Zara's Supply Chain Management: Practices, Issues, and Alternatives

This report provides a detailed analysis of Zara's supply chain practices, focusing on the economic environment in which the company operates. It examines key aspects such as quick demand response, small batch production, and the use of a central distribution center. The report also addresses issues within Zara's supply chain, including negative media reviews, labor concerns, and the potential for social instability. Furthermore, it explores alternative solutions to mitigate these challenges, such as improved marketing, increased employee wages, and better handling of negative publicity. The analysis includes references to relevant literature and online resources to support the findings, providing a comprehensive overview of Zara's supply chain management and its future prospects.

SUPPLY CHAIN PRACTICES OF ZARA

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2. Economic Environment:
It is very significant to understand the Economic environment where Zara operates. Here a
detailed analysis of Zara’s economic scenario would be analysed. It would help to understand all
the economical traits of this reputed fashion company. Zara had always been favoured by Spain’s
fast-growing “Economic environment. Economic stability of Spain had favoured Zara’s overall
sales margin. Thus Zara had earned huge profitability in its overall business. Such economic
favour had undoubtedly strengthened Zara’s overall business scenario. Zara had got immense
economic favour for its unique fashion attires in the overall clothing and retail industry. This is
indeed one strong point for Zara (Christopher, 2016). One reason behind this is that Spain
includes huge level unemployed people. The prime reason behind this unemployment is high
population of the country. Therefore the wages of per labour is quite low and Zara has to bear
low costs of its production. High-quality products are manufactured in this company through low
“production costing”.
Such low costing of manufacturing and production is undoubtedly one great economical gain for
Zara. The consequence of it is that Zara often offer high-fashioned and high-quality clothing
products through reduced rates. Now such reduced prices undoubtedly attract the attention and
satisfaction of the customers. It is one major reason behind Zara having so much large consumers
base. The exit of British from the Union of Europe has also resulted huge pound depreciation.
Such pound depreciation led to immense inflation rates. It had also increased the living costing
but less “disposable income” for its consumers. The result of this is that Britons are slashed upon
their spending for new clothes. The overall sales margin of Zara has also decreased thus. It had

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undoubtedly created huge impact upon Zara and the overall “clothing and apparel industry’s”
profitability.
Zara had always targeted Indian, Russian and Mexican markets as its prime targets. Russian
market is the most stable one among all these three markets. All these targeted markets’ per
capita income of people also matters a lot for Zara’s overall sales. The clothing companies like
Zara could not succeed properly without strong economic background. Thus economic stability
is very essential for the further growth and profitability of Zara (Aggour, Moussaid & El Hassan,
2016). The overall supply chain management of Zara is also dependent much upon this economic
scenario of the company. It is because the supply chain practices like “Inventory Management”,
timely delivery and “whip effect lean management” might not perform properly without strong
financial background.
5. Supply Functions’ descriptions
The functions of “Supply Chain” include certain principles. These functions’ “principles and
concepts” are very crucial for any company like Zara. It is those unique and relevant strategies of
supply chain that have enabled Zara to react the Zenith of apparel industry. The following supply
chain principles are mainly used by Zara for increasing its brand standard and net income. Zara
has retained its standing to be both an affordable and fashion forward brand name.
 Quick demand’s response: One “pull model” is thoroughly followed by Zara in its
“Supply Chain Management” and inventory. More than 1000 designs are made up each
month regarding recent trends and store sales (Chu, 2016). All the consumers’ spending

