Zara- Rapid-Fire Fulfillment Essay Example

Zara- Rapid-Fire Fulfillment Essay It is becoming apparent that the ever changing environment in the global marketplace requires a swifter response time from businesses and their supply chains. The era when production was moved overseas, so businesses can take advantage of low-cost labor is coming to an end, because businesses are not only competing on price but also on time.The owner of Zara, a Spanish clothing store knows this first hand, and has turned supply chain management on its ear, making his company the â€Å"envy of the industry† (Ferdows, Lewis, Machuca, 2004). Zara’s owner; Amancio Ortega, learned early that it is imperative to â€Å"control what happens to your product until the customer buys it† (Ferdows, Lewis, Machuca, 2004, para. 3). Supply Chain Management (SCM) is the reason for success in the fast fashion business. Its dealings are with suppliers and their suppliers, and with customers.It must take into account all the processes from raw materials origin to customer utilizat ion. The productivity of a supply chain is not just the product, but also a combination of place, time, function and form of that product. The way Zara runs its supply chain is so different from others as to appear illogical, however, if we look at Zara’s financials we can see that it works. According to Ferdows, Lewis Machuca, (2004), â€Å"Zara defies most of the current conventional wisdom about how supply chains should be run† (p. 106 para 2).Zara’s creation of an agile supply chain (ASC) is the reason for its success. The whole process of the supply chain in Zara could be divided into four parts: product organization and design; purchase and production; product distribution; sales and feedback. According to Zhang (2008) â€Å"the main duty of ZARA’s designers is not for product innovation, but for reorganizing fashion elements of the existed products on their purpose, transferring them into new kinds of products. They work to interpret the fashion instead of creating fashion† he says.Zara balances its in-house and outsourcing activities, almost half of all its production is done in house while heavy labor tasks like sewing and coloring are outsourced to companies. As a result, activities like prototyping and design are kept in-house to help agility, along with production and delivery of products in small batches instead of large quantities that are difficult to finish. First, by concentrating on shorter response times, the company ensures that its stores are able to carry clothes that its customers want at that time.Zara is able to move from recognizing a popular trend to having clothes in its stores within 30 days, while it may take other fast fashion businesses six to nine months, this means that Zara can quickly identify and catch a popular trend, while its competitors are playing catch up (Bruce Daly, 2006). Faster reaction along with their smaller production units means that Zara does not have to sit on unpopular items, and can produce more of what is selling quickly, which results in higher profit margins ( Ferdows, Lewis Machuca, 2004).This also allows Zara to delay decision making until after new consumer trends are known, which reduces inventory and enables Zara to predict errors (Chopra Meindl, 2012). By spending a little more for automated warehouses, close to their main production centers that assemble, pack and store individual orders for their retail networks,   Zara is able to deliver the new design apparel from the drawing board to the stores in one or two weeks and therefore can respond very quickly to the unpredictability of consumer tastes. Having new items in the stores weekly, keep customers coming back to find the new products.It also helps to keep the stores fresh and minimizes the risk of wrong forecasting (Ferdows, Lewis Machuca, 2004). Information system management is a planned system of the collecting, processing, storing and disseminating data in the form of infor mation needed to carry out the functions of management. Hence, technology is bettering reliability and speed with which information is divulged (Porter, 1980). Hand-held computers or PDA’s are utilized by Zara to collect information on consumer needs between retail stores and the factory in La Coruna.This along with regular telephone conversations between store managers and marketing specialists are one of the reasons that Zara’s information network is so effective. The utilization of PDA’s can be done by any company; it is Zara’s determination not to allow important information to fall by the wayside that assists with its success. PDAs are connected to the stores point-of-sale (POS) system, enabling managers to see how garments rank by sales. In as little as an hour, managers can send information that combine the hard data captured at the POS intermixed with acumen on what customers would like to see.All of this data allows Zara to design and produce sty les and orders based on feedback rather than guesswork. Hence, Zara avoids costly overproduction and the consequent sales and mark-downs that are so widespread in the fast fashion industry (Rohwedder and Johnson, 2008). References Bruce, M. ; Daly, L. (2006). Buyer behavior for fast fashion, Journal of Fashion Marketing and Management , Vol. 10 No. 3 , pp. 329-344 Chopra, S. , ; Meindl, P. (2012). Supply chain management: Strategy, planning, and operation. Upper Saddle River, NJ: Prentice-Hall. Ferdows, K. , Lewis, M. ; Mahuca, J. (2004, November). Rapid-Fire Fulfillment. Harvard Business Review, 82(11), 104-110. EBSCO Host. Porter, M. E. (1980) Competitive Strategy: Techniques for Analyzing Industries and Competitors, Free Press, New York. Qinghua Zhang (2008). Analysis on the Successful Case of Efficient Supply Chain in ZARA, ISBN: 978-1-4244-2107-7, pp. 1-4 Rohwedder, C. , and Johnson, K. , Pace-Setting Zara Seeks More Speed to Fight Its Rising Cheap-Chic Rivals, The Wall Street Journal, Feb. 20, 2008. Tiplady, R. (2006). â€Å"Zara: Taking the Lead in Fast Fashion†, BusinessWeek