Current model of supply chain in Zara

Describe about the Literature Review of Zara of Sustainability of the Supply Chain Management?

Due to economic, social as well as environmental problems in the developing countries, the fashion industry is focusing on sustainability within the working environment of Zara. They are trying to make sure that they should give the same quality as well as standards in their production throughout their whole supply chain process of Zara. Zara is a flagship chain store of the Inditex group. It is the most internationalized of the Inditex’s chains. Zara controls its supply chain by designing, producing as well as distributing itself. To produce its products at the minimal cost, Zara opts in order to source 80 percent of its products from the Europe (Adnana et al. 2013).  In the Spain, Zara becomes one of the most successful fashion companies; they are a success to build an effective information exchange system with its management of the supply chain.

In the varying circumstances and the innovative way of undertaking business in the fast fashion industry, Zara has unenthusiastic effects in both social as well as environmental problems. While responding to this increase in the sustainability problems, Zara has started to adopt sustainable strategies as well as uses some supply chain model to overcome the issues (Esper & Russell Crook, 2014). This literature review critically analyzes the sustainability supply chain management of Zara and evolves its operational decisions to some form of a process of planning as well as procedures. It also analyses the current and proposed model of the supply chain of Zara Company.

The fashion industry such as Zara is becoming more sustainable if the designers, fabricator as well as the retailers are more sustainable in their norms. The way to produce sustainable garments is the most accurate way to catalyze the consumer revolution towards both durable as well as ethical fashion. Zara introduces its new design of products as well as launches their new products very quickly. The company believes that more style is similar to new choices. Akbalik and Penz (2011) opined that this strategy made their products more accessible in the market and sold out their stock quickly also generates in customer related to next launch.

Zara makes their supply chain sustainable by making sure to their consumers that they are looking for use renewable energy as well as user-friendly dyes as well as fabrics in their fashion. Sustainable in the fashion industry does not mean that using renewable and recyclable materials. The most vital is the mass production that increases the consumerism (Kruger & Luke, 2014).  It leads to change in attitudes as low-priced as well as disposable. The company Zara will provide both internal as well as external funding in their fashion brands in order to make changes as well as innovates new ways to do so. Zara focuses on the strategic supply chain management for their operational improvement as well as achievement.

Job Shop Production

Zara develops its structure in such a way that it supports the method of mass customization. This type of customization is among the mass production as well as customization. It is a combination of the Job shop as well as a continuous flow of the production system with a very high efficiency as well as low volume (Basim, 2012). Therefore, Zara develops its new structure and adds some competitive advantage in their business operations. By taking into account an aggressive approach to risk management of fashion, the job shop production continuously flows its fashion items (Esper & Russell Crook, 2014). It helps Zara to achieve a high margin, but it turns the production design into competition marketing theory with the help of taking the concept of supply chain management.

Job Shop Production

Just-in-time (JIT) is a Japanese technology that observes the inventory of a company. It is first used in the car manufacturing industry such as Toyota that eliminates the wastes by minimizing the inventory cost of holding, time of production as well as reduces the defects. JIT is being utilized in the manufacturing units as well as lean thinking across the supply chain as well as the business operations of Zara. Bortolotti, Danese and Romano (2013) argued that Zara has reached at a position in order to adapt its technology as well as principles of the value of the customer as well as its modularization. Market winners, as well as qualifiers, are the primary determinants of various approaches of both lean as well as agile.

Kashmanian (2015) opined that one of the factors that are stimulating the rise in the practices of sustainable within fashion supply chain is the globalization of both sourcing as well as distribution. Zara depends on domestic supply and growing their approaches to countries such as China, India, Bangladesh, and Turkey in order to explore for manufacturers that can fulfil with new flexibility as well as design needs. The globalization of the industry gives a huge impact on the supply chain in various scopes (Halim et al. 2012). At first, there is a need to relocate the manufacturing sites gives an unenthusiastic impact on the established industry such as spinning, weaving, and effects in unemployment of workers.

