Zara's Supply Chain and Competitive Advantage Analysis

This report offers a comprehensive analysis of Zara's supply chain and logistics management, exploring the reasons behind its success in the fashion industry. It compares Zara's strategies to those of Dell and Myer, highlighting key differences in supply chain integration, production philosophy, storage, distribution, and communication. The report examines Zara's competitive advantages, including its fast-fashion model, customer-oriented strategy, and focus on innovation. It also discusses how Zara can maintain its competitive edge by incorporating sustainability practices. The report investigates the fundamental reasons for Zara's success, contrasting it with both successful and unsuccessful companies. Furthermore, the report delves into Zara's ability to adapt to market trends and customer preferences, making it a leading brand in the fashion industry. The report includes recommendations for Zara to maintain its competitive advantage, considering the concept of sustainability.

Running head: MANAGEMENT OF SUPPLY CHAIN AND LOGISTICS
Managemen
t of Supply
Chain and
Logistics
December 14
2018

MANAGEMENT OF SUPPLY CHAIN AND LOGISTICS
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Table of Contents
Introduction................................................................................................................................2
Overview of Zara...................................................................................................................2
Logistics Management Comparison between Zara and Dell.................................................3
Zara’s Supply Chain...........................................................................................................3
Supply Chain of Dell..........................................................................................................3
Difference between Zara and Dell.........................................................................................3
Suppliers.............................................................................................................................4
Philosophy of Production...................................................................................................4
Storage................................................................................................................................5
Distribution........................................................................................................................5
Communication..................................................................................................................6
Zara and Myer Comparison...................................................................................................6
Comparison between Zara and Wal-Mart..............................................................................7
Competitive Advantage of Zara.............................................................................................7
Conclusion..................................................................................................................................9
References................................................................................................................................10

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Introduction
Logistics management is the part of the supply chain management; it develops implements as
well as manage the storage and flow of services and goods to fulfill the requirement of the
customers (Christopher, 2016). Logistics management is a fundamental aspect of the success
of the operations of any business and has a direct influence on its bottommost line. As the
volume of freight increases and transportation becomes more difficult, the prerequisite for the
management of the logistics increases (Sople, 2012). The aim of this report is to analyze the
case study of Zara in order to understand the reason behind its success in comparison to its
competitors present in the market. Moreover, the report will highlight the concepts through
which Zara can maintain its competitive advantage in the market.
Overview of Zara
Zara is a famous reputed fashion manufacturing and designing company. It has been
announced as the well organized and market retorting enterprise in the fashion industry of
United Kingdom. Mr.Amancio Ortega, the organizer, and creator of Inditex is respected for
his planned decisions along with his winning strategies for market competition that have been
adopted by his rivals (Inditex, 2018). Zara is one of the Inditex brand, established in 1975, is
the famous and renowned fashion icon. The company is only making high profits but the
consumers in armlet appreciate it. The most of the seized market by the parent company i.e.
Inditex is for Zara. According to the estimations, Zara earns 80% share of the company’s
profit (Zara, 2018). Zara is Spanish based business and effectively established itself as a
leading business. The company is considered as the fashion icon, which is offering services in
the industry since decades and still, its consumers are very much satisfied that in the future it
is going to be better.

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Logistics Management Comparison of two famous companies
The strongest businesses of two different industries i.e. fashion and manufacturing are Zara
and Dell. Zara is known for manufacturing clothes and Dell is known for manufacturing
computers. Both the companies have operative strategies and effective supply chains.
Supply Chain
Supply chain management of Zara is dissimilar from other businesses. There are diverse
portions in its supply chain such as manufacturing, distributing, crafty, and sourcing to
channels (Trade Gecko, 2018).
Supply Chain of Dell
In Dell's supply chain, three key players are suppliers, business, and customers. In its supply
chain, the customers place the order and company provide its parts to different suppliers.
After this, the suppliers of the company directly deliver the order to their consumers (Dell,
2018).
Difference between Zara and Dell
The supply chain of both the companies i.e. Zara and Dell is completely diverse. The supply
chain of Dell is horizontally integrated whereas, the supply chain of Zara is vertically
integrated (Logistics Bureau, 2017). Dell is involved in the computer's production as well as
employs third party suppliers in order to deliver goods to end user. Considering Zara, it is
involved in the manufacturing of garments and cloths in diverse areas. The main success
causes of the company are designing, the capability to deliver products on time, trade, and
manufacturing. With the strong control on every part of the organization, Zara is capable to
recognize the customer's preferences in the diversified environment. The control over the
successful supply chain procedure, Zara is capable to create quality products in the short time
duration. The advantage of Zara's supply chain is that it could be managed effortlessly as

