Assigment
Q. What advantage does Zara gain against the competition by having a very responsive supply chain?
A. In an industry where the customer demand is unpredictable, Zara having a responsive supply chain has enabled it to enjoy greater customer turnover due to its 5 to 6 weeks cycle time leading to more profits as mostly the products are then sold at full price.
Moreover being responsive has also enabled Zara to reduce its inventories and also the forecast error.
Q. Why has Inditex chosen to have both in-house manufacturing and outsourced manufacturing? Why has Inditex maintained manufacturing capacity in Europe even though manufacturing in Asia is much cheaper?
A. To be responsive in the rapid changing world, Inditex opted for both outsourced manufacturing, for the production of products with predictable demand, and in-house manufacturing, for the production of products with highly uncertain demand. Inditex has maintained large fraction of manufacturing capacity in Portugal and Spain (Europe) despite the higher cost there because this allows Zara to respond quickly to changing fashion trends in Europe.
Q. Why does Zara source products with uncertain demand from local manufacturers and products with predictable demand from Asian manufacturers?
A. Zara’s main competitive advantage is responsiveness and to retain it Zara source products with uncertain demand from local manufacturers because local manufacturers offer fast and flexible sourcing and such products are to be delivered quick instead of at low-cost (with greater lead time as it is manufactured in Asia).
Whereas products with predictable demand are sourced from Asian manufacturers because outsourcing is cheaper that is products are manufactured at a low-cost.
Q. Why is Zara building a new distribution centre as its sales grow? Is it better to have the new distribution centre near the existing one or at a completely different location?
A. New distribution centre (DC) is being built by Zara in
A. In an industry where the customer demand is unpredictable, Zara having a responsive supply chain has enabled it to enjoy greater customer turnover due to its 5 to 6 weeks cycle time leading to more profits as mostly the products are then sold at full price.
Moreover being responsive has also enabled Zara to reduce its inventories and also the forecast error.
Q. Why has Inditex chosen to have both in-house manufacturing and outsourced manufacturing? Why has Inditex maintained manufacturing capacity in Europe even though manufacturing in Asia is much cheaper?
A. To be responsive in the rapid changing world, Inditex opted for both outsourced manufacturing, for the production of products with predictable demand, and in-house manufacturing, for the production of products with highly uncertain demand. Inditex has maintained large fraction of manufacturing capacity in Portugal and Spain (Europe) despite the higher cost there because this allows Zara to respond quickly to changing fashion trends in Europe.
Q. Why does Zara source products with uncertain demand from local manufacturers and products with predictable demand from Asian manufacturers?
A. Zara’s main competitive advantage is responsiveness and to retain it Zara source products with uncertain demand from local manufacturers because local manufacturers offer fast and flexible sourcing and such products are to be delivered quick instead of at low-cost (with greater lead time as it is manufactured in Asia).
Whereas products with predictable demand are sourced from Asian manufacturers because outsourcing is cheaper that is products are manufactured at a low-cost.
Q. Why is Zara building a new distribution centre as its sales grow? Is it better to have the new distribution centre near the existing one or at a completely different location?
A. New distribution centre (DC) is being built by Zara in