What are the supply chain
objectives of Zara?
Flexibility: Zara selects more than
one suppliers to guarantee that the company could not absence items in
emergency conditions, like policies, disasters, and cultural differences.
Dependability: Zara regulates that
retailers only can place order twice weekly, on Wednesday and Saturday. If
retailers miss the deadline, they have to wait for at least three days. Order fulfillment
has the same rules with retailers, including when items load on trucks, when trucks
deliver goods to the airport, and so on.
Speed: From designing to
production, from production to delivery, and from delivery to customers, Zara
only need 15 days. Designer, procurement expertise, and production planners communicate
around a circle table to improve the work efficiency. The enterprise improves
speed by decline capacity utilization. In addition, in fashion field, products
are short life, but Zara obtains information quickly and responses swiftly.
Costs: The purpose of Zara implements
all off those strategies is decrease costs and risks. For example, using information
tracking tools to decrease the bullwhip effect, regulating rules for purchase
items to measure dependability, and selecting multiple suppliers to decrease risks.
The company also purchases low costs raw materials to decrease costs and
Innovation: The company implements
some supply chain strategies which are different with other rivals, like small
part of tasks outsource to 3PLs, small batches, power control, strict rules to
place orders, and encouraging stock-outs.
Quality: One of the reason of the
high market rates of Zara is high quality products. Except the stock out strategy,
because of high quality products, customers visit Zara stores more often than
visit other stores like H&M.
Sustainability: Zara integrates and
considers all off the supply chain processes, rather than only one or two
processes. So, the company considers the whole environment of supply chain and
promote the sustainability. The firm has a self-reinforcing system, including
close the communication loop, stick to a rhythm across the whole supply chain,
and utilize capital assets to increase chain flexibility.
How is Zara’s supply chain
different from most other supply chains in their industry?
First, Zara outsources small part
of tasks to other expertise enterprises, and keep improve core competencies.
Charging core competencies can improve the control power of the company.
Second, Zara prefers to pack small
batches to improve flexibility, and the company allows occasional stock out to
promote customers’ desire to purchase commodities.
Third, the fashion company launches
a strict time-table to complete each process. The company learned just-in-time
strategy from Toyota.
Fourth, Zara sticks tags on products
before they are delivered to improve efficiency.
Finally, the firm permits
does Zara control the bullwhip effect?
The company has
three parallel commodities lines, each line managed by one manager. Managers guarantee
information can flow quickly across the line. The enterprise applies the
information technology to promote information exchanges. Technology includes
PDAs regular phone. When the season has started, Zara also permits retailers
adjust 40% to 50% to change orders rather than only 20% to avoid overproduction.