Secondly, it affects the ecological burden that compels from raise in transportation mileage. It gives pressure on the orders of the fashion industry as the most of their shipments are transported through the air and causes the increase in Co2 emissions. JIT sets to cut the cost by reducing the number of goods as well as materials as Zara holds its stock. It involves both producing as well as delivering the finished products to be sold (Costantino et al. 2012).  The finished products of Zara products are to be assembled into the finished goods. Giese and Trockel (2011) argued that one of the drawbacks of the just-in-time is that the re-order level closing by its preceding demand. If the demand of the products crosses above the amount, then the inventory reduces a lot faster as compared to usual, and it causes some problems in customer services. In the case of maintaining 95 percent rate of service, Zara carries two standard deviations of the safety stock (Esper & Russell Crook, 2014).  The shifts in demand should be forecasted until the trends are to be established to reset the correct level of demand.

Figure 1: Just-in-time Production Model

(Source: Giese & Trockel, 2011, pp-179)

While manufacturing in Europe, Zara controls to keep the cost of their products down. Concerning the cost of marketing, Zara relies on its key retail locations as compared to advertising in order to attract the customers (Gold, 2014). The company spends 0.3 percent of its sales on advertising as compared to its competitors. In order to keep their cost down, Zara chooses highly visible locations for their stores. Further from designing to the fashion of the day, the strategy of Zara is dependent on producing small volumes as per their style. The changing of products enables them to cut their discounts as well. Kashmanian (2015) opined that only 18 percent of Zara clothing does not work with the consumers as well as it is discounted.

Just-in-time Production Model

The competition of Zara has being shown in the following figure:

The core competencies of Zara are mainly revolves the following:

The products have high turnover

Well-organized distribution system

Flexible production system

Due to fast supply chain, the level of inventory is low

Assurance of the employees

Scanning of the fashion and market trends to meet up with the demands of consumers associated to fashionable clothes

Zara uses MRP model for its supply chain, as it is a fabrication planning as well as inventory control structure. Mironov (2013) opined that using this model, Zara production system helps to ensure their customers that perfect resources are available for production and those goods are accessible to the consumers in order to prevent shortages. It diminishes the wastes by sustaining the lowest probable material and product levels in stock. Zara divides their fashion companies into two groups. The first group will compose of those businesses that oppose the practices of sustainability, and they are trying to stay alive in the demanding environment. The instant group improves the viability throughout the supply chain in order to utilize some tools such as eco-labelling, administration systems, the community as well as environmental audits, a society of practice, fair trade as well as clear transportation modes (Mostafa, Dumrak & Soltan, 2013). Therefore, this model helps Zara to produce their products on time by dealing with changes in the order.

Agility in the supply chain is used to become norms as the product life cycle shortens as well as environmental forces are sometimes created and results in higher level of supply chain management (Markman & Krause, 2014). It helps Zara to give the right products to the consumers and at the accurate time. In the fashionable business concept of Zara, this model helps to route the manufacturing flexibility of the company through automation and results in rapid change. As compared to lean manufacturing, agile is more demand driven, it has localized configuration as well as helps to maximize the effectiveness of the Zara Company as well as its business operations.

Zara attempts to use both the tools as well as models of the lean operations to include the green metrics in order to compute the excellence of the particular companies. Dues, Tan and Lim (2013) opined that the lean, as well as the green approach, is obvious in practice; it achieves what are the benefits of it. Sarkis (2012) suggested that based on the lean principles, Zara specifies the value from the side of the end customers. It determines the value system for the company by identifying the steps that are useful to create a unique value, mapping the value stream as well as challenging each of the steps. The following issues are to be tackled to take sustainable clothing into the mainstream:

Consumption of fashion increases in the number of fashion items that the customers buy and then dispose of

Intense of cotton production and it requires lot of energy, water as well as pesticides

Using toxic chemicals in the process of production that damages the health of workers and environment

Keeping Costs Down

Unsustainable manmade fibres that take long time in order to degrade in landfill sites

The carbon burned as fabrics as well as clothing are being transported in the entire world

The consumption of energy while washing the clothes.

Zara aware their customers about where the clothing comes from, the process to manufacture and both social as well as environmental impact of the production (Ozdemir et al. 2012). The first step is to take internal transparency that addresses the issues of production of raw materials. It is the biggest challenge at the bottom of supply chain.

