Transports and Logistics Management

Select an international organization, either in the Apparel sector or in the

Electronics sector, use it as a case study. Relate this case study to the transport and

logistics activities of the selected organization.

 Table of Contents
1. INTRODUCTION...................................................................................................................... 3

2. BODY........................................................................................................................................ 3

2.1. ASSESS THE INTEGRATIVE NATURE OF MANAGING SUPPLY CHAIN AS EXEMPLIFIED IN ZARA
IN ACHIEVING ITS COMPETITIVE ADVANTAGE.....................................................................................................4

2.2. DESIGN AND EXPLAIN A TRANSPORT MANAGEMENT SYSTEM TO SUPPORT A SMOOTH FLOW

OF LOGISTICS ACTIVITIES FOR ZARA................................................................................................................5

2.3. DISCUSS FOUR FACTORS OF CUSTOMER EXPECTATIONS IN RELATION TO THEIR
DISTRIBUTION MANAGEMENT OF ZARA............................................................................................................7
2.4. DISCUSS FOUR CHALLENGES FACED BY ZARA IN MANAGING TRANSPORTATION AND
LOGISTICS ACTIVITIES.......................................................................................................................................9

2.5. DISCUSS FOUR ASPECTS TO ENHANCE SUSTAINABLE LOGISTICAL ACTIVITIES AT ZARA......11

3. CONCLUSION........................................................................................................................ 12

4. REFERENCES.............................................................................................................................. 14

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1. Introduction

Zara is one of the leading companies in the world’s fast fashion industry.

Originated from Spain as a fashion clothing and accessories, it was founded in 1975

as part of the Inditex group, and soon attained a quick expansion worldwide based

on its key concept of spreading a single fashion culture outside the national frontiers.

The company is among the pioneers in the introduction of new trend of fast fashion

production and distribution to the developing countries. There are many factors that

could be attributed to the enormous success of Zara, which lies in the core of its

operations with cross-functional operation strategies, well-managed inventories,

mass production under push control, and its famous vertically integrated supply

chain management (de Jorge Moreno & Carrasco, 2016). In this report, the author

shall assess the case of Zara to demonstrate analysis into different aspects of

transports and logistics management for a successful international penetration and

success. An assessment into how an integrated supply chain management system

could drive a company’s competitive advantage will first be presented, reflected

through the actual example that Zara has illustrated, followed by suggestion into a

transport management system that could enable the smooth flow of logistics

activities for the company. Furthermore, customer expectations shall also be

considered for building a suitable distribution management, while the main difficulties

faced in transportation management shall also be identified. The report will conclude

with discussion into key aspects that could enhance the logistical activities of Zara

into a more sustainable approach that could help it thrive and prosper in the long run.

2. Body

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2.1. Assess the integrative nature of managing supply chain as exemplified in Zara

in achieving its competitive advantage

The main motive for Zara to drive its success is through hierarchical

implementations, whereby it managed to design, manufacture, distribute and sell

products within a mere loop of every two weeks from the initial product showcase on

catwalks (Royo‐Vela & Casamassima, 2011). This is remarkably much faster

compared with the norm of six months for the fashion industry to change items. To

support this speed of changing clothing designs, the key lies in the adoption of

Zara’s highly responsive supply chain that is crucial to its business success, which

also demonstrates the integrative nature of supply chain management through a

vertical integration approach that has enabled the fostering of competitive advantage

for the brand. Integrated supply chain management is widely deemed as the answer

to enable the success of fast-fashion retailing for companies in general and for Zara

in particular. This is an efficient enterprise resource planning approach to supply

chain management that involves the facilitation of relationships with all suppliers and

management of all distribution and logistics activities through a centralized system

rather than the usage of multiple non-integrated system within the organization. The

main purpose for this integration is to eliminate waste and maximization of profits

thanks to enhanced efficiency.

The integrative nature of supply chain management is clearly illustrated in the

case of Zara when the company applies a vertical integration of steps including

design, product distribution and retailing. As for designing part, about 200 fashion

designers are in charge for the clothing line and select the most cost-effective

materials and fabrics for their designs (Papadopoulou, Papasolomou, & Thrassou,

2022). Next, after fabrics are selected, the designs will then be made into models

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and sent to the factories for manufacturing and production. At this step, the

technology will be leveraged when the computer will design the shearing of fabrics in

manners that the resulted in the least waste possible. Subsequently, fabrics will then

be sent to the factories for sewing and later proceeded with button nailing, ironing

and inspection. There also exist underground transmission channels that connect all

these processes and do the trademark labelling for the products to be distributed in

different countries. This integrated supply chain has helped to sharpen the

competitive advantage for Zara significantly as their reliance on centralized order

fulfillment serves to maintain the operations streamlined towards the robust

distribution network that can attain a quick delivery of commodities within 24 hours

for stores in the EU region, and within a mere of 40 hours for American and Asian

stores (Emerald Insight, 2013). This distribution network has enabled their short lead

time and the ability to provide products to the customers on a timely manner. Their

adoption of information systems for this integrated chain of supply also helped with

speeding up of complex tasks, reduction of cycle time and optimizing operation

accuracy, or ease of product identification with RFID technology that could help with

keeping track of inventory in an extremely efficient way (Lopez & Fan, 2009).

Overall, with the adoption of integrated supply chain management in a vertical

approach, Zara has remained its competitiveness in the fast fashion market.

