Zara is an organization that operates in the fast fashion sector and the origins of the company is in Spain. The organization was founded in the year 1975 by Rosalia Mera and Amancio Ortega. Zara is the major brand of Inditex group and is also considered as the largest retailer in the world. The fashion organization also owns many other brands including, Pull&Bear, Massimo Dutti, Stradivarius, Bershka, Zara Home, Oysho, Uterque. As reported in the year 2017 Zara is managing around 20 collections of clothing within a particular year. Zara first started its operations in the year 1975 and they further expanded their international operations in the year 1988 (Beske & Seuring, 2014). The first international operations of Zara had started in Portugal and starting from this year they further entered many other markets including, United States, France, Mexico, Belgium, Sweden and Greece. Zara entered the Asian market in the year 2002 and started its operations in Japan, China, Singapore, Malaysia and India. The other countries where Zara has expanded its set-ups are, Russia, Morocco, Estonia, Romania, Hungary, South Africa, South Korea. The online store of Zara was opened in the year 2010 and the website became active in Portugal, UK, Italy, France and Germany (Brandenburg et al., 2014).
The analysis in the report will be based on the supply chain management of Zara and other aspects including the relationship between the buyers and the suppliers and the selection criteria of the suppliers.
Discussion related to Supply Chain Management of Zara
The supply chain management related strategy of Zara is the major element that increases the competitive advantage of the organization in the market. The financial performance of the parent company of Zara, that is, Inditech was impressive in the year 2015 and the net worth of the organization was more than 100 billion dollars. The company was considered to be one of the most successful in the fashion industry. The financial performance of the company was able to attract the interests of the customers as well as the other organizations in the market (Carter, Rogers & Choi, 2015). The major strategy related to the success of Zara mainly involves the adaptability of manufacturing items, couture designs and distribution of the products to the stores. The secret of the success of Zara in the fashion market is the supply chain policy of the organization and the speed by which the latest fashion from the ramps were able to hit the stores. The agility of Zara’s supply chain is the major operational theme of the organization to gain competitive advantage.
Relationship between the buyer and supplier
The relationship between the supplier and buyer is a major aspect in the process of supply chain management of any organization. The supply chain of Zara is an important part of the success of the organization and the competitive advantage that they have gained in the market. The strengthening of supply chain will ultimately benefit the customers and the company as a whole. The supply chain of the company can be made much more effective and collaborative (Dubey et al., 2017). The collaborative supply chain environment facilitates the innovation related activities in the organization and growth can also be achieved in this type of environment. The organizations in the present times have been able to detect the importance of collaborative environment and they are also taking steps towards the improvement of relationships. The relationship of the buyers and suppliers in the supply chain of Zara has been found to be quite strong. The organization has implemented a rapid fire model where they aim to stay in the forefront of the fashion industry and they work in a pull system which is integrated vertically and is supported on well-developed and vast network of suppliers (Ellram & Cooper, 2014). The network of the suppliers of Zara are formed with the help of greater a quarter of a million workers who work directly and indirectly with the suppliers. The supply chain of Zara is well aligned with the operating model of the organization. The company focusses on the growth and development of the suppliers and they form strategic clusters in the market. Zara has an improved system of ranking for their suppliers which helps them in conducting audits on them so that they can be kept on track (Fernie & Sparks, 2014). The organization involves the suppliers in the development of the products so that the distance between the consumers, the brand and the suppliers can be reduced.
Supplier selection criteria
The selection of the suppliers in the fast fashion industry where Zara belongs is quite difficult as the working environment in the organization is quite challenging. The suppliers need to align their work processes with the working speed of the company. The organization keeps a constant check on the ways by which the suppliers operate and they have ranking systems which can help them in selecting the best of the lot. The suppliers are aligned with the operations of Zara and they need to face the challenges that can arise from the processes (Hazen et al., 2014).
Barriers and risks
The major barriers and risks that can affect the research that has been for the analysis is that the company officials may not disclose the entire information related to the supply chain issues of the organization. The information has been collected mainly with the help of secondary research and the data and information gathered from this research may not sufficient to address the topic. However, the information will be linked with the speech of Uluskan et al. (2016). The different aspects of supply chain management will therefore be discussed with the help of the different levels of information gathered in the research (Meixell & Luoma, 2015).
