In class 15, I had the opportunity of studying the Supply Chain Management of Zara, which I find very fascinating. Zara’s constant success and industry expansion over these few years had been mainly the result of excellent supply chain operation. Being in the fashion industry where customer preferences are constantly changing, the business is all about reducing response time.
Zara’s strategies for always producing fresh fashion [1]:
(1) Short Lead Time – keeping up with fashion
Short lead time allows Zara to operate from identifying a trend to selling the items in stores within merely 30 days, beating all its competitors – while most retailers forecast what/how much customers might buy, Zara moves along with its customers. Catching fashion at its hottest time will gain better margins for more prices at full price and no discounts!
(2)Provide lower quanlity – provide scarce supply
By lowering quantities of each product line, Zara can create scarcity that will drive the price high and keeping its customers on the verge of buying as soon as the clothing are in stock. As well, it would also reduce risks of losing great amount of sales if the trend is unsuccessful.
(3)More styles – various choices, meaning that there will be more chances of hitting the right trend
Instead of providing more quantities per style, Zara provides more styles with lower quantity. It has more styles and variations than most of its competitors.
Supply chain is an area of study that I am quite interested in. The success of Zara’s strategy gave me many insights in creating a successful operation management system.
Article Source:
[1] http://thirdeyesight.in/articles/ImagesFashion_Zara_Part_I.pdf
Image Source:
http://4.bp.blogspot.com/_4P9lCNJFkls/TPjPTiPvGAI/AAAAAAAADb0/mRTeYNZ7t5Q/s1600/zara+kerst+2010.jpg
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