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NATIONAL INSTITUTE OF FASHION TECHNOLOGY, HAUZ-KHAS

RMT ASSIGNMENT

SUBMITTED BY-

SALONI MISHRA ARUNAV SUMIT KUMAR M.FTECH SEM-2

ZARA changes their designs 2 weeks per time. industry average of 6-9 months• 12 inventory turnovers/year VS. one of the world’s largest fashion distributors. Spain.000 designs/year• 30. women and kids(ZARA KIDS)clothes. Inditex. Head Quarters in Coruna. Products of ZARA is very popular with young females (age of 24 -25)      . Their product portfolio is comprises with men. the Americas. industry average 3-4 times • 12. where the first ZARA store opened in 1975. Asia and Africa.000 Stock-Keeping Units (SKUs)/year • Unsold items account for 10% of stock VS. industry average 17%~20% • Commits 50%~60% of production in advance of the season VS. 80%~90% for other. CASE STUDY RELATED TO ITS SUPPLY CHAIN STATISTICS   15 days from designs to products VS. ZARA buys fabric in only 4 different colors. it has more than 4. shoes. Supply Chain Suppliers are all close to their factories so ZARA can order on a need basis.ABOUT ZARA Zara is part of the Inditex Group of Spanish fashion retailers. ZARA is the flagship chain store of Inditex Group owned by Spanish tycoon Amancio Ortega. with security and price tags affixed Overnight trucks are used to deliver to European stores and airfreight is used to ship to other countries. designs and cuts its fabric in-house Clothes are ironed in advance and packed on hangers.In the 1980s Zara pioneered the concept of what is now considered "fast fashion. cosmetics and accessories.780 stores in 77 countries in Europe.

▫ “The vertical integration of ZARA’s production system allows them to place a garment in any store around the world in a period between two to three weeks. Vertically integrated supply chain where design. and retailing were integrated.” Vertically Integrated Supply Chain . production. distribution.

The computer then decide how to shear fabrics in order to waste as little as possible. Fabric will be sent to the factories. Designs will be made into models when sent to the factory. They select the most cost effective fabric for the new designs. which contributes around 65 per cent of group sales . Up to tens of kilometers of underground . ironing and inspection. Buy on credit.• Zara. products will be sent back to the factory for button nailing.FACTOR IN THE PROFITABILITY FORMULABuy low. concentrates on three winning formulae to bake its fresh fashion: Short Lead Time = More fashionable Lower quantities = Scarce supply More styles = More choice.  After the sewing process. and more chances of hitting. 200 fashion designers are in charge of new designs for the clothing line. sell high. In Spain. sell on cash.

due to this most of the inbound logistics are road haulage. effective. and Greece. Clothes are then put straight onto the sales floor and are available to purchase.000 to 4. which will affect margins. and efficient • Mass customization • Low process costs INVENTORYStores place orders twice per week and the supply of finished goods is matched to store demand. Demand based production means there is very little inventory in Zara’s supply chain. it can modify existing items in as little as two weeks.(mainly trucks).000 items for its key competitors. Spain. Label trademarks for different countries. PROCUREMENT /INBOUND LOGISTICS ZARA buys its raw materials from Italy. Shortening the product life cycle means greater success in meeting consumer preferences. suppliers have agreed to supply material within 5 days to ZARAs facility in spain.   Production is then increased or decreased in the flexible production facilities.transmission channel connects all the processors. STRENGTHS It produces about 11. PRICING As production is carried out in Spain where average wages are higher than low cost Asian countries so factory wage costs will be higher than competitors.000 distinct items annually compared with 2. . DELIVERY Deliveries typically arrive one to two days after ordering with most deliveries arriving by truck from the Spanish factories. which results in much lower working capital requirements. Reason is final product can be push to the final selling point quickly. faster. Why using Vertical integration? Local sourcing of raw material – Cutting cost because they do not outsource any channel • Fast time-to-customer –Cutting time. The company can design a new product and have finished goods in its stores in four to five weeks.

receive orders from all of its stores and aggregate them. Approaches and Organization Zara's approach to the organization’s utilization of IT was aligned with its preferences for speed and decentralized decision making. it will be highlighted and Commercials’ decisions on product allocation when demand exceeded supply will be executed. it was not a great concern since it was only used to facilitate stock allocation decisions. and 24% in Asian and African countries and the rest of the world. . the need to maintain its leadership in the industry with online expansion. That goes up to 17times for Zara. CONCLUSION Zara’s updates after the case study and identify several important updates to its SC which includes a more accurate way of managing its inventories. 50% of the products Zara sells are manufactured in Spain. obsolescence and restriction of the technologies currently used and lastly. However. it is noted that Zara still experiences several SC challenges. B. When the supply and demand were imbalanced. an addition to its sales channel and improvements to retailers’ work process. La Coruna In La Coruna. Though it was not entirely accurate. Essential applications were developed in-house as most commercial packages were not suitable for Zara’s unique operations. There is no chief information officer appointed and no formal processes for setting an IT budget on specific technology investments and projects. 26% in the rest of Europe. applications developed internally were used to prepare and distribute the offer globally via the internet. Theoretical inventory of each SKU at each store were managed with a separate application. These include key issues such as the limitation of its companywide interconnectivity.  An average high-street store in Spain expects customers to visit three times a year. INFORMATION TECHNOLOGY (IT) A.

. disadvantages and associated risks. we believe that through the implementation of more advanced technologies. All in all. upgrading of POS terminals and further improvements on its e-commerce. They are establishing mobile enterprise applications. whilst having proper management of possible risks. Zara will be able to further enhance their operations and remain as a dominant player in the fast fashion industry. However. each of these recommendations has its benefits. Zara will need to carefully evaluate these recommendations and mitigate possible risks before implementing them.Based on the challenges discussed above. we have came up with three different recommendations to tackle the issues at hand.