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Table of Contents
1. Introduction:..................................................................................................................................2
Company’s Background.....................................................................................................................2
Four D’s:................................................................................................................................................2
Direct:................................................................................................................................................3
Four V’s..........................................................................................................................................3
Design:...............................................................................................................................................4
Just in time:...................................................................................................................................4
Deliver:..............................................................................................................................................5
Agile Supply chain:.........................................................................................................................5
Develop:............................................................................................................................................5
Recommendations:................................................................................................................................5
Conclusion.............................................................................................................................................5
References.............................................................................................................................................5
1. Introduction:
This essay intends to critically review Zara’s operational strategy and management from the
four aspects which are Direct, Design, Deliver and develop (Slack, et al 2009). I will be
critically reviewing each of the aspect with respect to Zara’s end to end operations.
Operations has become the hot topic in today’s business world. Effective supply chain
management is helping the firms to save lot of unnecessary costs and provide the goods or
services for the lowest possible price (Chase, et al 2018). So, an effective operations strategy
helps the firm to build competitive advantage, in fact many organizations are building better
products and maximizing customer satisfaction solely from their operations strategy (Hayes,
2006). And the reason for choosing Zara for this report is it is one of such organization which
has built competitive advantage and improved customer service from distinctive and efficient
operation strategy, the company understood the significance of operations and streamlined all
its process thus delivering superior value (Al-ajmi, 2020).
Company’s Background
Zara is Spanish based fashion retail company which was founded in the year 1974. Major
product line of Zara consists of clothing, footwear, perfume and other beauty accessories. The
company has more than 2270 stores all in prime locations and spread over many countries in
four continents. And according to fastretailing.com Zara is ranked number one in market cap
and sales figures. And its efficient operations strategy is one the core reason for Zara to top
the charts.

Four D’s:
As operations consists of many interconnected activities and process, I will be using the
general model of operations management which divides the overall operations into four main
areas as show in in figure 1.1 known as Direct, Design, Deliver and develop (Slack, et al.
2009). I will be critically review each of the aspect one by with respect to Zara’s operations.

Figure 1.1: Four

D’s model of
Operations
Management

(Image source:
https://graelaws.wordpress.com/ )

Direct:
This aspect deals with directing the overall operations strategy of the firm (Slack, et. 2009). It
deals how to define operations strategy to create a perfect synergy with company’s overall
business strategy. operations strategy is defined as setting the direction for long terms goals
of a firm’s operations function to support overall corporate strategy (Chung, 2003).
From Zara’s website (Zara.com) it says that the firm has put its customer at the heart of its
unique business model including its production, design, distribution and sales through its
extensive retail network, and its vision is to the operations strategy matches perfectly with its
overall vison,
According to Hayes and wheelwright (1984) four stage model of operation strategy, very few
organizations reach to stage 4 where its operations strategy gives competitive advantage for
the firm, Zara is at stage four where its exceptional abilities in design, development and
product and its efficient supply chain management to deliver refreshing designs every two
weeks where as the industry takes on an average of six months to do the same so it is which is
a way ahead of its competitors, Also Zara’s Lean inventory management and just in time
production makes Zara to be a world class manufacturer (QuickBooks, 2015).

Figure 1.2: Hayes and

Wheelwright (1984) four
stage model.

(Image source:
https://graelaws.wordpress.com/ )