Problems and benefits related to supplier selection
Benefits – The selection of suppliers for an organization has many benefits for the organization and the customers. The choice of suppliers for a long term helps in improving the competitive advantage of the organization, as in the case of Zara, the agile supply chain has created a competitive advantage in the market. The costs related to setting up of new suppliers is reduced with the help of long-term relationships between the suppliers and the organization. The efficiency of the supply chain and the communication between the suppliers and the company is improved in the long term relationships. The volatility of the prices of different raw materials is mitigated with the help of long term relationships (Monczka et al., 2015). The supply chain of the organization is consolidated if the suppliers maintain long term relationships with the company. The long term supplier relationships help in the outsourcing of other activities related to the operations in the organization. The organization can put stress on continuous improvement of the services and products offered by the suppliers if they have long term relationships. Zara has long term suppliers in the supply chain who have been selected based on their speed and efficiency. This factor has helped Zara in improving their sales and competitive advantage in the fashion industry (Schaltegger & Burritt, 2014).
Problems – The process of finding the perfect suppliers is a major issue for any organization. The main challenge is related to the difficulty that occurs in the maintenance of stable supply and thereby meeting the quality standards. Monitoring the performance of the suppliers in a given period of time is also an important issue. Zara has to select its suppliers while keeping in mind the operating process of the organization and the needs of the customers as well. The biggest challenge related to procurement is to make the suppliers perform their functions (Schoenherr & Speier?Pero, 2015).
Effect of supplier appraisal on purchasing
Supplier appraisal can be defined as the assessment of the potential capability of the supplier with respect to the ways of controlling the quality, quantity, delivery, price and many other factors related to the products that are supplied to the organization. The supplier base is dependent on the industry where the organization operates. The process of supplier appraisal is therefore important so that the right suppliers can be chosen for the organization. The performance of suppliers can be controlled with the help of appraisal (Stadtler, 2015). The weaknesses can be detected and thereby it can be improved so that the problems are addressed. The process of appraisal helps in securing and supporting the performance of the company. The buyers and the suppliers can collaborate together so that they can understand the factors that influence relationships. Zara has a well-developed process of supplier appraisal which helps the organization in ranking their suppliers and thereby detect the problems that have occurred in the supply chain (Touboulic & Walker, 2015).
Relationship of supplier appraisal with nature of product
The appraisal process of the suppliers of Zara is set on the strict requirements that are stipulated in the Code of Conduct that is set for the suppliers and manufacturers. The Code mainly outlines the standards of the company which prioritises protecting the human rights and promoting international level of labour conventions. Training related to the different processes are provided to the manufacturers and suppliers so that they are able to apply the Codes that are set by Inditex which is the parent company of Zara (Turker & Altuntas, 2014).
The nature of the product that is delivered by the suppliers of Zara is affected by the standards that are set by the organization. Zara has formulated a strategic plan with the aim of a sustainable and stable supply chain. The suppliers need to maintain the standard of the product so that they are aligned with the brand of Zara. Thus, it can be said that the appraisal and maintenance of standards of the supply chain helps in developing the nature of the product (Wang et al., 2015).
Factors related to supplier selection
The major factors that affect the selection of suppliers for a particular organization are, reliability of the supplier, which is important to establish long term relationships. The quality of the products that are offered by the supplier also affects the sales and profitability of the organization. Another important factor that is to be considered is the value for money that is being provided by the supplier. The strength of service of the suppliers and the clarity of communication also acts as a factor in the selection. The financial security provided by the suppliers is of utmost importance for the organization. This factor helps in determining the effect that the financial performance of the suppliers has on the organization. Zara has always selected their suppliers based on these important factors (Wisner, Tan & Leong, 2014). The suppliers are selected based on the various standards that are set by the company.
Ways of selecting, managing, monitoring and assessing suppliers
The suppliers are selected by collecting the opinions given by the stakeholders of the company and the criteria that is set by the management. The performance of the suppliers is managed by measuring their performance and audit the development. The performance is monitored by gathering feedback and with the help of the ranking system devised by Zara. The assessment is done by providing the certificates to the suppliers according to their level of performance and quality of services and products (Beske & Seuring, 2014).
Relationship of the speech with the supply chain management of Zara
The speech quoted by Uluskan et al. (2016), mainly states the connection of selection of suppliers with the strategic performance of the company and the organizational factors. The major organizational factors are related to relationship, capability of the process, managing the suppliers. On the other hand, the strategic performance involves the quality, cost, time, management, technology. The speech is closely related to the supply chain related strategies of Zara. The selection of suppliers is majorly dependent on the other organizational aspects as discussed in the analysis. The appraisal of the suppliers is also an important factor related to the quality of the services and products and the assessment of suppliers (Brandenburg et al., 2014).
The report is mainly based on the supply chain related strategy of Zara and the relation of this strategy with the speech of Uluskan et al. (2016). The discussion is concluded by stating that the selection of suppliers for an organization affects the quality of products and the sales of the organization as well. The costs, quality, processes and performance related to the suppliers affect the ways by which they are managed by the organization. The supply chain quality of Zara has acted as one of the major factors for its success in the fast fashion industry. This shows that supply chain and perfect selection of suppliers is an important factor for the success of a company.
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