Zara Supply Chain Analysis
Zara’s Secret to Success In comparison to its competitors, Zara’s supply chain is quite unconventional. Instead of focusing on competitive product prices and advertising Zara has developed a super integrated supply chain paralleled by few (1). This supply chain allows it to rapidly respond to market demand and have extensive control over its design and production process (1). Inditex, the clothing company that owns Zara is extremely vertically integrated. It is comprised of over 100 design, manufacturing, and distribution companies (3). Contrary to the common practice of ousting unnecessary labor, it handles most of its own manufacturing (60%), outsourcing only simple clothing designs. This extensive integration allows Zara to design, manufacture and distribute in as little as 15 days, which is lightning fast in the clothing industry (1). This is the essence of Zara. Zara releases new clothing designs every two weeks (2), creating a “made to order” feel as customers often have only one opportunity to buy a specific product (3). This strategy increases the frequency that customers visit the store and also decreases the need to mark down prices on unsold merchandise, saving the company money (2). Furthermore, this unusual practice reduces the cost of running out of one item. They sometimes even encourage stock outs to promote scarcity and therefore higher demand- a technique unheard of elsewhere (1). Image 1: Workers assembling clothing at a manufacturing plant Success of Zara and Goals of Target
Zara’s responsiveness to consumer demands is one of its greatest accomplishments. Its designers perform extensive fashion research and communicate exceptionally with its retailers to accomplish this (2). Target releases new clothing every 6 months which is a snail’s pace compared to Zara. By improving the fashionableness of its products Target could
expect more sales and less inventory to hold. Also, if Target could leverage more of its capital assets in the
Zara’s responsiveness to consumer demands is one of its greatest accomplishments. Its designers perform extensive fashion research and communicate exceptionally with its retailers to accomplish this (2). Target releases new clothing every 6 months which is a snail’s pace compared to Zara. By improving the fashionableness of its products Target could
expect more sales and less inventory to hold. Also, if Target could leverage more of its capital assets in the