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there are very limited accountabilities. While, Dell needs to pact, manage, and control diverse
process in its supply chain (Vijayan, Mukherjee and Kamarulzaman, 2016). Therefore, the
supply chain of Zara and Dell are proper and right as per their operations of the business. The
difference in the supply chain of both businesses is presented below:
Dealers
The strategy of supply chain used by Zara is vertically integrated under which company has
complete control over its suppliers. In this type of supply chain, the business is accomplished
to meet the customer demand and produce goods effortlessly (O’Marah, 2016). On the other
side, Dell possesses a numerous number of suppliers though there is an issue concerned with
the accuracy and speed in Dell's services (Dell, 2017). There is some type of risks involved in
the services of the company like uncertainty, product shortage, insecurity, raw material, and
delay in product delivery. Despite the products shortage, Dell is capable to provide the on
time delivery of its products. This is conceivable because 95% of the company’s dealers are
placed close to the production division (Reliable Plant, 2018).
Philosophy of Production
Considering the condition of Dell, it complies with the approach of make-to-order. Under this
approach, the business produces goods in the shorter time. Generally, business manufactures
products according to the customer's demand at reasonable prices. The company possesses a
varied range of products and services for its customers (Blanchard, 2010). Besides this, Dell
offers all the product related information on its online website. Therefore, due to the internet
the company is capable to offer information related to a range of services. In addition,
company easily plans made-to-order products.
Zara majorly concentrated towards innovative designs and new products development. The
business relies on that there must be additional products as well as designs for the customers

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in the market. The business introduces its offering through showrooms where it suppliers new
pieces of designs (Destination Innovation, 2018). The company possesses the policy to vend
new products rapidly in the market. It has increased inquisitiveness among the consumers
about forthcoming products. In addition, Zara avoid marketing of its offering with the support
of advertisement, as it desires to have a big image of the brand in an exclusive manner.
Motive of business is to offer the best services in the fashion market and content the demand
of the consumers. Because of limited products, consumers visit the store of Zara in order to
check out new designs and products. The customers demand the products of Zara differently
in different regions (Martin Roll, 2018). Hence, Zara's production philosophy served the
preferences and taste and preferences of the consumers and on the other side, Dell
concentrated on the production philosophy that is make-in-products.
Storage
Dell suffers from low inventory cost and does not possess any kind of additional cost on
storage houses. It has seven types of inventory. The business tries to reduce the cost by
different costs like supplier storage, retail storage, warehouses, and direct delivery. Besides
this, Dell does not have any kind of inventory strategy (Breen, 2018). On the other side, Zara
deliver products to different stores that support business in storing the apparels and deliver
successfully.
Dispersal
There are numerous channels of distribution for Dell like assimilators, suppliers, distributors,
retailers, and customers. The company complies with the B2B model in its procedure
according to which its 90% of the stock is ordered online. Dell vends its products like PCs
and laptops online by following direct distribution channel (Dell, 2018). By adding extra cost
and time, Dell directly connects with its consumers and patrons. This helps the company in

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cutting down the transportation cost. On the other side, apparels of Zara are not warehoused
and are dispersed at different company’s stores two times in a week. For the product
distribution, the stock is transported to the border of Australia and the carrier of logistics
delivers them to the stores. If there is out of the stock situation in the store, it orders products
from logistics that is responsible for managing and handling inventories and stocks. The Zara
stores are graded depending on the orders and sales (SCM Globe, 2015). The company cease
the production of any particular product, it is does not have worthy sales in the market. Due
to this procedure, Zara is capable to eliminate the redundant stock of unsold products.
Communication
Weekly Zara manufacturers novel designs and collections and introduce them to its store.
Manager of the company places the product on the internet and sells the products. Through
this procedure, the business is capable to maintain the product information and new designs
that are manufactured (Danziger, 2018). The designers depending on the customer's feedback
and current sales do the designing of the products. The effective communication within Zara
makes the procedure cost efficient and easy. On the other side, communication is considered
as one of the weaknesses of Dell because the consumers' orders are just feedback for the
business.
Zara and Myer Comparison
Considering the instance of Myer, it makes zero efforts in dividing the target market as per
consumers. It does not distribute the market into psychographic lines and demographic lines
of consumers (The Conversation, 2018). On the other side, Zara has divided its market based
on lifestyle and demographic segmentation. The brand image of the company has been
created successfully of being a leading business in the fashion industry by providing quality
products at reasonable prices (Bhasin, 2018). The Myer concept of "My Store" is indistinct.

