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MODULE NAME: MODULE CODE:

LOGISTICS AND SUPPLY CHAIN MANAGEMENT 1A: INTRODUCTION LSCM5121/d

ASSESSMENT TYPE: ASSIGNMENT (PAPER ONLY)

TOTAL MARK ALLOCATION: 100 MARKS

TOTAL HOURS: 10 HOURS

By submitting this assignment, you acknowledge that you have read and understood all the rules
as per the terms in the registration contract, in particular the assignment and assessment rules in
The IIE Assessment Strategy and Policy (IIE009), the intellectual integrity and plagiarism rules in the
Intellectual Integrity Policy (IIE023), as well as any rules and regulations published in the student
portal.

INSTRUCTIONS:

1. No material may be copied from original sources, even if referenced correctly, unless it is a
direct quote indicated with quotation marks. No more than 10% of the assignment may
consist of direct quotes.
2. Save a copy of your assignment before submitting it.
3. Assignments must be typed unless otherwise specified.
4. All work must be adequately and correctly referenced.
5. Begin each section on a new page.
6. This is an individual assignment.

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Referencing Rubric
Providing evidence based on valid and referenced academic sources Markers are required to provide feedback to students by indicating
is a fundamental educational principle and the cornerstone of high- (circling/underlining) the information that best describes the
quality academic work. Hence, The IIE considers it essential to student’s work.
develop the referencing skills of our students in our commitment to
achieve high academic standards. Part of achieving these high Minor technical referencing errors: 5% deduction from the
standards is referencing in a way that is consistent, technically overall percentage. – the student’s work contains five or more
correct and congruent. This is not plagiarism, which is handled errors listed in the minor errors column in the table below.
differently.
Major technical referencing errors: 10% deduction from the
Poor quality formatting in your referencing will result in a penalty of overall percentage. – the student’s work contains five or more
according to the following guidelines a maximum of ten percent errors listed in the major errors column in the table below.
being deducted from the overall percentage. Please note, however,
that evidence of plagiarism in the form of copied or uncited work If both minor and major errors are indicated, then 10% only (and
(not referenced), absent reference lists, or exceptionally poor not 5% or 15%) is deducted from the overall percentage. The
referencing, may result in action being taken in accordance with examples provided below are not exhaustive but are provided to
The IIE’s Intellectual Integrity Policy (0023). illustrate the error.
Required: Minor errors in technical correctness of Major errors in technical correctness of referencing
Technically correct referencing referencing style style
style Deduct 5% from overall percentage. Deduct 10% from the overall percentage.
Example: if the response receives 70%, Example: if the response receives 70%, deduct 10%.
deduct 5%. The final mark is 65%. The final mark is 60%.
Consistency Minor inconsistencies. Major inconsistencies.
• The referencing style is generally • Poor and inconsistent referencing style used in-
• The same referencing format consistent, but there are one or two text and/or in the bibliography/ reference list.
has been used for all in-text changes in the format of in-text • Multiple formats for the same type of referencing
references and in the referencing and/or in the bibliography. have been used.
bibliography/reference list. • For example, page numbers for direct • For example, the format for direct quotes (in-text)
quotes (in-text) have been provided for and/or book chapters (bibliography/ reference
one source, but not in another instance. list) is different across multiple instances.
Two book chapters (bibliography) have
been referenced in the bibliography in
two different formats.
Technical correctness Generally, technically correct with some Technically incorrect.
minor errors. • The referencing format is incorrect.
• Referencing format is • The correct referencing format has been • Concepts and ideas are typically referenced, but a
technically correct throughout consistently used, but there are one or reference is missing from small sections of the
the submission. two errors. work.
• Concepts and ideas are typically • Position of the references: references are only
• The correct referencing format referenced, but a reference is missing given at the beginning or end of large sections of
for the discipline has been from one small section of the work. work.
used, i.e., either APA, OR • Position of the references: references • For example, incorrect author information is
Harvard OR Law are only given at the beginning or end of provided, no year of publication is provided,
every paragraph. quotation marks and/or page numbers for direct
• Position of the reference: a • For example, the student has incorrectly quotes missing, page numbers are provided for
reference is directly associated presented direct quotes (in-text) and/or paraphrased material, the incorrect punctuation is
with every concept or idea. book chapters (bibliography/reference used (in-text); the bibliography/reference list is
list). not in alphabetical order, the incorrect format for
• For example, quotation marks, a book chapter/journal article is used, information
page numbers, years, etc. are is missing e.g. no place of publication had been
applied correctly, sources in provided (bibliography); repeated sources on the
the bibliography/reference list reference list.
are correctly presented.
Congruence between in-text Generally, congruence between the in-text A lack of congruence between the in-text referencing
referencing and bibliography/ referencing and the bibliography/ and the bibliography.
reference list reference list with one or two errors. • No relationship/several incongruencies between
• There is largely a match between the the in-text referencing and the
• All sources are accurately sources presented in-text and the bibliography/reference list.
reflected and are all accurately bibliography. • For example, sources are included in-text, but not
included in the bibliography/ • For example, a source appears in the in the bibliography and vice versa, a link, rather
reference list. text, but not in the bibliography/ than the actual reference is provided in the
reference list or vice versa. bibliography.
In summary: the recording of In summary, at least 80% of the sources are In summary, at least 60% of the sources are
references is accurate and correctly reflected and included in a incorrectly reflected and/or not included in reference
complete. reference list. list.

