Logistic And Supply Chain Management Strategies Of Zara Compared To Dell And Myer Essay.

Discuss about the Logistics and Supply Chain Management, Logistic management is the factor of the supply chain that deals with planning, executing and managing efficiency. The major priorities of Zara as well as its parent group iditex are customers and a demand centric supply management.

Zara's Logistic and Supply Chain Management Strategies

Zara is one of the best retailers which provide quality products and services to its customer by using effective strategies for its supply chain and logistics management system. Zara was founded in 1975 by Spanish born Amancio Ortega Gaona. It uses various kinds of fabrics to give the trendy outlook to clothes and accessories. Logistic management is the factor of the supply chain that deals with planning, executing and managing efficiency. The major priorities of Zara as well as its parent group iditex are customers and a demand centric supply management. However, Zara is a multinational global company but it is the subsidiary of Inditex which is largest apparel retailer in the world. The report will introduce the logistic and supply chain management strategies that enable Zara to become worthwhile in comparison of Dell and Myer. The competitive advantages are crucial for every company and the way of maintaining competitive advantages by Zara will be described in this report to make better understanding about the concepts and strategies of Zara. The fundamental reasons and strategies of Zara will be compared and contrasted with two companies Dell and Myer. At last, the report will reflect the similarities between the success formula of Zara, Dell and Myer.

Zara is more focused towards the logistics management strategies and has satisfied the customers that made it possible to become dominant in fashion industry. It has been researched that Zara has been in market since two decades and it has several branches in all over the world that are linked with the original brand. The communication system of Zara is efficient with its customers which facilitates amendments in market directly to the designers. For instance, a store manager of Zara company orders for clothes and the new fashion in clothes and accessories arrives in the stores two times in a week. The role of logistic management in Zara is valuable and that is why the company has been able to attain the competitive advantages progressively (Li, 2014).

The strategy of Zara includes adapting dressmaking designs, manufacturing new trendy clothes and allocating products to its stores within two or three week after they come into view on catwalks. The new design and the trendy clothes are monitored by its stores manager and sales team and reported them back to designers at headquarters. Agility is one of the operational themes of Zara (Mihm, 2010). There are various reasons behind Zara logistic management success which is mentioned below in brief.

Comparing and Contrasting Dell and Zara's Logistic and Supply Chain System

Vertically integration is being used by Zara to manage its shipment, operations, production, display, feedback and sales itself. The approach of vertical integration provides control to Zara over the operations. These controls can be defined in the Zara’s data acquisition, faultless modifications and the efficient quality products. The product cycle of Zara is maintained due to vertical integration and enables fluid communication between various stages such as manufacturing, designing and transportation. The distinct advantages are the feature of Zara to build efficient supply chains.

The majority sales of Zara are in Europe and after that Asia and America take place. Outsourcing to Asia requirements are very costly transportations which costs back to its biggest market. That is why Zara compasses its cost by manufacturing trendy clothes at home. Control over design and manufacturing process by Zara make enable to produce higher quality of products. Furthermore, vertical integration and the situating the manufacturing close to the markets make able Zara to maneuver designs and whip out new trends rapidly which defines the second most vital strategy of Zara (Muysinaliyev and Aktamov, 2014).

The inventory management of Zara is effective and company gas focused in place the inventory optimization models to determine models to discover the rate of quantity that can be available to each retail store of it. It has been determined by company that the shipped products should be sent after evaluating the targeted market of each store so that the store receives only what it can sell. It facilitates to avoid the creating the stock in large which may no longer require in the market due to outdated fashion (Donald and Stephen, 2014). The distribution network of Zara is effective that permits Zara to ship the goods to its various stores that is European stores and Asian stores within certain time of period.

It is the strategy which has been adapted by Zara to gain competitive advantages. The company delivers upper-quality fashion clothes which have been designed for various tastes to provide the quality and the trend clothes to the customers. It has been made sure by the company that its manufacturing departments have the potential to develop up to 85% during season adjustment which reflects that the demands of customers are met adequately and addressed efficiently throughout the year. It is the strategy of the Zara to encourage each employee to offer feedbacks about the demands of the customer.

Comparing Myer's Logistic Strategy to Zara's

There are various differences between logistic and supply chain management of Zara and Dell Company. The company of Dell is followed horizontally integrated approach while Zara is followed an integrated approach of supply chain. The nature of production process of Dell is isolated which hires third party suppliers for finishing the goods and delivery. On the other hand, Zara has control over its production process of garments. The reason behind successful of Zara is control over the trade from manufacturing to delivery. This activity enables company to answer rapidly to changing fashion and the preferences of customers which make it effective to introduce latest trends in the market in short span of time (Christopher and Russell, 2008). While Dell has to coordinate with number of tidy procedures and due to horizontal integrated approach Dell controlled easily to the entire process. There are some points, which can help in comparing the logistics and supply chain system of Dell and Zara. These points are mentioned below.

Storage

The inventory cost of Dell is low with no additional cost on warehouse. The time of inventory for Dell is 7 hours instead of 10 days. There is no inventory policy found in the Dell Company. The cost of extra such as direct delivery, warehouse, and storage of supplier with transporter cut the cost of direct customer pickup (Stadtler, 2015). On the other hand, Zara has numerous storages to store the new collection of garments and accessories and circulate them appropriately.

Distribution

The distribution channel of Dell is indirect that involves suppliers, retailers, distributors, assimilator and the end customers. The business to business model is followed by Dell Company that permits more than 80% suppliers to order online. Direct online sell of its products enables it to connect with direct client that have reduced the over cost and time (Hil, 2009).

