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Question:

Discuss about the Supply Chain Management of Zara.
 
 

Answer:

Introduction

Zara has been discerned to be founded in 1975 by Amancio Ortega Gaona. The main store of the company has been seen to be dealing with the various ranges of products of the manufacturing outlet. This was further seen to be the outlet for the cancelled orders for lingerie and night wear for women. The dealing of this has ensured a strong foundation of the association between the retail division and at the manufacturer’s end. The main priority of Zara has been seen to be done based on the SCM strategy focused on demand for the product and customers (Zara.com 2017).

Competitive Analysis of Zara

The suggestion on the sustainability and the competitive advantages of Zara has been introduced with the fives forces analysis on the company. The various types of the detailed analysis of the study have revealed a tough competition of the company with various types of the competitors such as Benetton, H&M and GAP. It has been further discerned that in 2008, the Inditex contributed the way to reach to the top to be successful as a fashion retailer. The deteriorating economic situation has changed the global perspective of the company’s decision. In the recent times the products are having shorter lifespan, with the more unstable as the company is not seen to be based on the glory (Hübner, Kuhn and Sternbeck 2013).

The logistics management of Zara is based on vertical integration and Just-in-time deployment of the operations. The technology of the company has been further seen to be driven by the key success factors. Some of the main form of the collaboration of the company has been observed with the main asks with the strategic use of the organisational resources and the core competencies which has been able to contribute to the core competencies in Zara.

 

Comparison of Dell and Zara’s Logistics Management

The report has been able to analyse the strategic tools for the application of Logistics Management, Competitive advantage, influence of supply chain and the customer value. The Theoretical framework of the study has been further stated on the Just in Time manufacturing and supply chain pattern which has been related to the various types o the important factors of organizational culture, education, modernization and knowledge management with the disposition of the core competencies of the companies. The business strategy of Zara has been further seen to be considered as per the comparison with Dell and Myers.

Both Dell and Zara have been seen to consistent with their performance and the business strategies. It has been further discerned one company is dealing in apparels and the other into manufacturing of computers (Kuhn and Sternbeck 2013).

Dell’s Supply Chain

It has been seen that Dell has a consistent with consumer, company and the supplier. It has been further seen that in the first stage the customer is seen to place the order, the second stage is seen with how Dell procures the parts from the supplier and immediate assembly and the final stage has been identified with supply to the customers(Ülgen and Forslund 2015).

Zara Supply Chain

The supply chain of Zara has been particularly seen to be dissimilar with one another. Some of the main components of the supply chian management of the company consist of manufacturing, supply chain functions and facilitation of the distributing outlets.

 

Point of Difference Type of supply chain of Dell

Based on the case study it has been identified that Zara follows a vertically integrated supply chain, on the contrary Dell has been seen to follow the horizontal integration of supply chain. Dell has been further seen to be isolated from the production process which is seen to fire third party suppliers for the processing of the various types of the delivery of the finished goods.

In compare to the supply chain strategy of Zara, it has been identified that the country is having full control with the different phases of the manufacturing of the garments. It has been further discerned that the company is having complete control for the trading activities from the manufacturing to the delivery process. The full control over the company has further enabled them respond quickly for the changing fashion and the customer preference. This has allowed Zara to issue new designs in a very short span of time. Another important benefit has been further observed with the following of the horizontal supply chain which may considered with the least amount of responsibilities which are shown with the assembly line.  On the contrary Dell is needed to coordinate with several numbers of the procedures which has been seen to control the entire process and proceed with the necessary changes which are seen to be simpler process.  Both are seen to be correct for the respective organisations (Bouzaabia, van Riel and Semeijn 2013).

  • Suppliers

The supply chain of Zara follows the integration of vertical supply chain, which is seen to be in charge of over the suppliers. Dell is further observed to control the supply chain process with a total of 15 supplier’s whit delivery of more than 85% for the services. Despite of having a number of the suppliers, the accuracy and speed of Dell is seen to be the primary concern of Dell to provide service to their clients. Several risks have been further seen to be involved with the uncertainty and shortage of goods. Some of the risk has been also observed with the delay in the delivery process. However instead of the reduced stocks, Dell has stressed on speedy delivery of the products. This has been further observed to be possible with 95% of the suppliers located close to the manufacturing (Goworek and McGoldrick 2015).

