufacturing and strategic supplier relationships, allows for agility and waste reduction. The report also examines Zara's sustainable sourcing efforts, including its commitment to the triple bottom line concept, while also acknowledging past controversies related to worker compensation. By balancing cost considerations with quality control, Zara's sourcing and purchasing strategies contribute significantly to its success in the global retail market. The report references various sources to support its claims and includes visual appendices showcasing Zara's workwear and store environments.

Running head: SOURCING
Sourcing: Zara
Name of the Student
Name of the University
Author’s note

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Sourcing/ purchasing are the process in supply chain management where a company
includes an external service provider within the operations of the organisation (Fernie and Sparks
2014). Zara is a fast fashion retail chain which operates under the Spanish company Inditex, One
of the major objectives of the company is to achieve growth through diversification; hence the
company keeps refreshing its stock once in two weeks. The competitive advantage of the
company is the establishment of the quick supply chain which is driven by the process of
procuring small amount of inventories which in turn results in reduction of waste (Inditex.com
2018). Due to the requirement of the company to refresh the products, Zara has a prominent
designer and marketing departments that continuously source the market in order to cater to the
requirements of the target market.
Supply chain management of Zara
Zara has a unique supply chain management function which helps the company gain an
edge over the competitors by keeping the cost of the products reasonable. As the organisation
operates in the fast-fashion industry the company has to re-fresh the stock of garments quickly.
Zara has a centralized and vertically integrated Supply Chain management process. The supply
chain of the company can be described as lean and agile as the waste is decreased due to less
usage of inventory and rapid change of products. The majority of the manufacturing process of
the company is owned by the management, Zara has its own manufacturing units approximately
22 in number, and this allows the company to be agile as well as reduce the waste in the process
of operation. This also helps the company to maintain the quality and monitor the efficiency. The
retail outlets take deliveries two times in a week, and a time span of two days are taken in order
to deliver the items. The approach that the company has towards the supply chain is JUST IN

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TIME method where the company focuses on the trends of the market (Qrunfleh and Tarafdar
2014).
Suppliers
The minority of the production process which is not undertaken by the company is done
by the suppliers who are chosen on the basis of the following: quality, worker wage, Flexibility.
Sourcing Zara sources its products from Europe, Asia and Africa as the labour of the country in
this region is relatively cheaper than that of European countries or US. As the company keeps
refreshing the stock rapidly at least once in two weeks, the supply of the products has to be in the
process all the time and as it has to change so quickly the factories need less investment in
stocking the raw materials. The company focuses on the quality of the products and ensures best
equipment in the process (Chow et al. 2008).
 50% of all items are manufactured in Spain
 26% in the rest of Europe
 24% in Asia and Africa
One of the major advantages of integrated process is that the majority of the quality is under
the direct control of the company and the major demerit of the process is that it can bring
complexities in the business operation.
Sustainable sourcing
Triple bottom line concept
This is a contemporary concept in marketing where the company not only focused on the
financial improvement and development of the company, but also realizes the responsibilities

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and duties that they have towards the society and the environment. Zara has also adopted this
business model and ensures that their business objectives are based on the values and principles.
Zara has a number of activities and policies regarding their CSR which ensures that the company
understands the responsibility they share in the society as well as for the environment.
The organisation has been under speculation fro under paying the workers in the
factories of Bangladesh (Pujol-Mazzini 2017). The employ about 3,000 workers in
manufacturing operations in Spain at an average cost of 8.00 euros per hour compared to average
labor cost in Asia of about 0.40 euros per hour. In 2016, workers of several garment
manufacturing companies in Bangladesh observed strike in order to claim that they are being
underpaid, along with many other reputed garment companies ZARA was among them.
It can be concluded form the above discussion that ZARA has one of the most unique and
stable from of supply chain management which provides the company an edge over the
competitors in the industry. the process of keeping the majority of the production control under
the company this retail giant tactfully tackles cost of sourcing and purchasing also in terms of
quality risks.

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Reference:
Chow, W.S., Madu, C.N., Kuei, C.H., Lu, M.H., Lin, C. and Tseng, H., 2008. Supply chain
management in the US and Taiwan: An empirical study. Omega, 36(5), pp.665-679.
Fernie, J. and Sparks, L., 2014. Logistics and retail management: emerging issues and new
challenges in the retail supply chain. Kogan page publishers.
Inditex.com ., 2018. ZARA. [online] inditex.com. Available at: https://www.inditex.com/about-
us/our-brands/zara [Accessed 5 Apr. 2018].
Pujol-Mazzini, A., 2017. From Aldi to Zara, Western stores beef up safety for Bangladesh
workers. [online] reuters.com. Available at: https://www.reuters.com/article/us-bangladesh-
fashion/from-aldi-to-zara-western-stores-beef-up-safety-for-bangladesh-workers-
idUSKBN19K1Y5 [Accessed 5 Apr. 2018].
Qrunfleh, S. and Tarafdar, M., 2014. Supply chain information systems strategy: Impacts on
supply chain performance and firm performance. International Journal of Production Economics,
147, pp.340-350.

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Appendix:
Figure: ZARA workwear
Source: (Inditex.com 2018)

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Figure: ZARA store
Source: (Inditex.com 2018)

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Figure: ZARA store
Source: (Inditex.com 2018)