Zara's Operations and Management Processes

Store Managers

Customer Trends

Design Manager

Past Sales

Requested Shipment

IT MANAGERS

Demand Forecast

&

Optimization

Model

Procurement and Production Manager

Manufacturing Plant

In Store Inventory

Warehouse Inventory

Distribution Manager

Warehouse Manager

Shipments

Shipments

Operation and Management Process:

In order to maintain control and respond with the timeliness that Zara’s business model (graphed above) requires, operations and management processes must be tightly integrated and fluid in terms of information. To this end, Zara employs a lean organizational structure to keep hierarchal bureaucracy at a complete minimum. This lean organization pattern directs attention to high performance and has information technology as its backbone. By reducing the amount of people through which information has to flow to decision makers, Zara is able to respond to market needs with extraordinary speed. This type of organizational pattern also allows for decisions to be decentralized and therefore more locally responsive.

Furthermore, Zara employs a lean production method to make sure that production is flexible and effective. The philosophy behind this production method, originally developed for Toyota is to “eliminate waste and empower workers, reduce inventory and improve productivity”. In addition to this, partnering with suppliers (vertical supply chain as discussed before), allows for Zara to reduce waste and increase productivity by not having to maintain supplies in anticipation to change, but to acquire supplies in response to change. This method is also known as the just-in-time production method for its ability to produce goods with a quick response to customer demand.

This lean production method, supported by lean organizational method is what drives the Zara business model. It prompts for the “10 rules of lean production” to be developed, executed, improved upon and ultimately yield for the company...