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inside the stores are monitored to understand and evaluate the designs which are most
consumed by consumers. The next designs would also be designed as per the success rate
of those previous ones. It is indeed one great strategies of supply chain for Zara.
 Productions of small batch: Fast turnover is one strong feature of Zara. Small amounted
and quantities products are mainly produced by the company. It gives the company
immense scope to demonstrate the opportunities of product designs and their success rate.
The company could also evaluate new designs acceptance in the clothing market. More
new clothing items also could be explored by the company (Wiengarten et al. 2018).
Huge quantities production risk is also reduced by this method. Such risks are also not
wanted much by the consumers. It could be thought one bad idea in investing in so many
various designs still Zara has optimized to use same clothing material in various\ways.
 “Central Distribution center”: The IT system of Zara is regarded very strong. The
distribution system of Zara is also backed up much by this IT system. All Zara’s clothes
are shipped to Spain which is its main location. The clothing items are then distributed in
other countries. The products are shipped as per various localities’ individual needs and
requirements.
6. Issues, Analysis and Alternatives:
Several issues have been observed within the “supply chain practices of Zara”. Much fake news
often circulates among the media regarding the products of Zara. Collateral damages are often
created from such negative reviews to the business operations of this company. The stock price
of the company could also be put into severe pressure. The standard of Zara Company’s labour is

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also very low. It is another burning issue for the company. The working condition of this
company is also quite low. Zara provides low wages to its labour and it is one major reason
behind the company’s poor condition of working. There are also many concerns of the labour
unions within this company. There is also prolonged campaign in the social Medias. Such
prolonged campaign could bring criminal issues also. Social instability issues might also be
created through such social campaign. These are the major issues within the business operation
of this company. (epubs.surrey.ac.uk, 2018)
There might be some alternatives to rectify these existing issues. Zara might have look after its
negative reviews more sincerely. It is because such negative reviews could put bad brand image
to the consumers. Thus Zara should invest more on the publicity and social marketing. It is
because today people are more inclined to more marketing of products. The company might also
give much emphasis to increase the wages of the employees. This solution might help to rectify
the trade unions issues although it would bring about more costing to the company. Therefore
these are the alternative solutions to the existing issues of Zara. These alternative solutions are
thus hoped to bring better “supply chain management” to Zara. (supplychain247.com, 2019)

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Reference List
Book
Christopher, M. (2016). Logistics & supply chain management. UK: Pearson UK.
http://digilib.stiem.ac.id:8080/jspui/bitstream/123456789/85/1/0273681761_Logistics%20and
%20Supply%20Chain%20Management.pdf [Retrieved on: 20.06.2019]
Journals
Aggour, A., Moussaid, A., & El Hassan, A. A. (2016). FAST FASHION IN THE MOROCCAN
APPAREL SUPPLY CHAIN: ACase STUDY. Retrieved from:
http://aircconline.com/ijmvsc/V7N4/7416ijmvsc02.pdf [Retrieved on: 20.06.2019]
Chu, P. (2016). Excellence in European Apparel Supply Chains: Zara (Doctoral dissertation).
Retrieved from: https://dspace.mit.edu/bitstream/handle/1721.1/101918/2005_2_Chu.pdf?
sequence=1 [Retrieved on: 20.06.2019]
Wiengarten, F., Onofrei, G., Humphreys, P., & Fynes, B. (2018). A Supply Chain View on
Certification Standards: Does Supply Chain Certification Improve Performance Outcomes?.
In ISO 9001, ISO 14001, and New Management Standards(pp. 193-214). Springer, Cham.
Retrieved from:
https://www.researchgate.net/profile/George_Onofrei/publication/319628914_A_Supply_Chain_
View_on_Certification_Standards_Does_Supply_Chain_Certification_Improve_Performance_O
utcomes/links/5bf6a5d8299bf1124fe55804/A-Supply-Chain-View-on-Certification-Standards-
Does-Supply-Chain-Certification-Improve-Performance-Outcomes.pdf [Retrieved on:
20.06.2019]

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Online Article
epubs.surrey.ac.uk (2018), Fashion Supply Chain, Retrieved from:
http://epubs.surrey.ac.uk/849196/1/__homes.surrey.ac.uk_home_.System_Desktop_Exploring
%20the%20International%20Fashion%20Supply%20Chain%20and%20CSR_Perry_Wood
%20chapter%202019.pdf [Retrieved on: 20.06.2019]
Website
supplychain247.com (2019), zaras’ fashion retail supply chain strategies, Retrieved from:
https://www.supplychain247.com/article/zaras_fashion_retail_supply_chain_strategies
[Retrieved on: 20.06.2019]