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4 key facts about Zaras ditribituona cahhanel networking sucess .

1.The products people want, when they want them

Rather than outsourcing production to Asia, as many clothing retailers are wont to do, most of the products
offered by Zara are manufactured in the dozen-or-so company-owned factories. However, items with a longer
shelf-live are outsourced to low-cost suppliers.

This gives Zara a competitive edge when supplying consumers with the items they want, when they want
them. Zara is able to cater to a wide range of customers by providing seasonal clothing as well as more basic
items like t-shirts.

Customer preferences for fashion are met by a shortened product lifecycle and by constantly assessing what
products sell (or which products dont sell). New fashion items can be designed and delivered to the store
within four weeks, and modifications can be made to existing items in as little as two weeks. If items prove to
be unpopular with consumers, the items will be removed from the store, further orders will be cancelled, and
alternatives are then pursued.

Loyal customers of Zara know that popular items are rarely reordered, so if they spot something they like they
had better purchase it straight away or risk losing out. But it doesnt just stop there. Many customers become
enamored with Zara because many of their items on offer reminisce of high-fashion stores but are sold at the
fraction of the cost.

It is for this reason many media organizations have heralded Zara with accolades such as the leader in fast
fashion and the worlds top fashion retailer. Hopefully its obvious by now that Zara is able to achieve this by
putting the customer at the heart of their supply chain through the Omni-channel experience and vertically
integrated supply chain.

2. Creating an Omni-channel business

Omni-channel business focuses on utilizing their supply chain to deliver a great customer experience. This
strategy is contrasted to multi-channel supply chains where the focus is on the ways in which the customer can
pay for the items.
At its core, Zara values its speed and responsiveness to the latest fashion trends so much that it holds these
elements in higher regard than cost. Omni-channel is all about ensuring your product or service is in the right
place, at the right time.

Zara was able to create synergy between their business and operation strategy by focusing on the importance of
the supply chain when delivering a great customer experience. They are able to take designs from the catwalk,
manufacture and distribute them within two weeks of the design first appearing in the fashion industry.

Zara will only commit 15-25% of a seasons line six months in advance, meaning that 50% of their products
are designed and manufactured within the season itself. This ensures the clothing Zara has on offer is on trend
and is exactly what the customer wants at that point in time.

Depending on the size and nature of businesses that use an omni-channel supply chain, many retailers require
third party suppliers to deliver the seamless customer experience as part of this strategy. But this doesnt apply
to Zara because they were able to vertically integrate their supply chain. Find out more below.

3. Integrating business and operations strategy

The super-fast turnaround of Zara's stock is the result of a well-oiled production process that is both agile and
flexible. But what many people don't know is that Zara retains more control over their supply chain than most
retailers because it is vertically integrated, meaning they have ownership of their supply chain.

Vertically integrated supply chains are contrasted to horizontal integrations that seek to partner with 3rd parties
for various components of the business. This strategy allows Zara to cuts costs because they aren't outsourcing
to multiple suppliers, a lot of time is cut in the distribution process and many conflicts from different channels
are avoided.

Vertically integrated businesses are also best known for leveraging mass-production principles of efficiency
because the business owns all the assets of manufacturing and production. There is still debate as to whether
vertical or horizontal integration is best for business, as vertical businesses are able to save money through
efficiencies, whereas horizontal integration enables businesses to benefit from low costs of manual labour.

Zara is known for opening locations in central business districts with as many locations as possible. So they
really need to ensure they don't have any issues delivering their clothing lines to stores. Zara manufactures and
distributes products in small batches. This allows them to take full control over the design, warehousing,
distribution and logistics functions rather than relying on outside partners.
4. Innovating for rapid development

The industry average for developing a new product and getting it to stores is six-months. Zara can achieve this,
reportedly, in just one-week. The sheer scale and speed of Zaras production schedule is no small feet, with the
fashion retailer launching 12,000 new designs each year.

Forbes put many of Zaras successes down to its ability to generate quick turnover of merchandise by rapidly
shipping new designs to stores (as discussed above). Sustained innovative new lines of clothing constantly
replace old ones in the global Zara network.

Unsold items account for less than 10% of stock, compared to the industry standard of 17-20%. This is
achieved through their unique business model of copying high-fashion designs, seeking global customer
feedback, and then literally sewing the changes into their stock. Re-designing their stock in this manner gives
consumers the feeling that the products are new and creates urgency on an otherwise unwanted item.

Key takeaways for success

Zara is one of the worlds greatest supply chain success stories, and there are many takeaways businesses can
learn from them:

Zara places the customer at the heart of all their operations


The omnichannel experience focuses on how the customer feels about the transaction
Their vertically integrated supply chain allows Zara to retain control of operations and ensure speed
and responsiveness for their customers
Zara utilises innovative means to ensure they can rapidly deploy new designs to market that are what
the customers want, when they want it.

Link:http://blog.cemat.com.au/4-key-facts-about-zaras-supply-chain-success