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    Zara Supply Chain

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    anon.novice
    Zara needs to decentralize its design function to allow regional offices to better understand local demand trends and reduce design time. It will also establish distribution centers near key markets to cross-dock products from suppliers, reducing distribution time. Additionally, Zara will outsource more production to low-cost countries while developing partnerships with suppliers to ensure quality and flexibility. These changes will help address Zara's problems of high costs, long lead times, and inability to adapt to regional needs.

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    Zara Supply Chain

    Uploaded by

    anon.novice
    320 views24 pages
    Zara needs to decentralize its design function to allow regional offices to better understand local demand trends and reduce design time. It will also establish distribution centers near key markets to cross-dock products from suppliers, reducing distribution time. Additionally, Zara will outsource more production to low-cost countries while developing partnerships with suppliers to ensure quality and flexibility. These changes will help address Zara's problems of high costs, long lead times, and inability to adapt to regional needs.

    Original Description:

    Supply Chain Management Case Study

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    Zara needs to decentralize its design function to allow regional offices to better understand local demand trends and reduce design time. It will also establish distribution centers near key markets to cross-dock products from suppliers, reducing distribution time. Additionally, Zara will outsource more production to low-cost countries while developing partnerships with suppliers to ensure quality and flexibility. These changes will help address Zara's problems of high costs, long lead times, and inability to adapt to regional needs.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    320 views24 pages

    Zara Supply Chain

    Uploaded by

    anon.novice
    Zara needs to decentralize its design function to allow regional offices to better understand local demand trends and reduce design time. It will also establish distribution centers near key markets to cross-dock products from suppliers, reducing distribution time. Additionally, Zara will outsource more production to low-cost countries while developing partnerships with suppliers to ensure quality and flexibility. These changes will help address Zara's problems of high costs, long lead times, and inability to adapt to regional needs.

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    Zara

    Supply Chain Management Practices

    Group members
    Arslan Asghar (L1S10MBAM0170)

    Muhammad Sohail (L1S10MBAM0205)


    Maryum Kabeer (L1S09MBAM2043)

    Introduction
    Zara was founded in 1975. It was subsidiary of Inditex

    Zara is a high fashion concept


    Its offerings are footwear, apparel and accessories
    Its target market are women, men and children from new born to adult
    aged 45

    Zara has 853 outlets all over the globe till 2005

    Problems
    The design function of Zara is centralized due to which;
    It is time consuming in terms of new design development and design
    approval.
    It is difficult to analyse the needs of all the regions.

    Zara production is partially done in house and partially outsourced


    due to which;
    The production cost is high
    The production time is more

    Problems
    Centralized distribution system leads to;
    High distribution cost
    High distribution time

    Low shelf time leads to;


    Lower sales

    Solution
    Three prong strategy

    Decentralization Outsourcing production

    Retail strategy

    Decentralization

    Design Strategy
    Design Function Decentralization:
    Establish regional design offices based on two criteria;
    Region should be selected based on cultural similarities
    Specific countries should be selected based on largest number of retail outlets/style &
    fashion

    Individual retail outlets will share data on demand & trends to


    regional design offices
    The design decisions and design approval will be made at regional
    design offices
    The suppliers will be connected to the regional offices of Zara through
    portal

    Design Strategy

    Design Strategy
    Advantages:
    Less time in analysing the regional demand and trend data. Design time will
    be reduced from 3 days to 1 day
    More effectiveness in analysing the demands of individual regions

    Disadvantages:
    High cost
    Loss of control

    Distribution Strategy
    Distribution centres at central location for all regions will be developed
    Products from the suppliers will reach these distribution centres and then will
    be cross docked to the individual retail outlets

    Distribution Strategy

    Distribution

    Hong Kong

    Mexico

    Saudi Arabia

    Spain

    Asia

    Brazil/America

    Middle
    East/Africa

    Europe

    Distribution Strategy
    Advantages:
    Products will not have to be sorted as at central distribution centre. It will
    save time. Distribution time will be reduced to 2 days
    Cost will be saved as these distribution centres will be located relatively near
    to their destinations

    Outsourcing production

    Outsourcing production
    Suppliers will be selected in low cost countries like china.
    In order to be flexible parallel suppliers will be developed;
    Low cost suppliers in villages and town areas of Spain & Portugal will continue
    to produce for Zara
    Zara will develop value added partnership with these suppliers by investing in
    their human resource development, partnering with them for cutting edge
    technology, investment in IT in order connect with suppliers.

    Outsourcing production
    Suppliers

    China

    Mexico

    Spain

    Middle
    East/Africa

    Brazil &
    America

    Europe

    Outsourcing production
    Advantages:
    Low production time
    Low cost. Cost will be reduced to 5 to 7 percent for China

    Disadvantages:
    Design imitation by suppliers
    Inconsistent quality in different regions

    Retail Strategy

    Retail strategy
    Due to the shelf time of 4 weeks only early adopters can buy the product. By
    increasing the shelf life of hot selling designs to 8 weeks, late adopters and
    laggards can also buy the products.

    Retail strategy
    Late
    adopters

    Retail strategy
    Advantages:
    Average visit of customers may increase from 17 times to 25 times per year.
    This means more sales.

    Disadvantages:
    Cost will be high because inventory will have to be maintained for hot selling
    designs.

    Comparison of old & new supply chain


    Old supply chain:
    Purchase undyed
    fabric

    Dye/print fabric

    Design

    Prototype/Sample

    Retailing

    Distribution

    Sewing

    Cutting

    Comparison of old & new supply chain


    New supply chain
    Design

    Prototyping

    Manufacturing

    Distribution center

    Retailing

    Estimation of lead time with new supply


    chain

    Style, idea quantity conveyed to head quarters

    1 day

    Design

    1 day

    Style approval

    Few hours

    Prototype development

    1 day

    Garment production

    5 days

    Shipment

    2 days

    Total

    10 days

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