1. Zara profile
Zara is the most internationalized of Inditex’s chains which owned by Spanish tycoon Amancia Ortega. The first Zara store opened in 1975 and there are more than 1,500 Zara stores around the world until now. It is claimed that Zara needs just two weeks to develop a new product and get it to stores, compared with a six-month industry average, and launches around 10,000 new design each year. Zara has resisted the industry –wide trend towards transferring fast fashion production to low-cost countries. While it spent little on ads, it spent heavily on stores. Zara is vertically integrated retailer. Unlike similar apparel retailers, Zara controls most of the steps on the supply chain: it designs, produces, and distributes itself. The business system that had resulted was particularly distinctive in that Zara manufactured its most fashion-sensitive products internally. 2. Zara’s supply chain strategy
Zara follows a structure that is more closely controlled than most other retailers, and pays further by having the various business elements in close proximity to each other, around its headquarters in Spain.
3.1 Ownership and Control of Production
It is estimated that 80 precent of Zara's production is carried out in Europe which is within the small radius of its headquarters in Spain. In fact, almost half of its production is in owned or closely-controlled facilities. Counter-intuitively Inditex has also gone the route of owning capital-intensive manufacturing facilities in Spain. In fact, it is a vertically integrated group, with up-to-date equipment for fabric dyeing and processing, cutting and garment finishing. 3.2 Supercharged Product Development
Design and product development is a highly people-intensive process. The heavy creative workload of 1,000 new styles every month is managed by a design and development team of over 200 people. This means that every person on an average is producing around 60 styles in a year or 1-2 styles every week. In addition, the entire product development cycle begins from the market research. This has meant a significant investment in information technology and communications infrastructure to keep streaming up-to-date trend information to the people making the product and business decisions. 3.3 Reach rather than Predict
What sets Zara apart from many of its competitors is what it has done to its business information and business process. Rather than concentrating on forecasting accurately, it has developed its business around reacting swiftly. What a typical retailer or brand might do? Designers may start looking at fashion trends, and start designing a look for summer 2010. Information and inspiration comes from forecasting agencies, trade shows, and various other places. Over a period of 3-5 months they develop the ideas into physical samples. From beginning to end, the process of defining a concept to receiving goods in the retail store might take anywhere from 9 to 12 months for a typical retailer. 3.4 Quick-Bake Recipe: Well Mixed Ingredients
Garment styling for Zara actually starts from the email or phone call received from the stores. Thus, from the beginning Zara is responding to an actual need, rather than forecasting for a distant future. As soon as approvals are received, instructions are issued to cut the appropriate fabric. The cutting is done in Zara's own high-tech automated cutting facilities. The cut pieces are distributed for assembly to a network of small workshops mostly in Galicia and in northern Portugal. None of these workshops are owned by Zara. Thus, what takes months for other companies, takes no more than a few days for Zara. Finally, Zara's high-tech distribution system ensures That no style sits around very long ahead office. The garments are quickly cleared through the distribution centre, and shipped to the stores, arriving within 48 hours. Each store receives deliveries twice a week, so after being...