In the manufacturing industry like Zara, the reduction of waste creates the benefits to reduce the manufacturing cycle time, reduce the labour expenditures, improve the quality of product, savings of space, and reduce the inventory as well as gives quick response to the customers (Sterling & Boxall, 2012). At the time wastes are eliminated from the store across the supply chain, the overall cycle time is being improved. Both the cost of labour as well as staff are reduced, it helps to give quality products as well as delivery is being improved (Tachizawa & Wong, 2015). It also reduces the inventories as well as shortens the lead times of the customer.

Produce in small lot: In a case of lean manufacturing, small lot is one of the innovative characteristics, which is also considered in the case study of Zara. This idea is feasible for a business as the small lots give a sense of individuality (Ozdemir et al. 2012). The customers should take instant decisions to choose the products. Otherwise, the next day someone else will make the products, they want to purchase. Therefore, the consumers visit the stores of Zara to search for new products as well as it creates an enormous amount of both traffic as well as revenue.

Centralize the design and development of product: Zara is developing their new products by their in-house workers as well as merchandisers. Later, the suppliers are needed to send samples to the buyers through the help of merchandisers (Priem & Swink, 2012). When the back and forth communication is eliminated, it also reduces the time in order to market.

Utilize of the work cell organization: The team of products development has its designers, planners for product development as well as procurement. This team helps the Zara Company in order to modernize the in-house communication a lot.

Control the schedule strictly: At the store of Zara, the stores mangers to place the order two times in a week, even the delivery of the products are done within 24 hours as the shipments are ready for the delivery (Rauer & Kaufmann, 2014). When the products are delivered, they are displayed at the stores the similar day they arrived at the store. Since each and everything is up to the requirement, it helps the company to reduce the time of waiting for the products at every step of the system.

Keep the production in-house: Zara tries to stay away from the low cost country sourcing as well as make an investment in in-house manufacturing (Sahore & Bahadur Yadav, 2012). They are making this type of decision, as they believe that the in-house production helps to enhance the overall flexibility of their products.

Core competencies of Zara

Automate production and warehouse facilities: Zara trusts in the time-based competition, therefore for them computerization helps them in order to speed up their business operations and to become a competitive advantage.

Adhere to the rules: Executing all the rules are not enough for a company to be effective, therefore the company must be strict with their rules related to supply chain management.

Figure 2: Zara’s supply chain process

(Source: Rauer & Kaufmann, 2014, pp- 77)

The model helps the company to resolve the quality that should be delivered to each single one of its retail stores via shipments that go away twice in each week. The stock those are distributed is limited and ensured that each of the stores only receive just what they need (Ozdemir et al. 2012). It goes on the way to the brand image of Zara. This quick in-season turnover would locate Zara’s distribution headquarters in Spain; it allocates Zara to ship often and within lesser batches. Tate and Ellram (2012) argued that if the design of Zara’s products makes an attempt to pursue the latest trend, then it does not sell well as well as small harm is done. Each of the Zara’s outlets sends in two orders per week on the particular days as well as timing.         It extends the customers of Zara, who know what time to visit the stores for getting new garments (Vincent, 2011). Therefore, this change should not disrupt the system of Zara, but this success shows the strength of their operations. It enables the mass production and leads to well-organized inventories, high profitability as well as creates value for the shareholders in both short and long term.

Conclusion

It is concluded that the models capture the network of supply chain of individual fashion firms involved in the production, storage as well as distribution of fashion product that is distinguished by the brand of Zara. Seven R-frameworks is used to measure the pollution of Zara such as reduce, reusing, recycling, restyling, rewearing, redesigning and reimaging. Within the fashion industry such as Zara, disposable fashion under the concept of fast fashion becomes a trend. In this particular trend, fashion supply chains are highly responsive to change in market. Due to change in customer demand, new styles will appear in the market and Zara reduces its whole process cycle from conceptual design into packaged product on the retail sales floor.  

Zara adopts its local sourcing approach as well as obtains its products from local manufacturers, and then the carbon footprint is being reduced. Therefore, the local sourcing enhances the level of environmental friendliness as compared with traditional offshore sourcing. Since Zara generates high volume of pollutants in their production process, therefore Just-in-time, agile, materials requirement planning supply chain model are used to take into account the consumer behaviours.

References

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