ZARA’s Supply Chain Logistics

Executive Summary

The case study revolves around Zara’s supply chain, which is a retailer based in Spain and deals with accessories and clothing. It has been in existence since 1975, and its supply chain has been among the key contributors to its success. The company practices a co-opetition strategy of enhancing efficient collaboration with suppliers. This a strategy has proved to be efficient due to the company’s practice of lean thinking, agility, vertical integration, quick responses and strategic responses. Despite the current success, the company can maximize on e-commerce and foster strategic alliances for increased sustainability. Secondary data collection method has been used in collection of viable information for the case study. This involves data from commercial and journal articles regarding various supply chain aspects about the company.

  1. Introduction

Zara is a retailer based in Spain, which deals with accessories and clothing. It was founded in 1975 and has grown to become Inditex group’s main brand. Initially, it was an outlet for women’s lingerie and night wears’ canceled orders. This set-up has enabled the company to establish a strong foundation in the realization of association between retail trade and the producer. Currently, the organization has over 2,100 stores across 88 countries (Stevenson, 2016). The company normally selects expensive and suitable real estate locations in order to open designated flagship stores. Zara tends to prioritize on consumers and establishment of a demand-centric supply management. In 2015, Inditex actualized a valuation of 100 billion Euros; which is the highest figure since its inception. Zara has been the flagship brand for this group, and as of 2014, it accounted for more than 66% of the total sales (Stevenson, 2016). There are several factors that contributed to the success that Zara is experiencing at the moment. Among them is the establishment of a super-fast turnaround, taking consumer preferences into account and having a variety of products. The logistics work quite favorable hence making the company quite appealing to the target audience.

 

  1. Theory

Zara has established a core co-opetition strategy; which is efficient collaboration with suppliers. This has enabled the company in operating effectively and becoming a favorite brand for most consumers. There are various components that are likely to underpin the operation of this co-opetition strategy. Among these components are lean thinking, agility, integration, strategic management and quick responses. Lean thinking involves the ability to produce exactly what is needed and within the desired quantity, where it is needed and when it is needed (Christopher &Towill, 2000, p. 208). The latent theme involves attaining more with fewer resources while according consumers exactly what they want. It is more of creating value while eliminating waste. Agility, on the other hand, revolves around how fast an organization can respond to varied changes in consumers’ preferences, the environment and competitive forces among others. Organizations ought to adapt swiftly to various changes relevant to the supply chain in order to remain viable and competitive (Christopher &Towill, 2000, p. 211). Integration involves coordination and alignment within a given supply chain. It involves parties responsible for raw materials, fulfilling purchase, manufacturing the product, supporting services and transporting completed items. Under strategic management, an organization tends to make high-level decisions related to the supply chain that are relevant to the entire organization. The decisions made ought to reflect the overall organizational strategy. Quick responses, on the other hand, tend to follow the concept of lean thinking. These aspects are likely to hinder Zara’s co-opetition strategy of collaboration with suppliers if they are not used in the appropriate manner. However, in Zara’s case, they have worked in strengthening the co-opetition strategy since they have been integrated into the supply chain.

 

  1. Practice

The success of the company is rightly attributed to its efficiency in supply chain management. Although the company produces more than 450 million items every year, it has largely remained efficient in its supply chain giving it a competitive advantage over other industry players. Every week, two deliveries are made in all the company’s stores across the world. The success behind this precision in deliveries stems from the company’s overarching control of its manufacturing and supply chain functions. Indeed, this is a unique trend and is different to strategies employed by most of its competitors. According to Ghemawat & Nueno (2006), the diversification of the company through vertical integrations is efficient in the attainment of significant growth for the company. Clothes appearing in their original designs in catwalks are replicated in the company and retailed at the stores within two weeks. Ultimately, the success boils down to the fact that the company owns its supply chain. Its strategy involves competing on its speed to market with an embodied philosophy of fast fashion.

Choosing Zara for this case study is based on its working co-opetition strategy that accords the company a competitive advantage in the market (Ferdows et al, 2003, p. 63). The company’s supply chain management incorporates most of the components and concepts that make the co-opetition strategy adopted to bring positive results. This paper identifies the main co-opetition strategy used in the company and the rationale behind its application. Additionally, the implementation of the different strategies is analyzed with a focus on their effectiveness and overall benefits. Most of these strategies are the key towards the effectiveness of the co-petition strategy of forging positive relationships with suppliers. Secondary data collection method has been used in collection of viable information for the case study. This involves data from commercial and journal articles regarding various supply chain aspects about the company. Lastly, t

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