Zara- Rapid-Fire Fulfillment Essay Example Zara- Rapid-Fire Fulfillment Essay It is becoming apparent that the ever changing environment in the global marketplace requires a swifter response time from businesses and their supply chains. The era when production was moved overseas, so businesses can take advantage of low-cost labor is coming to an end, because businesses are not only competing on price but also on time.The owner of Zara, a Spanish clothing store knows this first hand, and has turned supply chain management on its ear, making his company the â€Å"envy of the industry† (Ferdows, Lewis, Machuca, 2004). Zara’s owner; Amancio Ortega, learned early that it is imperative to â€Å"control what happens to your product until the customer buys it† (Ferdows, Lewis, Machuca, 2004, para. 3). Supply Chain Management (SCM) is the reason for success in the fast fashion business. Its dealings are with suppliers and their suppliers, and with customers.It must take into account all the processes from raw materials origin to customer utilizat ion. The productivity of a supply chain is not just the product, but also a combination of place, time, function and form of that product. The way Zara runs its supply chain is so different from others as to appear illogical, however, if we look at Zara’s financials we can see that it works. According to Ferdows, Lewis Machuca, (2004), â€Å"Zara defies most of the current conventional wisdom about how supply chains should be run† (p. 106 para 2).Zara’s creation of an agile supply chain (ASC) is the reason for its success. The whole process of the supply chain in Zara could be divided into four parts: product organization and design; purchase and production; product distribution; sales and feedback. According to Zhang (2008) â€Å"the main duty of ZARA’s designers is not for product innovation, but for reorganizing fashion elements of the existed products on their purpose, transferring them into new kinds of products. They work to interpret the fashion instead of creating fashion† he says.Zara balances its in-house and outsourcing activities, almost half of all its production is done in house while heavy labor tasks like sewing and coloring are outsourced to companies. As a result, activities like prototyping and design are kept in-house to help agility, along with production and delivery of products in small batches instead of large quantities that are difficult to finish. First, by concentrating on shorter response times, the company ensures that its stores are able to carry clothes that its customers want at that time.Zara is able to move from recognizing a popular trend to having clothes in its stores within 30 days, while it may take other fast fashion businesses six to nine months, this means that Zara can quickly identify and catch a popular trend, while its competitors are playing catch up (Bruce Daly, 2006). Faster reaction along with their smaller production units means that Zara does not have to sit on unpopular items, and can produce more of what is selling quickly, which results in higher profit margins ( Ferdows, Lewis Machuca, 2004).This also allows Zara to delay decision making until after new consumer trends are known, which reduces inventory and enables Zara to predict errors (Chopra Meindl, 2012). By spending a little more for automated warehouses, close to their main production centers that assemble, pack and store individual orders for their retail networks,   Zara is able to deliver the new design apparel from the drawing board to the stores in one or two weeks and therefore can respond very quickly to the unpredictability of consumer tastes. Having new items in the stores weekly, keep customers coming back to find the new products.It also helps to keep the stores fresh and minimizes the risk of wrong forecasting (Ferdows, Lewis Machuca, 2004). Information system management is a planned system of the collecting, processing, storing and disseminating data in the form of infor mation needed to carry out the functions of management. Hence, technology is bettering reliability and speed with which information is divulged (Porter, 1980). Hand-held computers or PDA’s are utilized by Zara to collect information on consumer needs between retail stores and the factory in La Coruna.This along with regular telephone conversations between store managers and marketing specialists are one of the reasons that Zara’s information network is so effective. The utilization of PDA’s can be done by any company; it is Zara’s determination not to allow important information to fall by the wayside that assists with its success. PDAs are connected to the stores point-of-sale (POS) system, enabling managers to see how garments rank by sales. In as little as an hour, managers can send information that combine the hard data captured at the POS intermixed with acumen on what customers would like to see.All of this data allows Zara to design and produce sty les and orders based on feedback rather than guesswork. Hence, Zara avoids costly overproduction and the consequent sales and mark-downs that are so widespread in the fast fashion industry (Rohwedder and Johnson, 2008). References Bruce, M. ; Daly, L. (2006). Buyer behavior for fast fashion, Journal of Fashion Marketing and Management , Vol. 10 No. 3 , pp. 329-344 Chopra, S. , ; Meindl, P. (2012). Supply chain management: Strategy, planning, and operation. Upper Saddle River, NJ: Prentice-Hall. Ferdows, K. , Lewis, M. ; Mahuca, J. (2004, November). Rapid-Fire Fulfillment. Harvard Business Review, 82(11), 104-110. EBSCO Host. Porter, M. E. (1980) Competitive Strategy: Techniques for Analyzing Industries and Competitors, Free Press, New York. Qinghua Zhang (2008). Analysis on the Successful Case of Efficient Supply Chain in ZARA, ISBN: 978-1-4244-2107-7, pp. 1-4 Rohwedder, C. , and Johnson, K. , Pace-Setting Zara Seeks More Speed to Fight Its Rising Cheap-Chic Rivals, The Wall Street Journal, Feb. 20, 2008. Tiplady, R. (2006). â€Å"Zara: Taking the Lead in Fast Fashion†, BusinessWeek