On contrast, the products of Zara Company are shipped from the manufacturing site in Spain by Zara Logistica. The products of Zara are not stores twice in the week. The responsibility has been given to the commercial manger of Zara who are liable to inform about the demanded products to the logistics who handle the stocks. The main feature of its strategy is that it evaluates the purchase of products and in case any product is not selling in the market in that case the production of that product is instantly congested (Christopher, 2016).

Zara's Competitive Advantages

Communication

The communication strategy of Zara is most effective to interact with customers and make them aware about the latest trends or updated stocks. The designers of the company are entirely depended on the sales of apparel and the remarks as well as feedback of the customers. While, the communication strategy of Dell is not appropriate and the major weak point of dell is that it is not forethought about the international styles. The orders of customers are considered as the feedback for the Dell.

Hence, there are various differences between logistic and supply chain system of Dell and Zara, but both companies are successful and follow effective logistic management strategies to attract the customers.

Myer is the Australia department store chain which is considered as the good role model for various companies in the context of dealing with packed goods. In the comparison of Zara, Myer does not put effort to make effective strategies for attracting customers and it has no segments. On the other hand the success of Zara is made due to its effective segmented strategies along with psychographic lines (Gorrepati, 2016). Myer is using direct model of supply chain to communicate its business process and activities. This model facilitates to ship the products from the manufacturing to the destinations so that customers can collect them (Flynn, Huo  and Zhao, 2010). On contrast, Zara has numerous intermediaries such as wholesalers and retailers. The company of Zara is the leader of the fashion industry providing money value. While the concept of Myer’s “My Store” is vague and the target market of Myer is not so wide. While the target market of Zara is between 20 to 35 years old especially young fashion markets. Myer has given position its products as one of the huge retailers by offering a wide range of collection of departmental and grocery products and Zara has built its image in the form of biggest fashion retailers. The logistic strategy of Myer is not effective and the production flow of Myer is too low while Zara has executed the just in time strategy and has low inventory system. The customer services of Myer are unsuccessful and enhance the customers attraction it applies discount facilities to its products while Zara is encouraged on introducing seasonal fashion products with appropriate customer services.

Competitive advantages are considered as the central points to maintain the sustainability of the business. The world retail congress named recently Inditex as “International Retailer of the Year? for its best practice in global retailing.  It pursue for experiment is another reason of competitive advantaged in customer driven market. The attribution of Zara is new product development and innovation globally. The strength of Zara is well efficient knowledge about its partnership, clarity and alliance with suppliers. Customer oriented approach has been followed by Zara which is subjective to creating Zara and differentiating the association between manufacturer and retailers. The managers of the company are focused on making various strategies that will ensure the sources of company are sustainable both in the short run and long run. There are some aspects which is able to mention the competitive advantages (Cowe, 2011).

Operational effectiveness

There are numerous companies that put efforts to attain the competitive advantages and for performing better than competitors.  The same strategies are being chosen by every company to attain the competitive advantages which cause the failure. That is why, the strategies of Zara is different and unique for developing its operational effectiveness that aided organization to attain competitive advantages. Zara has adapted the vertical integration which builds the demand of supply chain of the company; on the other hand the competitors of the company hire labor at cheap rate from China, Mexico and so on. Zara uses proprietary software to examine latest trends from each of its various hundreds of stores in all over the world. It is trained its employee to work on it which enables Zara operations to know that which products are being purchased, in what quantity and where. Along with that, the samples of Zara are presented in number of stores than anyone else. Zara is able to differentiate itself by overturning the normally flow form design, transport and then to the customers (McLeod, 2011).

Strategic positions

Strategic position involves performing various processes of competitors in similar as well as different ways (Huh & Janakiraman, 2008). Advanced technology has been adopted by Zara to take the benefits from strategic positioning. The target market of Zara is wide and it has targeted those people who are educated and believe in fashion trends. Social media platform is the efficient tool of the Zara to expand its operations and the latest fashion trends in all over the world.

There are numerous similarities between the success factors of all the three companies that are Zara, Dell and Myer. The roles of logistic and supply chain management are the major reason behind the success of the organization. The direct approach has been followed by all companies to reach at the end of customers and they are not dependent on the distributors to deliver the products to the marketplace. Zara manufactures latest trends clothes and provides them to the customers by its globally retail stores (Loeb, 2013). Similarly, Dell produces computers and laptops and sells them direct to its consumers by its websites. Again, Myer provides its products to the customers. The success formulas of all three companies are effective that can be followed by other companies. Expensive and complex processes are reduced by companies. Effective strategies are the main cause of their success in their industries. The success formula of these three companies, i.e. Dell, Myer and Zara can be suitable for other companies also.

Conclusion 

It has been concluded that the success of Zara is attributable to the vertical integrated approach. Company has designed the business model in a way to provide latest trends clothes and accessories to its customers at affordable rates. The comparison of logistic supply chain management has been made among Zara, Dell and Myer. The revenues of the Zara are constantly improved due to effective strategies and the company is known for its perfection to provide new trendy clothes to all its stores rapidly.

By the evaluating the report of Zara throughout the report, it has been found that the company is having an effective strategies to attract the numerous customers. It has been recommended to the Zara that it should expand its operations in other regions of the world for the purpose of attaining compensate for its market share which would be helpful to decrease in Europe. Company should focus on Asian market in wide manner to develop its competitive advantages. However, the brand of Zara is well known but it should use the various advertisement approaches to promote its products as well as stores.

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