The Success Factors of Zara: An Insight into Its Supply Chain Efficiency

Based in Spain, Zara is one of the potential fashion apparel companies across the globe. Zara is a global multi-national company; however, it is a subsidiary unit of the world’s biggest apparel retailer Inditex. Zara is different to other apparel manufacturers across the globe. The major differences are there in the competitive advantage that Zara has for its excellent supply chain operations. Zara has probably the solution for those apparels also that have no market and generally produce an added burden on the manufacturers. Those manufacturers in such case remain with no clues than to bear the loss of unsold apparels. On contrary to this, Zara has the solution for those products also (Caro 2012). The main purpose of this assignment is to understand the importance of supply chain management by analyzing the supply chain efficiency of Zara. Moreover, the paper also compares the supply chain operations of Zara with Dells & Myers and provides a platform to judge whether such strategies are favorable to other apparel companies as well.

There are ample numbers of factors that contribute to the success of Zara such as an effective management of supply chain operations. The speed of delivering the products, the use of Just-in-Time approach and the deployment of a technologically advanced logistics process are the key factors behind the success of Zara. On the other hand, the collaboration of important tasks, a strategic use of the available resources and the core competencies are the key factors that contribute to Zara’s competitive advantage. The company’s designers stay in touch with the latest fashion trends. The company, on the other hand, takes a comparatively lesser time in manufacturing the required demands. Moreover, the manufactured products are shipped by labeling the products with the different country’s name. If one any of the products line is not sold, Zara recalls those products to its store to align it to the different locations. This not only helps in avoiding the wastages of manufactured products, which is a challenge for other manufacturing apparels in the world. Henceforth, the realigned products are sold successfully (Chu 2016).

The highlighted strategies just prove how intelligent a business planning is of Zara. The supply chain efficiency of the company is evident in its realigning the products to other geographical locations. This is also evident in its forecasting capabilities that help the company understand the current trend in the market. Additionally, a quick manufacturing of the ordered products helps in attain a robust control on its inventory management. This is indeed necessary for supply chain operation that a company has excellent logistics services, controlled inventory management and efficient forecasting ability (Menon 2012).

Comparing Supply Chain Operations of Zara with Dell and Myer

Comparison between Zara and Dell’s logistics management-

Both the Dell and Zara are highly successful companies. They both operate in the different segment of the market. Dell manufactures the computers while Zara manufactures the apparels.

The supply chain operation of Dell is indeed very simpler. It is mainly comprised of customers, Dell, and the suppliers. This means that when customers place their orders the company gets to know through its distributors. On getting the orders, they collect their required materials from their suppliers. Dell then does the assembly part and in quick time, the products are ready to be delivered to the customers (Wittstruck and Teuteberg 2012).

It is indeed different to the Dell’s in numerous ways. Zara has an efficient logistics operation, which is indeed a very important concern for the supply chain operations (Uriarte Elizaga 2016). Interestingly, the designers are very close to the market. They conduct a thorough research on the current trend. The company receives its orders from the distributors who notify of customers orders. The use of Just-in-Time approach is another strength that helps the company to prevent the wastages of materials and responding to the customer’s demands in real time. Even the unsold items are sold by aligning such shipments to other geographical locations (Rao 2014). This is indeed a challenge to most of the apparels across the globe (Hadiwidjojo and Bernardus 2016).

Dell has a horizontally integrated supply chain whereas Zara indeed operates vertically. Dell does not manufacture the computers. It rather employs the third party suppliers to manufacture the placed orders. Dell being a horizontally operating company has to care for the assembly line, which is rather very easier. This is also not very challenging and Dell capably handles that (Wittstruck and Teuteberg 2012).

Zara has a full fledged control over the different segment involved in manufacturing the placed orders. The success story travels through its efficiency in trade, crafting, manufacturing, and delivery. The utmost control that Zara has on the entire manufacturing process and the supply chain operations helps to enhance its capability in delivering on time. The identified controls help Zara to deliver the new design in real time. It has a vertically designed supply chain network that asks for coordinating with the suppliers and the designers to conduct even the smaller thing. However, Zara capably conducts all its operations (Crofton and Dopico 2012).

