Supply Chain Management

ZARA

Presented By :- Group 12(a)

Arman Anand
Charvi Puri
Mohit Sewani

 ZARA is the flagship chain

store of Inditex Group
owned by Spanish tycoon
Amancio Ortega.
HQ in Coruna, Spain, where
the first ZARA store opened
in 1975.
Zara has 1700 stores, 78
countries worldwide.

Zara practices fast fashion

trends moves from the
runway to stores within
weeks, as opposed to
months.

Zaras supply chain has undergone tremendous changes

in order to sustain its competitive advantage in todays
market
Zara has continually maintained its mission to provide
fast, affordable, and fashionable items

Inditex : 2012 Global Sales

Breakdown

Inventory Management at

Focus on reducing response

time.
12 inventory turnovers/year
VS. industry average 3-4 times.
Launched approximately
12,000 new items per year,
compared to 2,000 - 4,000 for
H&M and Gap.
30,000 Stock-Keeping Units
(SKUs)/year

Inventory Management at
Short shelf life attracts
more customers more
often
Stock outs are not
uncommon
Zara holds 6 days worth of
inventory, while H&M
holds 52 days, and Spanish
retailer Cortefiel holds 94
days of inventory

Success winning Formulae

Zara, which contributes
around 65 per cent of group
sales , concentrates on three
winning formulae to bake its
fresh fashion:
1. Short Lead Time = More
fashionable
2. Lower quantities = Scarce
supply
3. More styles = More choice,
and more chances of hitting
it right?

Success winning Formulae

The company's strategy involves stocking very little and
updating collections often.
Instead of other brands that only update once a season, Zara
restocks with new designs twice a week.
That strategy works two ways:
First, it encourages customers to come back to the store often.
It also means that if the shopper wants to buy something, he or she
feels that they have to buy it in order to guarantee it won't sell out.

They broke up a century-old biannual cycle of fashion. Pretty

much half of the high-end fashion companies - Prada and
Louis Vuitton, for example - "make four to six collections
instead of two each year. That's absolutely because of Zara.

How it Works ?
Suppliers are all
close to their
factories so ZARA
can order on a
need-basis

ZARA buys fabric in

only 4 different
colors;
designs and cuts
its fabric in-house

Clothes are ironed

in advance and
packed on
hangers, with
security and price
tags affixed

Overnight trucks are

used to deliver to
European stores and
airfreight is used to
ship to other
countries

Vertically Integrated Supply

Chain
Vertical integrationis a strategy used by a company to gain
control over its suppliers or distributors in order to
increase the firms power in the marketplace,
reduce transaction costs
secure supplies or distribution channels.

This enabled ZARA to establish a business model that allows selfcontainment throughout the stages of materials, manufacture,
product completion and distribution to stores worldwide within just
a few days.
ZARA - The vertical integration of our production system allows
us to place a garment in any store around the world in a period
between two to three weeks.

Supply chain Components

For Zara stores to be able to offer
cutting edge fashion at affordable
prices requires the firm to exert a
strong influence over almost the
entire garment supply chain:

Design and
Order Administration
The company ensure product quality by
designing its own products. Zara has almost
300 people working in its headquarters in
Spain.
These talented people include designers
and specialists. Together they produce
designs for approximately 40,000 items per
year from which 12,000 are selected for
production.

Production
50% of the products Zara sells are manufactured in
Spain, 26% in the rest of Europe, and 24% in Asian
and African countries and the rest of the world.
Zara makes its most
fashionable items half of
all its merchandise at a
dozen company owned
factories
in
Spain
andPortugal, particularly
in
Galiciaand
northernPortugalwhere
labour
is
somewhat
cheaper than in most of
Western Europe.

Distribution
Distribution Centre all products pass through
Zaras major distribution centre in La Corua. The
5-storey, 50,000 square meter distribution centre
employs some of the most sophisticated and up-todate automated systems.
Logistics
(Contractors) In 2012, the
distribution centre shipped 130 million pieces. 75
percent of these shipments were to stores in
Europe. Fashion garments represent around 80
percent of Zaras products and the rest are more
basic items.

Retailing
Stores usually place their orders and receive shipments
twice per week. Orders have to be placed at predesignated times.
The overall experience of the customer in the store in
considered. Apart form the fashion supply, the interior
maximum
design of the store, coordination of collections,
care over window displays and customer care are some
of the elements that guarantee this experience.

Conclusion
Zara is an example of how a firm can design and
manage its supply chain to gain competitive
advantage.
Zara makes sure that each element of the supply
chain network adds value to the entire operation.

Zara makes sure that it streamline its supply chain,

removing steps that does not contribute to the
achievement of the companys goals and developing
those elements that add value.
https://www.youtube.com/watch?v=9n0mikF1Esw

References
http://www.supplychainforum.com/documents/articles/Zara%20Case
%20Study%20.pdf
www.businessweek.com%2Farticles%2F2013-1114%2F2014-outlook-zaras-fashion-supply-chainedge&ei=pE0AVL6wCYmLuAShqoKgDg&usg=AFQj
CNEGEVmiebxJ4wDUuIFG-yJiZb-EQA
http://www.zara.com/in/
http://en.wikipedia.org/wiki/Zara_(retailer )
https://www.youtube.com/watch?v=9n0mikF1Esw

Thanks