Q.

What advantage does Zara gain against the competition

by having a very responsive supply chain?
A. In an industry where the customer demand is
unpredictable, Zara having a responsive supply chain has
enabled it to enjoy greater customer turnover due to its 5
to 6 weeks cycle Time leading to more profits as mostly the
products are then sold at Full price. Moreover being
responsive has also enabled Zara to reduce its inventories
and also the Forecast error.
Q. Why has Inditex chosen to have both in-house
manufacturing and outsourced manufacturing? Why has
Inditex maintained manufacturing capacity in Europe even
though manufacturing in Asia is much cheaper?
A. o be responsive in the rapid changing world, Inditex
opted for both outsourced manufacturing, for the
production of products with predictable demand, and inhouse manufacturing, for the production of products with
highly uncertain demand. Inditex has maintained large
Fraction of manufacturing capacity in Portugal and Spain
(Europe) despite the higher cost there because this allows
Zara to respond quickly to changing Fashion trends in
Europe.
Q. Why does Zara source products with uncertain demand
from local manufacturers and products with predictable
demand from Asian manufacturers?
A. Zaras main competitive advantage is responsiveness
and to retain it Zara source products with uncertain
demand From local manufacturers because local
manufacturers oer Fast and exible sourcing and such
products are to be delivered quick instead of at low-cost
(with greater lead Time as it is manufactured in
Asia).Whereas products with predictable demand are
sourced From Asian manufacturers because outsourcings
cheaper that is products are manufactured at a low-cost.