Four V’s
Volume Low

Variety High

Variation in demand High

Visibility High

If we analyse four Vs by characteristic of operations process with respect to Zara, the volume
of Zara is low as it changes it designs for every two weeks and produces limited quantity to
create scarcity in the minds of consumers that the design may stock out, this also helps Zara
to Keep the inventory costs very low (Natasha, 2015). Coming to variety of products Zara
offers high variety of products as them shelfs update once in every two weeks (Aftab, et al.
2018). As there is a high variety of products and due to its online presence demand
forecasting for Zara is very challenging (García, 2014). And there is high variation in demand
from customer’s side. There is a high visibility for Zara’s products and it provides faster
response for customers (Al-ajmi, 2020). Coming to marketing Strategy Zara spends only 0.3
of its sales towards advertising whereas competitors spend 3 to 4% (Ferdows, et al. 2005).
Overall, we can say supply chain and efficient and sustainable business goals remain to be the
core in Zara’s success
Design:
Design aspect deals with designing the firms’ operations, products and services by determining the
processes to produce these products and services. Zara’s Designer’s will Design more than
40,000 garments out of which about 10,000 design’s reach the stores (Ferdows, et al. 2005).
As Zara’s updates it stocks twice in a month, its has Just in time Production and sophisticated
inventory management systems in place.

Just in time: it is a Japanese manufacturing philosophy to eliminate waste by planning and

continuous improvement of productivity (Matsui, 2007). Zara has a set up distribution network
called “The cube” which is the heart of Zara’s supply chain, which interconnects factories, stores,
suppliers and designers (Natasha, 2015). “The cube” has connected with 11 underground factories
owned by Zara with in 10kms of radius, and the Raw materials supply are mostly from Europe and
received with in just five days after ordered (Natasha, 2015). We can see in the figure 1.3 and
understand how integrated supply chain of Zara “the cube” is connected with stores, factories,
designers and suppliers And Zara keeps most of the production in-house which allows Zara
production to be flexible with the frequency, volume and variety. And the items sent to store are
fully finished by already putting them price and sales tags so that they can be directly displayed in
the stores
‘

(Image source: Natasha,

2015)

Figure 1.3: Zara’s

operating model through
its distribution centre
“The cube”
Deliver:
This aspect deals with
Delivering the goods
through logistic activity
and managing capacity
efficiently, at any given time, Zara doesn’t suffer with excess inventory or spend much on holding
inventory it only sends what is needed for a store in a limited quantity, as the designs are refreshed
for fifteen days with strong distribution network. They are number of quality checks are in control to
take care such that only defect free goods are reached to stores. And according to Zara’s website the
company is able to deliver goods from its warehouses to stores for a maximum time of 48 hours and
for stores located in Europe region it is even less than 24 hours (Zara.com)
Agile Supply chain:
Agility in supply chain means that making the supply chain responsive to the market demand and
these supply chains rely on Market information unlike forecast-driven conventional supply chains
(Christopher, et al 2004). and Zara has exceptional demand forecasting technology which predicts
the nearly accurate demand with the help of advanced technology information is accessible for
everyone in the supply chain from logistics operator to store manager, thus there is very less of
bullwhip effect, bullwhip effect is an uncertainty in demand information which leads to inefficiency
in supply chain and leads to excess inventory causing many problems (Lee, et al. 1997) so, Zara
manages the issue by centralized order fulfilment which helps in delivering the right inventory to
right place at right time in a highly efficient way.

Develop:
This deals about Sustainable activities taken by the firm helps in improving the current operational
processes (Slack, et al 2009), from sourcing to delivering the goods, Zara has been very conscious
about environment, Zara sources material and delivers in the most sustainable way for example: the
company is using only electric vehicles to deliver its goods and sources raw materials in the most
sustainable way a Zara has lot of sustainable initiatives in Place like “Closing the loop” and has a
mission to be Zero waste by 2023 (Inditex.com). Zara has lot of sustainable initiatives in Place like
“Closing the loop” and has a mission to be Zero waste by 2023 (Inditex.com). from this we can say
that the company has been following triple bottom line framework by caring and giving importance
to Planet, People and profits. as consumers are becoming more aware of environment,
environmental conscious activities will help the company to achieve competitive advantage

Recommendations:
Although from the report it appears that Zara has exceptional operational capabilities, but
Operations is such a filed that one can always look for improvements, and Six- Sigma is a
methodology to produce almost defect free production the company achieving Six-sigma is said to
be having less than 6 defects per million production ( Eckes, 2003). If Zara focuses on achieving six
sigma there is a huge benefit in terms of defect free production.