  • Production philosophy

Zara has been seen to be keen in introducing new products and designs, thereby launching the same very quickly. The company believes in application of more styles with variety of choices. It has been further discerned that the company launches its product in limited showroom. In some of these stores, it has been identified to receive new products. This strategy has been applicable in making of products exclusively sold out the stock which generates curiosity among the customer and making the next launching of the product demanding in nature. The various strategy of lower quantity has been seen with the limited supply equal to the purchase compulsion. It has been further observed that Zara does not advertise the products as the brand image. The target is customer’s expectation and the actual product. As product are limited, the customers frequently checks for the new arrivals. Some of the main forms of the products are limited and the customers are seen to frequently visiting the store to check for new arrivals. The clothes are observed to highly demanding in some of the regions and the clothes are seen to be available in the various types of the other region. For example, the eastern countries have a very high amount of demand for the summer clothes, due to the tropical nature of the climate. Whereas in the European countries it has been observed that the demand of the winter clothes are very high due to the cold climate throughout the year. As Europe is recognised as the fashion capital of the world, it can market its product in various types of the other regions in Asia. These types of the philosophy of the production are seen to serve the taste and preference of the customers. Dell has used this theory to make in order products.

 


Dell on the other hand is seen to follow make to order strategy. This strategy has been seen to custom made in a very short period of time from the respective customers made with the customer requirement at a reasonable time. At times the core competencies have been further seen to be leveraged with internet and these incorporate elements from value chain. Dell has bee further identified to customize their products in their website. The products are also seen to be designed as they can be customized easily (De Souza et al. 2016).   

  • Storage

It has been discerned that Dell has been identified to have a low inventory costs with no extra charge on warehouses. They have been seen to be having 7 hours of inventory instead of 10 days. Some of the other costs have been further observed with the costs like warehouse, direct delivery, supplier storage with the retail storage and with the direct pickup with the cutting costs. Dell has not been seen to be having any policy on the inventory. On the other hand the total number warehouses for the products of Zara are associated to garments, which are circulated effectively (Cullen et al. 2013).

  • Distribution

The various types of the concern for the indirect distribution of Dell has included assimilators, suppliers, end customers and retailers. The Business to business model by Dell accounts for 90% of the supplier’s order which are procured online. Dell has been further seen to make online orders for its products such as laptops, PC with. This is in between the stages which are removed with the added time and cost. Also the company is directly associated to its clienteles. This further escalates the costs of the Dell.

            The distribution strategy for the products of Zara is seen with manufacturing site situated in Spain through Corunna Depot which is also known as Zara Logistica. These inventories are not stock and are distributed in the stores of Zara twice every week. The overseas distribution is taken care of by carrying most of the inventory to the border of Spain and the rest is carried over by the Logistics carrier the respective stores. The stores are seen to order more number of stocks from the offers and a commercial manager is responsible for passing his orders to the logistics department was responsible for handling the stock. The stores are seen to be traded at for the sales and model accuracy. This is seen to govern the level of priority for the supplier’s orders. In case a product is not selling, it is made sure that the production of such product is stopped immediately. This further implies that no amount of stock shall be stored in the inventory or piling up. This particular process is able to attract customer preference quickly (Vijayan et al. 2014).

  • Communication

Several types of new designs and collections are updated weekly and showcased in the stores. This particular component for this whether a product requires any change or new designs are to be created are not. This particular communication system is not only fast but also observed as a cost efficient process. The main weakness of Dell that bed with lack of foresight related to new international standards. The customer’s orders are considered as their only feedback.

 

Comparison of Myer with Zara

On comparing Zara with Myer it has been discerned that, Myer has made no effort for segmentation of the market along the psychographic lines and demographic lines of customer. It is also not made proper allocation of users of the products whereas Zara has segmented product along the lifestyle and demographic lines of the customer. Zara has been further considered to brand itself a leader in the fashion industry by offering money value. The “My Store” concept of Myer has a particularly seen to be ambiguous and the target market is very general in nature. Zara’s main target group is between 20-35 year age group of young fashion. Whereas the main focus of Myer seen with departmental store which has unsatisfactory customer service.