Overall Feedback about the consistency, technical correctness and congruence between in-text referencing and bibliography:
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................

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Question 1 (Marks: 40)

Read the following case study carefully and answer the questions that follow.
Zara’s Unique Business Model is Driven by Its Supply Chain Capabilities.

Zara changes its clothing designs every two weeks on average, while competitors change their
designs every two or three months. It carries about 11,000 distinct items per year in thousands of
stores worldwide compared to competitors that carry 2,000 to 4,000 items per year in their stores.
Zara’s highly responsive supply chain is central to its business success. The heart of the company
and its supply chain is a huge, highly automated distribution center (DC) called “The Cube”.

The company was founded in Spain in 1974 by Amancio Ortega and his wife Rosalía Mera. It is the
flagship business unit of a holding company called Inditex Corporation with headquarters in
Arteixo, Galicia, a city in northwestern Spain near where Mr. Ortega was born. In 2019 Zara was
ranked as the 46th most valuable brand in the world by Forbes.

Company Business Model

Agents for the company are always scouting out new fashion trends at clubs and social gatherings.
When they see inspiring examples they quickly send design sketches to the garment designers at
the Cube. New items can be designed and out to the stores in 4 – 6 weeks, and existing items can
be modified in 2 weeks.

The company’s core market is women 24 – 35 years old. They reach this market by locating their
stores in town centers and places with high concentrations of women in this age range. Short
production runs create scarcity of given designs and that generates a sense of urgency and reason
to buy while supplies last. As a consequence, Zara does not have lots of excess inventory, nor does
it need to do big mark-downs on its clothing items.

Zara has 12 inventory turns per year compared to 3 – 4 per year for competitors. Stores place
orders twice a week and this drives factory scheduling. Such short-term focused order cycles make
forecasts very accurate, much more accurate than competitors who may order every two weeks or
every month.

Clothing items are priced based on market demand, not on the cost of manufacture. The short
lead times for delivery of unique fashion items combined with short production runs enable Zara

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to offer customers more styles and choices, and yet still create a sense of urgency to buy because
items often sell out quickly. And that particular item or style may not be available again after it
sells out. Zara sells 85 percent of its items at full price compared to the industry average of selling
only 60 percent of items at full price. Annually there is 10 percent of inventory unsold compared to
industry averages of 17 – 20 percent.

In Spain, customers visit Zara stores 17 times per year on average compared to 3 times per year for
competitors. Because their clothing designs change often, it is harder for people to see them
clearly on the Internet and thus they are encouraged to come into the stores instead and try on
the unique fashions that Zara offers.

Manufacturing and Supply Chain Operations Make Zara Unique

Zara buys large quantities of only a few types of fabric (just four or five types, but they can change
from year to year), and does the garment design and related cutting and dyeing in-house. This way
fabric manufacturers can make quick deliveries of bulk quantities of fabric directly to the Zara DC –
the Cube. The company purchases raw fabric from suppliers in Italy, Spain, Portugal, and Greece.
And those suppliers deliver within 5 days of orders being placed. Inbound logistics from suppliers
are mostly by truck.

Zara’s factories can quickly increase and decrease production rates, so there is less inventory in
the supply chain and less need to finance that inventory with working capital. They do only 50 – 60
percent of their manufacturing in advance versus the 80 – 90 percent done by competitors. Zara
does not need to place big bets on yearly fashion trends. They can make many smaller bets on
short term trends that are easier to call correctly.