Zara has a vertically integrated supply chain that helps it to have a robust control on its suppliers. Demands are easily met and manufacturing is easily conducted. Dell also capably manages its supply chain operations. Interestingly, the company gets 85% of its entire materials from the 15 suppliers (us 2017). These are indeed a big number of suppliers; however, Dell ensures that there is not a single flaw in the speed of responding and the accuracy. However, there are some risks involved in the supply chain operations. Such risks are insecurity, uncertainty, goods shortages and delayed delivery (Wittstruck and Teuteberg 2012).

Challenges and Strategies of the Apparel Industry

Dell follows a make-to-order philosophy that encourages the delivery of product after the products being ordered only. They capably manage to deliver the products in a very small span of time. Sometimes they are benefitted from the core competencies of their suppliers (Wittstruck and Teuteberg 2012).

Zara, on the other hand, has a keen interest in introducing new designs. Their philosophy believes in a fact that more styles are made for more segments of customers. They launch the products in a very limited showroom. Definitely, the products will be out of the stock in a very less time. Hence, there will be a curiosity in customers for the products. This is also effective in preventing the excessive manufacturing of products, which is a very healthy sign in protecting the wastage of manufactured apparels. This strategy helps the company in loading their customers with the desires to check again the available products in stores. Such a production philosophy allows Zara to relate their production to the customer’s needs (Oliveira 2014).

Dell spends a very less amount of time on storing the goods. They have 7 hours of inventory rather. Products remain with its suppliers and are asked for the delivery when there are orders for the products. This strategy helps Dell in saving significant expenditures on storing the goods (Wittstruck and Teuteberg 2012).

Zara, on the other hand, has to store its products in its different warehouses. The strategy will ask for a significant investment (Jaskulska 2013).

An indirect distribution channel of Dell includes suppliers, retailers, assimilator, distributors and the end users. The B2B model implemented in Dell allows its majority of suppliers to order online. Dell is engaged in selling its various products through online. This is indeed a very intelligent move as by following the mentioned strategies Dell is able to cut down on the expenses and the time, which are involved in sending the products to end users (Wittstruck and Teuteberg 2012).

Zara, on the other hand, follows a different strategy. The inventories are not stocked. These are rather shipped to its different stores twice in a week. The shipments are labeled in specific to a country. If one shipment is not sold then that shipment is again restored to the stores. Such products are then sold to other geographical places that suit the product (Phochatan 2016).

Myer does not have a proper market segmenting strategies (Myer 2017). On the other hand, Zara has an efficient market segmenting strategies. Zara does not brand itself. It rather reaches to the customers by stocking into limited stores. The target group of Zara is 20-35 age group people (Azevedo and Sanchez 2015). On the other hand, Myer brands itself as a departmental store with an extensive range of collection. However, it struggles to offer a quality customer service (Myer 2017). The strategy is to offer the discounted products to attract the customers. However, Zara focuses on attracting the customers based on seasonal items that serve their needs and demands (Azevedo and Sanchez 2015).  

Sustainability and Core Competency: A Key to Attain a Sustainable Business

Sustainability has been an utmost challenge for the innumerous number of companies across the globe (Dessain, Ton and Corsi 2012). Zara is competent enough to remain competitive in the apparel industry. Zara has recently received high scores in stock market index for making investments into social causes. The accolade signifies that Zara is aimed at continually expanding to the different parts of the world. The company is on regular hunts to invent something new, which is also evident through its unique designs in different seasons. The reception that its new products get from the customers does speak of its competitive advantage. The supply chain supremacy of Zara positions the company into a different list where very few global companies exist. It has mastered the art of managing the supply chain operations. So, Parker and Xu (2012) recognize the importance of supply chain by stating a fact that an efficient supply chain management can help to attain a sustainable business. Zara indeed has capably managed its supply chain operations through strategic capabilities (Johansen and Lisa 2014).

According to Wang (2014), core competency is an essential quality that helps to attain a sustainable business. The core competency of Zara is its robust supply chain management strategy and the ability to produce the products in reduced time. The company is able to attain to produce apparels in real time due to the fact that they have deployed the Just-in-Time approach (Fullerton, Kennedy and Widener 2014). According to the author, the identified core competency of the company will help it in attaining a sustained business.