It can be seen that Zara has built efficient supply chain to warehouses and stores, but adoption of E-
commerce’s is increasing at a rapid rate, Zara can focus on faster delivery to customer’s home, and
has to build or partner with other logistic companies for efficient last mile logistics

. Zara needs to revamp its market Strategy and to spend more on adverting, so that it can target
broader customer segment.

Expansion of distribution centres and operations in developing countries as the demand may
increase in future

Conclusion:
Finally concluding, Zara Is the Unique player in the fast fashion industry which has built competitive
advantage on its efficient operations, it is way ahead in terms of Industry benchmarks like new
design’s for every two weeks. And delivery to stores with in 24 hours etc, all these are made possible
by agile supply chain and just in time and lean inventory management, like every company it has also
scope for improvement in some areas as mentioned in the recommendations.
References
Aftab, M.A., Yuanjian, Q., Kabir, N. and Barua, Z., 2018. Super responsive supply chain: The case of
Spanish fast fashion retailer Inditex-Zara. International Journal of Business and Management, 13(5),
p.212.

Al-Ajmi, N.M., 2020. Fast-Fashion Zara. Available at:

https://www.researchgate.net/publication/340446491_Operations_and_Project_Management_Fast-
Fashion_Zara_By_Noof_Malallah_Al_Ajmi (Accessed date: 23rd December 2021).

Chase, R.B., Shankar, R. and Jacobs, F.R., 2018. Operations and Supply Chain Management, 15e
(SIE). McGraw-Hill Education.

Christopher, M., Lowson, R. and Peck, H., 2004. Creating agile supply chains in the fashion
industry. International Journal of Retail & Distribution Management.

Chung, C.H., 2003. Operations Management.

Eckes, G., 2003. Six Sigma for everyone. John Wiley & Sons.

Ferdows, K., Lewis, M.A. and Machuca, J.A., 2005. Zara’s secret for fast fashion. Harvard Business
Review, 82(11), pp.98-111.

Flynn, B.B., Schroeder, R.G. and Flynn, E.J., 1999. World class manufacturing: an investigation of
Hayes and Wheelwright's foundation. Journal of operations management, 17(3), pp.249-269.

García, J.M., 2014. Demand forecasting at Zara: a look at seasonality, product lifecycle and
cannibalization (Doctoral dissertation, Massachusetts Institute of Technology).

Hayes, R., 2006. Operations, strategy, and technology: pursuing the competitive edge. Strategic
Direction.

Lee, H.L., Padmanabhan, V. and Whang, S., 1997. The bullwhip effect in supply chains. Sloan
management review, 38, pp.93-102.

Matsui, Y., 2007. An empirical analysis of just-in-time production in Japanese manufacturing

companies. International Journal of production economics, 108(1-2), pp.153-164.

Natasha, D., 2015 Zara: a Retailing Force to Be Reckoned With. Available at:
https://digital.hbs.edu/platform-rctom/submission/zara-a-retailing-force-to-be-reckoned-with/
(Accessed date: 25th December 2021).

Quickbooks.com., 2018 Zara Supply chain Analysis- The secret behind Zara success. Available at:
https://www.tradegecko.com/blog/supply-chain-management/zara-supply-chain-its-secret-to-retail-
success#:~:text=Synergy+between+Zara's+business+strategy,design+first+appearing+on+catwalks.
(Accessed date: 27th December 2021).

Slack, N., Chambers, S., Johnston, R. and Betts, A., 2009. Operations and process management:
Principles and practice for strategic impact: Financial Times Prentice Hall.

Zara brand analysis. (2018). 7. STRATEGIC RECOMMENDATIONS. [online] Available at:

https://sbmldanielle.wordpress.com/2017/06/02/blog-post-title-5/ [Accessed 20 Oct. 2018]