Zara's Supply Chain

Zara's Supply Chain

Amy Tignor

Abstract

This is a brief analysis of the supply chain of the retail operations for Zara, a clothing company. I will provide an overview of why their supply chain contributes to a successful business model.

Zara Case Study

Zara is a successful clothing retail outlet headquartered in Spain. Zara is owned by Inditex, the largest clothing manufacturer in Spain. They have thousands of brick and mortar establishments in major cities as well as a prosperous website. One of the key factors in the ongoing success of Zara is the philosophy of the business’s founder, Amancio Ortego; he believes that in order to be successful, "you need to have five fingers touching the factory and five touching the customer" (Ferdows, Lewis, Machuca, 2004).

Zara has bucked the common trend of outsourcing all of the manufacturing of goods to low cost firms in Asia, and maintain at least 40% of their fabrication in-house (Chopra & Meindl, 2012). They also maintain close relationship with local subcontractors for more labor intensive work, and keep more complicated designs reserved for their own factories (Ferdows, et al, 2004). When they do use outsourced factories in Asia, they tend to send off their more simple designs, such as sweaters in basic colors (Ferdows, et al, 2004). Managing their supply chain in such a successful manner allows Zara to be more flexible and responsive to changing customer needs and demands.

Zara has a very quick turnaround time to these customer needs and demands, and they are able to be successful as a result of their information structure and response times. Zara relies on open communication between its stores, factories and designers and uses a combination of telephone calls and tailored handheld computers to facilitate the flow of communication back and forth between the retail outlets and the company headquarters in La Coruna (Ferdows, et al, 2004). This open communication allows staff members in the...