ZARA Supply Chain Management Mona Singh (14868329) MEPM 2015 2 1. Its customer-centric services, leading speed, customized technology, logistics, vertical integration and economies of scale grasped from its parent company, Inditex, its are the key to its success. Inventory Management. The key to conducting JIT inventory approach in Zara is producing all kinds of merchandise in small batch and reducing the corresponding inventory level in its warehouse (Heizer & Render, 2001). From the customer’s perspective, it is incredibly convenient, and for Zara it provides even more immediate knowledge about inventory management and consumer preferences for individual SKUs. That means that Zara can quickly the unpredictability in fashion, it is quite likely that you will end identify and catch a winning fashion trend, while its competitors up selling a large proportion of your products at a discount. In order to remain competitive, I believe that Zara should focus on and expand this initiative. Zara has got 1,671 stores in 85 countries. The positive effects associated with the vertically integrated, shortened supply chain are obvious: Zara’s advertising fee is only 0.3% of its revenue whereas the other similar fashion retailers normally spend 3% for advertisements and marketing purposes. H&M and Benetton, ZARA maintains the lowest inventory. Zara is the world's leader in the fast-fashion industry and introduces over 10,000 unique designs to their stores each year. They do only 50 – 60 percent of their manufacturing in advance versus the 80 – 90 percent done by competitors. This lean working capital management offsets their higher production costs and enables them to boast rapid sales turnover rates. Zara’s factories can quickly increase and decrease production rates, so there is less inventory in the supply chain and less need to finance that inventory with working capital. Inditex’s higher labor costs are offset by greater flexibility — no extra inventory lying around — and on faster turnaround speed. zara.com studios in Arteixo which will span 64,000 square metres. ZARA' s formulae 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. Another major key elements in which Zara successfully implement into its operation management is “just in time inventory” system in each one of their retail stores. Essentially, store managers collect sales data and current trends on a daily basis and send it back to head office where the information is analysed by its leading designers, who then update Zara’s clothing ranges. Planning Product concept Design samplesMaterial selection Research & Development (Designers/Pattern Makers) UNIQLO’s R&D centers are constantly researching the latest fashions and life- styles around the world as well as look-ing for new materials. However Zara also boasts the lowest year-end inventory levels in the fashion industry. Zara’s Results vs. Zara does not need to place big bets on yearly fashion trends. Inventory management. Local sourcing. Centralized Logistics and Distribution. Share; Like ; Download ... to finish, takes only two to three weeks. The design process also reviews the significance of the product lifecycle whilst identifying diverse Product Lifecycle Management (PLM) software that is currently used by various organisations in the apparel sector. Zara, Inditex’s flagship retail format, generated 66% of the company’s overall sales in 2012. H&M’s business-model mainly focuses on outsourcing and ZARA’s business-model mainly focuses on in-house production. Competitors. Zara can move from identifying a trend to having clothes on sales of Rs. They opened 360 new stores in over 50 markets across all of their brands last year. The company can design a new product and have finished goods in its stores in four to five weeks It can modify EXCELLENCE IN EUROPEAN APPAREL SUPPLY CHAINS: ZARA By Phyllis P Chu Bachelor of Science, Management Science Submitted to the Zaragoza Logistics Center in Partial Fulfillment of the Requirements for the Degree of Master of Engineering in Logistics and Supply Chain Management In the MIT-Zaragoza International Logistics Program At the Zaragoza Logistics Center, A Research Institute … according to its business needs rather than being hostage to Like Uniqlo, Zara’s Just in Time inventory procurement is underpinned by a highly developed forecasting systems. 4.5. Zara’s vertical integration, smaller supply chain, and minimum inventory stock allow the company to be more responsive and avoid excessive risk. Challenges specific to that environment include very short product life cycles, and store policies whereby an article is removed from display whenever one of its key sizes stocks out. procurement of materials, product planning, development and manufacture through distribution and retail to inventory management. Zara’s supply chain management analysis provides deeper understanding of internal value chain. 28. and inventory to sales ratio (Nelson, M. & Medini, R., 2014). Given that the delivery to final customers process will represent the main new characteristic in the Zara business, the inventory point of view is important. Constant slight changes give customers a sense of scarcity and exclusiveness. all about dressing up and supply chain management of H&M and Zara is a proof to that which is globally recognized as a successful and extensive retail giant. Throughout the supply chain, lean is word, all the way from raw materials to the finished garments on the shelves. Inventory Management of a Fast-Fashion Retail Network Felipe Caro ⁄ J¶er¶emie Gallien y September 4, 2008 Abstract Working in collaboration with Spain-based retailer Zara, we address the problem of distributing, over time, a limited amount of inventory across all the stores in a fast-fashion retail network. It will also increase the online customer service teams and the dedicated packaging both from the specific online stockrooms and from the stores. And it also provides a comparative analysis of their inventory management techniques. You’ll be hard pressed to find any excess inventory or deadstock in a Zara warehouse. Zara maintains a design team of 200 people, all of which produce approximately 12,000 new styles per year for Zara. With such fast paced production, expeditous inventory management, and social media networks that are exploding with followers, Zara has been able to successfully develop an internal and profitable supply chain strategy like no other. Zara sells over 11,000 distinct items per year versus its competitors that carry 2,000 to 4,000. Zara is a chain of fashion retail stores established in the year 1975 by the Inditex group. H&M and ZARA are two extremes in the clothing industry. difficulty in It is already working on just intime production mechanism to avoid the blockage of funds and wastage but it does not mean that its customer faces difficulty in finding and purchasing the required model. Inditex’s computerized inventory system, state-of-the-art production and warehousing, and a short supply chain cut lead-time to 10-15 days between design and distribution, compared to the 5-6 month industry average. update and analysis package, or an inventory management Also, for printing and processing the greige, again Zara operates system. Working in collaboration with Spain-based retailer Zara, we address the problem of distributing, over time, a limited amount of inventory across all the stores in a fast-fashion retail network. With limiting their production of their inventory items, Zara reduces their risk of stockpiling unwanted clothes. Challenges speciflc Zara case study: how Zara implemented applications of AI for enhancing its supply chain management system. Zaras inventory model THE COMPETITVE EDGE Key features in the inventory management practises Zara, unlike its competitors such as Gap, Benetton, and H&M, does not use Asian outsourcing. In addition, the main issues concerning fashion supply chains shall be discussed in detail. Zara Uses Operations Research to Reengineer Its Global Distribution Process Felipe Caro (UCLA Anderson School of Management), Jérémie Gallien (MIT Sloan School of Management), Javier García Torralbo, Jose Manuel Corredoira Corras, Marcos Montes Vazquez