Zara shows how important supply chain management is

Zara had 21.4 billion dollars in sales in 2012 and has been growing substantially across the world due to its fast moving cycle of new clothing. It has become a go-to for the fashionable consumers because they know Zara is always bringing out new clothing. The total process of designing a product to shipping it across the world to various stores can take as little as two weeks. Because of how quickly their products can be launched, Zara is given a huge advantage in the fashion industry, as it is a very fast-paced and demanding industry. Communication across the channels is crucial to Zara’s successful supply chain management. Because around 450 million products are produced a year, the company needs to ensure that communications across the channels are efficient and meticulous.

As trends in the fashion industry are constantly changing, designers must be able to keep up with what consumers want. What makes Zara a success is its supply chain. For example, to cut shipping time, their factories are located in Europe. This may increase production costs compared to producing in Asia or India, but time and possibly shipping cost benefits seems to outweigh production costs. To add, each item is produced scarcely rather than being mass-produced like other brands do. Because of this exclusivity, demand increases, which also allows price to increase. This can positively affect the bottom line if Zara can consistently bring out new products. Zara’s supply chain model is risky as there are constant variable costs from working with new designs, but because of Zara’s high customer loyalty, the company knows that these costs can be covered from high consumer demand.