Discuss about the Logistic and Supply Chain Management for Zara.
In this report the Supply Chain Management of Zara, the fashion retailer company of Spain has been evaluated to justify their strategic policies regarding the SCM.
Coming Up with the Suppliers
In this competitive market, marketers need to pay close attention while selecting suppliers. It helps the marketers to decide who will be the most effective supplier for their organisation and can help the organisation to execute their business properly with incensement in profitability. According to Christopher (2016), choosing the right supplier depends on many factors relating to the business that determines the potentiality of suppliers for any company. The factors on which the selection process of an organisation depends are quality, service, value for money and reliability. Therefore, a systematic strategic approach should be taken while selecting suppliers that enable an entrepreneur to understand the potentiality of the business as well as weighing up customers’ purchasing decision. In this case, the concerned authorities of Zara have to decide their suppliers after following a three-step guideline such as,
- Identify the potential suppliers
- Shortlist the most suitable suppliers
- Finalising the suppliers for their business
While identifying the suppliers the company has to find out the distance of the supplier from their warehouse or displaying store. If the suppliers situated in a short distance from the warehouse, then the transportation of the products become easy and free of delivery cost (Stadtler 2015). Therefore, the suppliers cannot get the chance to demand a high price for their products, which decreases the transportation cost indirectly. Zara has implemented this strategy to reduce their price of products as well as to attract more customers. Additionally, they have researched on the storage capacity and potentiality of the suppliers whether they are able to supply a bulk of materials or not. This helps to save time and capital that indirectly brings more profit for the company.
Stock Ordering Procedures
Stock ordering is one of the most important steps for any retailer to enter in the circular process of product. Every company has to develop a particular procedure to take orders for their products; otherwise it will create a huge mess in the company regarding the exact process of taking order. As opined by Wisner et al. (2014), there are various ways to control the stock of orders. Different company implement different approaches to controlling their stock of products as well as taking orders. In this case, Zara has taken the Just in time approach to maintaining their stock of order. As the company is a fashion retailer, therefore, they have to change their products according to the fashion trends of market (Kim 2013). This is a sector where change is constant and every single day the demand of customers can be changed. Therefore, they do not keep a huge stock for future; rather they have taken this approach. It helps them to identify the demand of consumers and the according to them they take orders when needed. It prevents their business to face a huge loss suddenly.
Every organisation follows a delivery system that enables the company to reach the products to the right place without any miscommunication. As stated by Ross (2013), delivery arrangements of a company are a direct contact with the clients, which create the reputation for the company. If the delivery process of a company possesses a good communication, then the clients’ satisfaction level can be seen in the reputation of the company and a good reputation automatically increases the profit. The business of Zara is expanded in offline as well as online. Therefore, the delivery arrangements play a crucial role in their business. The USP of the company is to delivering the products to clients free, without any extra charge (Seuring 2013). Therefore, they deliver their products to clients through a few steps. As first, the products issued from the store to the main warehouse from where the products are to be distributed. Then the products reach to the nearest warehouse of the client and from there the product reaches to customer’s home. Therefore, the clients can easily avail the products without any problem.
Other Logistical Information
The other logistical information that is required to smooth the process of Zara’s business is distribution; order processing, transportation and warehousing (Fernie and Sparks 2014). All these logistic processing is needed to complete the total supply chain management of the company. Therefore, the company possesses an order processing system that is listing the orders. In this way, the company lists their orders in a list to sort them systematically. Then the process of packaging is done in the warehouses where the products are finalised by the company. At the end of this distribution process the products has to be transported to the destination to complete the procedure of distribution. The company uses their own transport system to bring the products from the suppliers, deliver the products from store to warehouses and to the customers’ addresses ((Kozlenkova et al. 2015). This distribution logistics are important for the company as the time, place and quantity of production differs with the consumption of these.
In this section, the application of Supply Chain Management has been discussed with referring to the fashion retailer Zara. The procedures of Zara’s selection system of suppliers, their stock ordering procedures, delivery arrangements processes and other relevant logistical information has been explained in detain to gain the proper idea about their distribution system. They have selected the suppliers who are within the short distance to reduce their transportation cost. It has also affected their pricing processes for the products. Additionally, they have taken the just in time approach to taking the orders, which are delivered to the destination or to the customers’ house through following a systematic steps. As the company is related to the fashion industry, therefore the process they have selected to complete their business procedure can justify their requirements. In last part, the other relevant logistical informations have been evaluated to analyse their distribution process.
Christopher, M., 2016. Logistics & supply chain management. Pearson Higher Ed.
Fernie, J. and Sparks, L., 2014. Logistics and retail management: emerging issues and new challenges in the retail supply chain. Kogan Page Publishers.
Kim, B., 2013. Competitive priorities and supply chain strategy in the fashion industry. Qualitative Market Research: An International Journal, 16(2), pp.214-242.
Kozlenkova, I.V., Hult, G.T.M., Lund, D.J., Mena, J.A. and Kekec, P., 2015. The role of marketing channels in supply chain management. Journal of Retailing, 91(4), pp.586-609.
Ross, D.F., 2013. Competing through supply chain management: creating market-winning strategies through supply chain partnerships. Springer Science & Business Media.
Seuring, S., 2013. A review of modeling approaches for sustainable supply chain management. Decision support systems, 54(4), pp.1513-1520.
Stadtler, H., 2015. Supply chain management: An overview. In Supply chain management and advanced planning (pp. 3-28). Springer Berlin Heidelberg.
Wisner, J.D., Tan, K.C. and Leong, G.K., 2014. Principles of supply chain management: a balanced approach. Cengage Learning.