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in industry contexts ­ranging from ­aviation spare parts,
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 Introduction to Supply Chains 9

material provision to their family in Mexico. The impact of these customer

commitments increased the participation of Cemex further downstream
and the complexity of the associated logistics system but potentially gen-
erated a more stable source of demand.

1.4.1  The Cemex Supply Chain Architecture

The supply chain involves flows from the cement manufacturer to the con-
crete mixer to the construction site. Cemex modified these flows through
the intensive use of technology. Dynamic routing enabled last-minute can-
cellations to be accommodated. This coordination between Cemex and the
user provided significant value for the user but depended on Cemex’s ability
to accommodate such requests efficiently. The result was a more competi-
tive supply chain that was responsive to customer demand and thus enabled
significant market share growth. Having the right level of ability to accom-
modate change requests played a key role in this system. Coordinating in-
centives also included having visibility regarding future demands through
the use of credit terms to enable management of the financing of construc-
tion materials, further increasing the success of the supply chain.

1.5  Zara and the Apparel Supply Chain

Zara is a multibillion dollar Spanish company with stores all over the
world. Zara owns large sections of the apparel supply chain and man-
ages the entire chain to speed up innovation and product availability.
One secret to Zara’s success is the constant flow of customer requests and
information from stores to the design studios. In turn, Zara generates
a constant flow of product from plants to stores, even at the expense of
retiring products for which there is demand.
Zara represents a new generation of supply chains in the apparel in-
dustry. The following anecdote regarding Zara says it all:

When Madonna went on tour in Spain in early 2001, she started

in Madrid and ended in Barcelona ten days later. The fashion
that teenagers picked up from Madonna’s outfits was developed,
manufactured, and available in stores in Barcelona by the time
10 INTRODUCTION TO THE FOUR CS OF SUPPLY CHAIN MANAGEMENT

the tour ended. A remarkable ten days from design, development,

manufacturing to store availability ([10],[74]).

Zara sources the fabric from all over the world (Italy, China, Japan,
India). Zara owns its own cutting machines that cut the fabric in batches,
using laser-cutting devices, and optimize layouts within each roll to min-
imize scrap. Independent sewing shops in Europe do all of the stitch-
ing. The apparel comes back to Zara, where it is ironed, packaged, and
grouped by store. Zara contracts with independent trucking companies to
distribute the products to stores that are solely owned by Zara.
Customers expect fresh assortments every time they visit the store and do
not expect products to be in stock for a long time. By controlling most steps
in the supply chain, Zara is able to respond faster to market trends. This also
decreases the cost of errors in the forecast. But Zara may also have identified
that having a fast supply chain enables it to charge a price premium for the
market segment it targets. Is such a high degree of supply chain ownership
necessary for Zara? How can competitors respond in the apparel market?

1.5.1  Zara’s Supply Chain Architecture

Zara has a vertically integrated supply chain with intense coordination

between levels. Store managers pass along customer requests to design-
ers, who then incorporate customer suggestions into new designs that are
manufactured and delivered frequently to stores. This coordination en-
ables faster cycle times, under two weeks from start to finish. Capacity for
cutting, packing, delivery, and so on are owned and deployed by Zara to
maximize flexibility. The sewing capacity is subcontracted but managed
by Zara. Is the Zara supply chain competitive? The company has a market
value that is significantly larger than most firms in the apparel industry.
Success has come from significant control of assets as well as an intense
coordination of information flows throughout the supply chain.

1.6  Global Apparel Supply Chain Management

Li & Fung is a Hong Kong–based company that specializes in supply
chain management ([82]). The origins of the firm can be traced to Victor