Zara

1262 words 6 pages
Executive Summary:
Zara is one the leading fashion having a substantial sale of Euro 8088 million in 2010. There are many factors which have led to such a substantial growth for the company some of which are analyzed in the subsequent discussion. Some of them are capability to release in-season fashion in 50% less time than competitors. The central distribution model and efficiency in supply chain has contributed to this immense success. Once the stores are opened outside Spain this is the biggest hurdle which it has to cross. 1. What makes Zara different from other specialty apparel retailers?
There are many levers which differentiate Zara from its competitors some of which are: a) The biggest strength which Zara has is that
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Zara also deliberately manufactured less quantity of every product to give an illusion of scarcity, which fueled the higher sales because customers wanted to buy new fashion as soon as possible. The prices were also kept lower than competitors which further helped it to sell all the products.
The basic idea behind the Zara’s operation strategy was to either completely own the supply chain or maintain a strong control if it does not completely own the entity by part ownership. The centralized system helped it to get lower price on raw materials and also apply just-in-time. This was particularly important because of lower lead time it maintained for releasing products to market. The shipping method was used so that products reached on time to stores even if air-freight had to be used.
The close alignment between the two strategies helped it to reach the market in shortest possible time by releasing products before the competitors. Its use of technology and IT intelligence helped it to react to changes in fashion as soon as possible. The central inventory management enabled it to stock all the stores with the latest fashion. 3. What do you think of Zara’s sourcing mix?
Zara’s sourcing mix was split between in-house manufacturing and outsourcing depending upon the value addition provided by each type of activity. It had a single warehouse which helped it maintain lower inventories. 50% of the products are manufactured in countries near to Spain especially low

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