ZARA Supply Chain Management Practices

Supply Chain Management PracticesGroup Members:DHRUV MAHESHWARI | DIVYA NAGAR | HITESH VARSHNEY | SIDDHARTH SINGHVIIntroductionFounded by Amancio Ortega Gaona in 1963Went on to become the flagship brand of IndiTex, its holding company in 1979Strategic buying and acquisition: bought over 100 companies worldwide involved in textile purchasing, textile manufacturing and logisticsObjective was to integrate its operationsHowever, designing and production remained in-house operations.Fast Fashion StrategyPioneers of customized retailingFrom conceptualization to development and delivery only 2 to 3 weeksVertical integrationOther fashion apparel brands take anywhere between 8 to 12 months to forecast trends.Spotting TrendsFront end salesmen give continual updates to SMs - relayed to the Head Office dailyImportant data on preferences and trends identified in the stores itselfManagers specially trained - at identifying such fashion changesDesign team also moves internationally to scout for newer and fresher trends.Signifies robust feedback mechanismsDesigningSeparate design units men, women and children designing, procurement and production handled sepeartelyVertical integrationUsage of CAD rapid prototypingOnly seasonal collections were deliberated upon eight months in advance.ProductionAutomated cutting facilitiesEnhances flexibility, reduces wastageDecentralized sewing to 11,000 workers in 350 small workshops faster completion of collectionsFinished goods pre - tagged and pre - ironed before dispatch saves display time.DistributionSorting through optical reading devices sorts 60,000 items every hourFolded apparel and hung apparel handled separately Routed according to destinations using automatic routing devicesMerchandise transported using airways and roadways 98.9% accuracy in shipments.Store LayoutPrime locations where pedestrian flow is constantStore interiors - high end European boutiquesNeutral shades of paint and lighting used to enhance the merchandiseSpecialized window designing teams relay the window display designs every week to the storesMerchandise arranged - to ensure that the consumers spend more time inside the store.USPTrade off between higher margins and increased flexibilitySWOT AnalysisSTRENGTHSVertical IntegrationStrategic acquisitionsEffective trend spottingFaster design development and approvalAutomated cutting less wastageAutomated and robotic sorting of merchandiseImage of exclusivityLower risks limited inventoryVery strong IT systemsWEAKNESSESHigher stitching costs than rivalsHigher logistical costs due to usage of roadways and airways for shipmentVery less expenditure on advertisements high dependence on word of mouth and point of sales exhibits

SWOT AnalysisOPPORTUNITIESExpansion into online marketing pursuing e-retailing optionsThe ever expanding demand for high end fashion apparel at affordable pricesTHREATSRivals moving operations to Asian production hubsCustomer switching could become a problem due to more economical and affordable optionsGrowing popularity of e-retailingDiverse trends and preferences across all global markets

The Future of ZaraCollaboration with online and e-tailing platforms could be a possibilityStrengthening their vertical integration modelDifficulty in applying present model to promising Asian and African marketsOver reliance on European markets especially Spanish the bearish euro market could adversely affect Zaras revenues.

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