A Lean and Agile Supply Chain

Stores take deliveries twice per week, and they can get ordered inventory often within two days
after placing their orders. Items are shipped and arrive at stores already on hangers and with tags
and prices on them. So items come off delivery trucks and go directly onto the sales floor. This
makes it possible for store managers to order and receive the products customers want when they
want them, week by week.

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Zara stores respond practically in real-time as styles and customer preferences evolve. It is a great
business model for success in the high-change and hard to predict fashion industry. It means about
half of the clothing the company sells, which includes most of its high margin and unique fashion
items (but not its lower margin basic items), is manufactured based on highly accurate, short-term
(2 – 6 week) demand forecasts.

Zara spends its money on opening new stores instead of spending a lot on ad campaigns.
Estimates vary on the number of Zara stores worldwide. An article in the New York Times
Magazine (November 2012, “How Zara Grew into the World’s Largest Fashion Retailer”, placed the
store count at around 5,900. An article in Forbes simply states there are “more nearly 3,000
stores” (June 2019, “The World’s Most Valuable Brands – #46 Zara“, see bibliography below).
Annual sales for 2018 were estimated by Forbes to be $21.3 billion. The holding company, Inditex
SA, is a public company and Inditex provides annual statements, but it does not break out Zara
sales from sales of the other brands owned by Inditex (Pull&Bear, Massimo Dutti, Bershka,
Stradivarius, Oysho, Zara Home and Uterqüe). Zara also uses a flexible business model where its
stores can be owned, franchised or co-owned with partners. So it is not always possible to find
exact numbers for Zara’s business operations and finances.

Source: Hugos, M (2020). CASE STUDY CONCEPT: Zara’s Unique Business Model is Driven by Its
Supply Chain Capabilities [online] https://www.scmglobe.com/zara-clothing-company-supply-
chain/ [Accessed 25 February 2022].

Question 1 (Marks: 40)

Q.1.1. In light of the above case study and with the aid of your prescribed textbook, (4)
provide your own definition of a supply chain.

Q.1.2. Explain any three elements of the Zara supply chain. (12)

Note, you are required to paraphrase the element before you apply it to Zara.

Q.1.3 Supply chains are constantly impacted by global trends. Supply chain (8)
practitioners need to be constantly scanning the environment to be aware of
trends so that the company can adapt.

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Discuss any two trends in the supply chain and indicate whether you believe
Zara is aware of the trend or not.

Note, you are required to paraphrase these trends before you apply them to
Zara.
Q.1.4. A central question for supply chains is the make or buy decision.
Q.1.4.1 In your own words, differentiate between the make or buy decision. (4)
Q.1.4.2 Explain which option Zara uses with supporting points from the case (4)
study.

Q.1.5 As organisations compete and grow in size, they tend to expand their operations (8)
to span across the globe as with Zara.

Discuss any two entry strategies for the global market you believe Zara utilises.

Note: you are required to paraphrase the strategies before you apply them to
Zara.

Question 2 (Marks: 30)

You are attending an interview for a supply chain management graduate position in the Office of
National Treasury and the interview panel would like you to submit an essay in which you discuss
the pillars of the government sector supply chain management.

Your essay must include but is not limited to:

• The essay should have an introduction, body, and conclusion.

• A paraphrased explanation of the five pillars.
• A brief reflection (at least two points) on what you believe to be the most important pillar
given the current socio-economic conditions in South Africa as well as the broader contexts
of mismanagement, tender irregularities, and fraud in the South African Government
institutions.

Word count: 1200

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Question 3 (Marks: 30)

Q.3.1 The purchasing function is a complex and unique function within the business. A (10)
business can engage in domestic and international purchasing. Discuss the
differences between these two types of purchasing with the aid of detailed
examples.

Note, are required to paraphrase each type of purchasing and may conduct
additional research when providing examples to support your explanation.

Q.3.2 Quality management has many dimensions. Choose a product/service you are (20)
familiar with and relate each of the following dimensions to your chosen
product/service.

• Aesthetics
• Performance
• Service
• Warranty
• Features

Note: you are required to paraphrase each dimension before you apply it to your
chosen product/service. You must relate the chosen good/service consistently
against each of the outlined dimensions. More marks will be awarded for the
originality of chosen good/service rather than taking examples from the
prescribed textbook or Lean

[TOTAL MARKS: 100]

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