No, there are identified differences in between the supply chain operations of Zara, Myer, and Dell. All the companies have their different supply chain strategies. For an example, Dell follows a horizontally integrated supply chain whereas Zara follows a vertically integrated supply chain indeed.

This is one of such examples that prove that differences in supply chain operations are expected. This is due to a fact that different companies have different organizational resources. Their capabilities vary with respect to the available organizational resources. Such differences in the organizational resources bring differences in supply chain operations as well (Stadtler 2015).

This has already been highlighted that there are differences in the supply chain operations of different companies. Such differences are because of their viability with their respective organizational resources. Nevertheless, a dissimilar supply chain management will bring dissimilar results as well (Seuring 2013). The fact is evident in the different statures that Zara and Myer have. Zara is a highly successful apparel company on the global platform. On the other hand, Myer has struggled to produce a robust supply chain management.

Zara is a highly successful apparel company on the global platform. The company is successful because of its strategic capabilities, which is rare to many apparel companies across the globe. The capability to deliver the orders in a very less time is only possible through an efficient forecasting capability and the capability to manufacture in quick time. Additionally, they are also able to identify the current trend in the market. Such a forecasting capability is also very rare in existence (Rao 2014).  

The company is also able to utilize the unsold manufactured goods by allocating the products to a different geographical location. The products are then successfully sold to the new target customers. This is another strategy, which most apparel companies struggle into. Apparel brands across the globe find this difficult to prevent their unsold items from getting wasted. They are also not capable to prevent the wastages of materials in their different warehouses. Wastages of materials and the unsold items are a probable strain on such companies (Rao 2014).

Different companies have a different set of capabilities that also bring a different set of results for them. The three different companies such as Myer, Dell, and Zara have very fewer similarities in them. Nevertheless, there is no formula for success. Examples of success are there as it is evident in the success of Zara and Dell. However, companies can take the examples of successful business. This will help them to configure the requisite elements necessary to attain their set vision and the organizational objectives. For example, the supply chain efficiency of Zara cannot be copied as the company has a different set of organizational capabilities and the resources. However, this can be understood from the example that supply chain efficiency is indeed required to attain the maximum success (Seuring 2013).

Supply chain management is indeed a very vital factor that has troubled the many as well. Examples of such companies are very few that have shown resilience towards the supply chain management and created examples for others. Coca-Cola, Walmart, and Zara are the few examples of such companies that successfully manage their supply chain operations in their respective zones (Roh, Hong and Min 2014). The supply chain is responsible for some very core sector of a business. Those core sectors are inbound & outbound logistics, a collection of raw materials from the suppliers and sending the manufactured goods to the distribution houses. These are rather very complicated and challenging processes. It is indeed difficult to have an utter control on the supply chain. However, the use of an appropriate technology and the strategic capabilities will definitely help to control the supply chain operation. One of such technologies is Just-in-Time approach that helps to reduce the material wastages and respond to the consumer’s demands in real time (Fullerton, Kennedy and Widener 2014).

Conclusion & recommendations- 

To conclude, Zara has a very capable and controlled supply chain operation. This will prove to the company a worthy asset in attaining the sustenance of the business. The other organizations such as Dell and Myer have a different set of supply chain strategies. Moreover, Dell is also successful with an entirely different supply chain management strategy. Myer, on the other hand, has struggled to find the utmost responsibility to the supply chain complexities. The case study of Zara has helped to find some suitable recommendations for others in the apparel business or the other industries.

Different firms across the globe should deploy the Just-in-Time approach. This will help those companies to track the real-time requirement of the market. Moreover, this is helpful to reduce the wastages of materials.

A sound marketing research is also required. This will help to understand the exact requirement of customers. Moreover, this is necessary to meet the demands and to reduce the chances of products that remain unsold.

An efficient logistics services are also required. This will help to get the required raw materials in real time. Moreover, this will also help to deliver the products in real time that is necessary to meet the demands of the market.  

References-

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