LEAN

MANAGEMENT
(Assignment No - 1)

Submitted to: Submitted by:

Mr. Jayant Kumar Anand Kumar

Khushboo Kumari
About ZARA
ZARA is the flagship chain store of Inditex Group owned by Spanish
tycoon Amancio Ortega, who also owns brands such as Massimo Dutti,
Pull and Bear, Oysho, Uterqüe, Stradivarius and Bershka. The group is
headquartered in A Coruña, Spain, where the first ZARA store opened in
1975.

ZARA needs just two weeks to develop a new product and get it to
stores, compared with a six- month industry average, and launches
around 10,000 new designs each year. ZARA has resisted the industry-
wide trend towards transferring fast fashion production to low-cost
countries. Perhaps its most unusual strategy was its policy of zero
advertising; the company preferred to invest a percentage of revenues in
opening new stores instead.

ZARA developed a business model that incorporated the following three

goals for Operations:

1. Develop system the requires short lead times

2. Decrease quantities produced to decrease inventory risk

3. Increase the number of available styles and/or choice

ZARA’s agenda

1. Competitive Advantage, Strategies and Objectives

2. International Strategy :

• Market Selection

• Market Entry

• Marketing approach

3. Financial Position Compare to Competitors

4. SWOT Analysis
5. Resolution to Grow the ZARA chain in best

Competitive Advantage:

• Cost Leadership

• Fashionable (quality) at reasonable product

• Based on Product Positioning: “ZARA is cheaper price than Benetton

and GAP, and still being fashionable”

• Fast Production

• Ability to Design and finish goods in stores within 4 to 5 weeks

• Very quick to get designer-influenced products into their stores

• Product Variation

• Ability of ZARA to launch new trends, design and variation of product.

• Low Level of Inventory

• Efficient Distribution System

• Turnover of Product is high

Objectives:

• Maximize Profit

• Maintain and ability to go further fashionable (quality) at reasonable

price

 ZARA positioning

Transform
Before Objectives/ Expectation

Price Price

ZARA Fashion Fashion

ZARA
(New)
Strategy:

ZARA are placed on board market scope. ZARA provided cost

leadership and differentiation strategy combined it to win the
competition. ZARA compete at reasonable price by build cost leadership
strategy, so even they set at reasonable price they still could gaining
reasonable margin and develop differentiation strategy, in this case
ability ZARA to design and finishes product within 4 to 5 weeks (unique
competences).

Narrow
Segmentation Strategy
Market
Scope

Broad Differentiation Cost

Market Strategy Leadership
Scope

Uniqueness Low Cost

Competency Competency
Objective:

Continues & possibly to go further with time cycle of generate design,

finishes product & distribute it.

Creative departments;
Three areas,
200+ staff
Samples;
Delivery; prototypes Made in-
garment s Arrive house and By
in store within 48 suppliers
hours of ordering

Design, Product And

market Cycle;
Mattress;
Shipping; Final design : 1 day material for
from Logistics Manufacture : 3-8 days Garments laid
centres to Transport : 1 day out in layers
stores, road & Selling : 17-20 and marked
air days Total : 22-30
days

Cutting;
Finishing;
a machine Cuts
garments Are
the fabric
pressed,
according to the
dressed and
patterns
quality checked Sewing;
cut fabric is
Shipped to
workshops to be
stitched
Strategy:

Value Chain Framework

MIS

Production Objectives Marketing

Design

Strategies:

• Production & distribution:

 Maintain quality Cost Leadership

 High Bargaining Power to Supplier
 Distribution System Fast Distribution

• Marketing:

 Market Penetration
 R&D
 Market, Location of Stores, Consumers Behavior Analysis

• MIS (Management Information system):

 Order Information Flow Stores Ordering System

 Improving Inventory System
 Product Distribution System

• Design:

 Coordinate with R & D and also with stores it to get new trends
 Ability to Produce New Design & Trend
ZARA International Strategy:

• Be good in International Strategy

• Combined of Strategy:

 Cost Leadership is usually capture in mass production (mass

product, less differentiation) - Standardization
 Differentiation Strategy is usually capture to produce goods that
has more value added - fashionable, fast delivery -customization

• Good Consideration in market selection, marketing, and market entry

Market
Sellection

International
Strategy

Marketing
Market Entry
Approach

Marketing Approach:

Consideration

4 P considerations - Product, Price, Promotion and Placement. Each

Country has different marketing approach.

• Product - local preferences, design, trends

• Price - different pricing strategy for each country. For example: Italy
and Paris has no problem for price but quality-oriented, but German has
sensitive price.
• Promotion - different promotion strategy for each country

• Placement - efficient distribution, location of stores

Resolution to grow ZARA chain in best

Change the system

• Centralized Transform Decentralized

•Build decentralized distribution & Production in each region (Asia,

Europe & America, more is better) to highly penetrate new market &
trend to decrease the complexity of process

•Moreover, would tend to fastest in producing new product (design,

production & distribute)

•Keep maintains the value chain, nothing to change but it should be

expanded in each district/region.
Bibliography
https://www.linkedin.com/pulse/how-zara-used-lean-become-largest-fashion-retailer-nathan-
robinson

https://www.tradegecko.com/blog/supply-chain-management/zara-supply-chain-its-secret-to-retail-
success

https://www.slideshare.net/harshsinha12/lean-manufacturing-in-zara