ZARA supply chain (3)

SUPPLY CHAIN ANALYSIS LECTURER: HO THI HONG XUYEN GROUP: TOKTOK Member Phạm Thúy Hiền Nguyễn Thị Ánh Tuyết 19124041 19124046 Nguyễn Thế Trung Nguyễn Hoàng Nhật Quyên Hà Thị Thu Huyền 19124063 19124073 201204185 CONTENTS ABOUT ZARA SUPPLY CHAIN MODEL SUPPLY CHAIN COMPONENTS STRENGTHS AND WEAKNESSES CONCLUSION REFERENCES I ABOUT ZARA Zara is a Spanish fashion clothing manufacturer and retailer, formed in the 1970s Zara mainly targets young and urban female customers and acceptable prices are offered Zara is not a world leader in cloth designs, but it is a highly sensitive and flexible fashion trend follower I I SUPPLY CHAI N MODEL Zara’s Fashion Retail Supply Chain Strategies ZARA global distribution center "the cube" III SUPPLY CHAIN COMPONENTS 10 CLOSED CYCLE OF THE ZARA SUPPLY CHAIN Product design Sourcing and production Raw material Product distribution procurement cycle Sales cycle 14 All Zara products, no matter where they are made, are sent back to DCs in Spain, which are then sent to Zara stores worldwide Products will be shipped from DC to warehouses in select local schools, then sent to Zara stores by third-party logistics companies The market does not have domestic goods, products will be sent directly to Zara stores 75% of Zara products are shipped by truck and 25% are shipped by air SALE In terms of format retail, Zara stores have premium products that move in and out of the store quickly Special, Zara keeps less inventory 15 ZARA’S SUPPLY CHAIN APPROACH 16 Procurement Methodology Deep Collaboration Production Feedback Local Manufacturing Spare Capacity Demand Forecasting Procurement Methodologies Zara’s work Procurement on clothes the but materials on team number the needed doesn’t of finished number to 16 of raw manufacture the clothes This helps reduce waste, as you can re-use fabric but not resell a piece of clothing that didn’t meet the expectations A great example of how sustainability can be improved reduction in parallel to cost Deep Collaboration Supplier relationships are key and suppliers are all close to Zara factories and collaborate tightly, so Zara can order on an everyday-need basis 17 19 Production Feedback Every day, store managers give customer feedback to the market specialists, who then pass the information along to the production & design teams This rapid feedback loop enables a quick and agile response to the market 20 Local Manufacturing Zara presents a drastically different approach than its competitors Instead of outsourcing all of its production to Asia or Eastern Europe, it decided to manufacture its products in Galicia for items with a more unstable demand While lower-cost production could be achieved in other regions, the faster time to market, reduced transportation costs and low exposure to changing tariffs and politics outweigh that one factor This reduces overall supply risk, with a more narrow set of risks than posed by more extended, global supply chains This also helps reduce the reduction in transportation overall carbon footprint through a significant 21 Spare Capacity Zara voluntarily keeps up to 85% of its plants idle, in order to optimize the response to demand changes all around the world Another interesting approach, quite different to competitors that try to maximize utilization 22 Demand Forecasting Zara reaps the benefits of very efficient inventory management models that help them determine the exact quantity of items needed for every store They ship very small batches twice a week As a result, it creates a sense of scarcity, very few items are unsold, and if the experiment fails there is much time (thanks to their very responsive Supply Chain) to try other different styles almost every time This eventually helps Zara find the right product 23 rules of fashion supply chain management 24 IV 50% STRENGTHS AND WEAKNESSES 25 First, being able to react quickly to all fashion trends Zara owns all the channels and supply fashion outfits as of the supply chain, it soon as in a few weeks’ time becomes difficult to expand to far locations as it is very Secondly, Zara never makes its products in big quantities expensive to distribute such products Thirdly, though Zara’s supply chain has a higher cost it allows the advantage of low inventory and hight 26 V CONCLUSION We know that Zara is an expert in “fast fashion” chain supply which is basically understood as a quick reaction to consumers’ needs and quick response to changes in supply So, to sum up the case of Zara, we can say that when a product meets the current needs of the consumer, the consumer buys the product, and that’s how Zara maintains existing customers and attracts new ones Thank you all for listening References 28 Supplychain247, 2014, Zara’s Fashion Retail Supply Chain Strategies, https://www.supplychain247.com/article/zaras_fashion_retail_supply_chai n_strategies Susan Hoque, 2019, Introduction to Zara, https://www.youtube.com/watch?v=PQOvVSm9wUE Ivalua, Vishal Patel May 6, 2020, Zara – a Masterclass in Supplier Relationships and Supply Chain Management, ivalua.com/blog/supplychain-management-zara/ MBA Knowledge Base, Case Study: Zara’s Supply Chain Success Story, mbaknol.com/management-case-studies/case-study-zaras-supply-chainsuccess-story/ CASE STUDY, Zara Case Study Solution, https://acasestudy.com/zaracase-study-2/?fbclid=IwAR14qFq936pH66_iAX0PqlsnJ2rCb_P9gsTTx5w3Zs0TFUVMa1SJYEDD1c ... 28 Supplychain247, 2014, Zara? ??s Fashion Retail Supply Chain Strategies, https://www.supplychain247.com/article/zaras_fashion_retail _supply_ chai n_strategies Susan Hoque, 2019, Introduction to Zara, ... May 6, 2020, Zara – a Masterclass in Supplier Relationships and Supply Chain Management, ivalua.com/blog/supplychain-management -zara/ MBA Knowledge Base, Case Study: Zara? ??s Supply Chain Success... ZARA SUPPLY CHAIN MODEL SUPPLY CHAIN COMPONENTS STRENGTHS AND WEAKNESSES CONCLUSION REFERENCES I ABOUT ZARA Zara is a Spanish fashion clothing manufacturer and retailer, formed in the 1970s Zara