Supply Chain Management Strategy

The main focus of the company has been put on strategic SCM concept of occupational achievement and improvement. The strategy is a further identified as the major source of competitive advantage and customer satisfaction. The new model of SCM is focused for handling physical information and products which involve both downstream and upstream customers maximise the value.

Just – in – time policy

The Just in Time (JIT) is seen with the pioneer Japanese technology of monitoring inventory. This particular technique eliminates the holding costs, reduces defects and production time. In the recent times JIT is seen to be utilised by most of the manufacturing units along with clean thinking strategy.

Zara’s competitive advantage

In the recent times the World Retail Congress has newly named “International Retailer of the Year? to Zara for its best practice in global retail business. It has been further seen to be awarded with maximum score in the stock market index for being the most socially responsible investment. It has importance in the quest for competitive advantage in customer driven market. The new product development line of Zara along with the innovation is recognised by its leadership in the service. The strength of its suppliers is identified as the key to modern-day business ideology (Orcao and Pérez 2014).

Conclusion

In general it can be concluded that the supplies analysis has been able to provide a deep understanding of the Internet value chain. Various types of interpretation of the logistics management concept has been able to focus on its customer’s technology, vertical integration and customer centric services focused towards higher economies of scale with the parent company. The key success factors of the company have been seen with Inditex. The main inputs of the collaboration, incentive capacity, information, supply chain and in the knowledge management have given significant importance to the success of the organisation. The main mindset of Zara’s strategy has been seen in terms of customer centric approach which is never to contribute to gaining of competitive advantage.

 

References

BouzaabiaO., van RielA. C. R. and SemeijnJ. (2013) ‘Managing in?store logistics: a fresh perspective on retail service’, Journal of Service Management, 24(2), pp. 112–129. doi: 10.1108/09564231311323926.

CullenJ., TsamenyiM., BernonM. and GorstJ. (2013) ‘Reverse logistics in the UK retail sector: A case study of the role of management accounting in driving organisational change’, Management Accounting Research, 24(3), pp. 212–227. doi: 10.1016/j.mar.2013.01.002.

GoworekH. and McGoldrickP. (2015) Retail Marketing Management, Management.

HübnerA. H., KuhnH. and SternbeckM. G. (2013) ‘Demand and supply chain planning in grocery retail: an operations planning framework’, International Journal of Retail & Distribution Management, 41(7), pp. 512–530. doi: 10.1108/IJRDM-05-2013-0104.

KuhnH. and SternbeckM. G. (2013) ‘Integrative retail logistics: An exploratory study’, Operations Management Research, 6(1–2), pp. 2–18. doi: 10.1007/s12063-012-0075-9.

OrcaoA. I. E. and PérezD. R. (2014) ‘Global production chains in the fast fashion sector, transports and logistics: The case of the Spanish retailer Inditex’, Investigaciones Geograficas, 85, pp. 113–127. doi: 10.14350/rig.40002.

De SouzaR., LauH. C., GohM., Lindawati, NgW. S. and TanP. S. (2016) ‘Retail Precinct Management: A Case of Commercial Decentralization in Singapore’, in Transportation Research Procedia, pp. 765–776. doi: 10.1016/j.trpro.2016.02.030.

ÜlgenV. S. and ForslundH. (2015) ‘Logistics performance management in textiles supply chains: best-practice and barriers’, International Journal of Productivity and Performance Management, 64(1), pp. 52–75. doi: 10.1108/IJPPM-01-2013-0019.

VijayanG., KamarulzamanN. H., MohamedZ. A. and AbdullahA. M. (2014) ‘Sustainability in food retail industry through reverse logistics’, International Journal of Supply Chain Management, 3(2), pp. 11–23. Available at: https://www.scopus.com/inward/record.uri?eid=2-s2.0-84949799456&partnerID=40&md5=a3700bfdaa52b61145db25d1e28f7123.

 Zara.com. (2017). Company-+ Info | ZARA United States. [online] Available at: https://www.zara.com/us/en/info/company-c11112.html [Accessed 10 Sep. 2017].

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