Zara Supply Chain: A Case Study in Success
The fashion industry is unpredictable. The products are highly unpredictable because they are susceptible to seasons and the fickle demands of consumers whose tastes can change on a whim. Zara spearheaded a supply chain management campaign that governed its design, purchasing, production, distribution and retailing efforts, and was highly successful. Here’s some of what the Zara Supply Chain process improved to increase profits and efficiency.
Zara Supply Chain with Short Lead Times
The company focused on shorter response times so Zara was able to carry the fashions that the consumer wanted at the moment they wanted them. By identifying a trend as it was happening, they were able to make their designs and have the clothes in the store within 30 days – they were able to produce clothing that fit the trend of the moment. While other companies were taking up to a year to get their lines in the store, Zara customers already had what they needed. The design teams at Zara first made sure the designs they were coming up with could be produced and sold for a profit. The people who actually sewed the product were in close proximity to the design teams, so if there were questions, the answers came quick.
Zara Supply Chain Production Practices
The Zara supply chain was successful in its ability to take ownership and control of its production. Even though they spent more on production by keeping it local to its headquarters in Spain, they had more control. This control over their fabric dyeing processing gave them the power to make what they wanted when they wanted it. Zara did not own the stitching factories, which are far more expensive, but controlled them through subcontractors nearby. Zara also gave their production planners free reign to produce the products they needed at the cost required, which meant they sometimes took production to facilities outside of the factories owned by Zara. The production practices also include short runs of the designs, which create a climate of scarcity and uniqueness for its customers.
Distribution Processes in Zara Supply Chain Saved Money
Zara treats it product like a perishable food. Their high-tech distribution system had garments from the warehouse to the store within two days. The distribution process in the Zara supply chain had minimal human intervention, which included more than 100 miles of underground tracks that moved products from the manufacturer to the production facilities and optical reading devices that sorted 60,000 items per hour. The inventory management was also able to keep track of thousands of design specifications allowing staff to know what was available to put a garment together. This allowed them to avoid delays due to wait times on ordering.
Zara Supply Chain Practices Have Impacted the Industry
Zara’s unique business model and approach to the supply chain management has been a model to the retail industry. Many companies are studying the model as the industry standard in how to operate a successful retail business. Though the company is wary of overexposure, it is establishing markets in America and is considering an Internet sales approach to its product line. Zara continues to take steps to remove any processes that do not add value.