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The company does not have any specific target market of consumers. Whereas, Zara mostly
target young age group of 20-35 years. Considering the company’s position, Myer is placed
in the market as the departmental store with dense product assortment. However, company's
consumer service is unsatisfactory. Myer makes use of discounting strategies in order to
appeal customers towards its product.
While, Zara introduces seasonal products in order to entice consumers with effective and
suitable services in the market. Logistics classify the consumers demand and attempt to meet
them at an affordable cost (Pratap, 2017). The distinct and efficient strategic plan offers a
superior financial stability. The management of the supply chain is related to the hierarchy of
the business. Generally, management of the company’s logistics and supply chain strategy are
capable in attaining the goals of the management.
Comparison between Zara and Wal-Mart
Wal-Mart is considered as the biggest industry brands of retailing. Both the businesses have
adopted numerous policies in order to flourish. Wal-Mart makes use of storage houses in
order to stock its product, whereas Zara refuses to adopt the strategy of storing its products.
The company directly distribute goods to the stores and vend. Wal-Mart is considered as
distributors and retailer. In order to attain the advantage from the supply chain, Wal-Mart
makes use of ‘hub-and-spoke' system (Flash Global, 2018). Besides this, it is utilizing a
system of inventory management. It helps Wal-Mart in supplying goods quickly to the
consumers and Zara utilizes the internal value chain and offer services that are customer-
centric.
Competitive Advantage of Zara
The parent corporation of Zara that is Inditex has attained a maximum score in the index of
the stock market for socially responsible investment. Besides this, Inditex received the award

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from World Retail Congress of being the International Retailer of the Year for its best
performs. This achievement of the Zara reflects that it is attaining competitive advantage
through continuous business expansion. The invention and innovation strategy are the main
feature of the company’s competitive advantage. The development of new product and
innovation by Zara are very famous within the industry. Besides this, the strength of Zara is
its alliances, clarity, and partnership. Zara follows customer-oriented strategy, which helps it
in distinguishing itself from other businesses in the market.
There are numerous reasons due to which Zara has attained sustainable competitive
advantage in the market. Some of the motives due to which it have attained competitive
advantage are:
 Short lead-time is said to be one of the reasons behind the effectiveness of Zara. The
business continuously putting its maximum efforts to bring innovative styles and it
finishes its manufacturing procedure in short time duration.
 The products of Zara are very famous among customers due to which consumers wait
for its new designs and stock of clothes (MBA Skool, 2018).
 The production of the clothes is finished in halftime by the company which offers it’s
the biggest competitive advantage.
 The parent company of Zara that is Inditex has initiated a program of repair and reuse
known as closing the Loop. This program provides consumers the chance to drop off
their used clothes in the stores of the company or through the post; such their clothes
can get a second life (Dockrill, 2018).
 Besides this, the animal welfare policy of Zara raised a severe ban on angora, fun, and
on stocking goods tested on animals.

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Conclusion
The report has highlighted the effectiveness of Zara’s logistics management and supply
chain. The assessment related to Myer and Dell with Zara has been discussed within the
study. From the examination, it could be evaluated that company’s supply chain is the
essential element that is required to attain success in the market. The Zara’s supply chain
study is exclusive as compared to other companies present in the market. The internal value
chain is determined with the help of Zara's supply chain analysis. The company complies
with the approach of customer-centric under which its services are focused towards its key
customers. Besides this, the company makes use of logistics, and customized technology that
is considered as the main success factors for the Zara. It is a learning organization and putting
its maximum efforts in the supply chain that is offering its success in the market in
comparison to other organization. Due to the sustainable environmental strategies such as
animal welfare policy and Closing the loop program, the company is able to attain a
competitive advantage in the market.

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References
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