2.2. Design and explain a transport management system to support a smooth flow

of logistics activities for Zara

Given the integrative nature of supply chain management and how it can help

to boost up the efficiency of the business, the presence of an effective transportation

management system will play a key role in supporting a smooth flow for logistics

activities of the company. There are many benefits associated with the deployment

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of a transportation management system, such as the provision of a central platform

for management of all aspects of transportation such as planning of route, selection

of carriers, tracking of shipments or management of invoicing. A transport

management system, with the aid of centralised information as well as generation of

insights from data, can help companies optimize their logistics functions, as it can

help to find the most efficient routes for shipments after considering various related

elements such as distance, cost, or delivery time (Mazaira, González, & Avendaño,

2013). A systemized transport management often includes data analytics that

provide valuable insights into the operations of the company, thus supporting them

with intelligence to make data-driven and informed decisions. Besides the core

functions of transport management, there can be further features that operate in an

all-in-one system for better tracking and operation of the transport management

system, such as freight auditing or payment functions, where the invoices are

accurately tracked or the carrier management could help maintain the relationships

with multiple suppliers, ensuring the best rates are attained based on the automation

of algorithms that could decide based on pricing and service levels (Cambra‐Fierro &

Ruiz‐Benitez, 2019).

For a smooth flow of logistics activities, Zara can consider enhancing its

transport management to optimize much better efficiency, given how the company is

focusing on a much faster cycle of new fashion lines that occur every two weeks.

This short internal require processes in the whole supply chain to be well connected

and integrated, especially in the transportation part that holds a crucial role in the

chain. Given such characteristics, it is advisable that Zara should adopt an all-in-one

ERP (Enterprise Resource Planning) system that has different modules such as

Sales Management, Inventory Management, Transport Management, Manufacturing,

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Accounting, etc. Instead of buying licenses of different software that serves a single

function, having an integrated system shall enable efficiency significantly while

reducing costs. As for the Transport Management System, this will be a module

within the whole ERP program, with core features that should be available for Zara

including Freight Management, Execution, Planning, and Reporting. First, with freight

management, it will help Zara store the rates charged by different carriers for

shipping in a real time manner. This will help centralize of rate information that can

help make quicker comparison, or even negotiation with couriers can be done online

as well. This can also support with other transport workflow and paperwork involved

such as the updates of the statuses or form generation for standardized documents.

Second, execution will include major actions of freight management such as booking

of shipments (Kim, 2013). This will be integrated with GPS (Global Positioning

System) for real time communication with drivers in transit as well as measuring of

time and distance. The next feature that is also crucial for Zara is planning, which is

driven by data and analytics function in the system, optimizing the whole process

with better efficiency. Finally, this system will also support administration tasks such

as regulatory compliance or auditing conformation. With these core features in place,

it will help all the steps in the whole chain to be integrated seamlessly.

2.3. Discuss four factors of customer expectations in relation to their distribution

management of Zara

Logistics and distribution management is considered the key component that

leads to the success of Zara in the fast-fashion retailing industry. With its short cycle

that has made other rivals follow suit by cutting down on their interval of new product

launching, Zara with its integration of information, movement of goods, stocking,

storage, etc has built up a lucrative distribution system that has the full commitment

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to the contentment of the consumers. Therefore, there are various factors of

customer expectations that are associated with the operations of distribution and

logistics in Zara.

The first and foremost element in expected by the customers of Zara is its

accessible physical facility for ease of accessing their products. Though the current

period is highly dominant by online shopping, the physical stores are still holding a

strong importance in appealing the customers as well as helping distribute the

products to consumers in a much more direct manner (Cook & Yurchisin, 2017).

Zara is driving this expectation with their signature of advertisement through shop

windows to converse its trademark figure. Most of the Zara stores are in strategic

location in a city that has the most traffic, therefore, instead of having to invest in

mass media promotional campaign, its direct distribution to the physical stores is its

take on attracting customers and managing their expectation and leveraging the

interaction with customers to enhance their sales.

The second factor of customer expectation for the distribution of Zara is how it

manages to guarantee the consumers with provision of adequate stock in a much

real-time manner compared to other competitors such as Topshop or H&M. This is

because Zara own its in-house production unit, which can help with enabling of

flexibility in variety, quantity and regularity of new styles. The company also expands

to exploit its distribution management to boost up the customer expectation in the

sense that it even allows specific products to be produced for certain retail stores

depending on the demand forecast for the certain shop (Chen, 2019). Therefore, the

availability of stock to suit with the demand is one aspect that drive the satisfaction

levels for the customer significantly.

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 The next satisfaction factor for distribution management of Zara is its agility,

which is reflected by its ability to deliver products to European countries in just 24

hours, and in 48 hours for farther locations in America or Asia. This is achieved

thanks to its system of demand monitoring that plays a vital role in the distribution

process, whereby only the demanded products are delivered, and the unmet

demand will be assured to be supplied in the shortest time possible to meet with its

quick change of fashion cycle.

The four factor that affects the expectation of the customers in how Zara

manages its distribution of products is apparently its reactive production model

supported by the just-in-time mechanism. Zara is the pioneer brand that can manage

to drop new products in smaller collections many times within a season that are

designed based on must-have trends. It gives customers the sense of ‘exclusivity’ if

the trend does not stick and even urges the customer to make their purchase at full

price, by understanding the fear of missing out symptoms on consumers. Zara, by

understanding these expectations, are building up its distribution to meet such needs

and retain their consumers.

2.4. Discuss four challenges faced by Zara in managing transportation and logistics

activities

Though Zara has successfully developed its own approach to handle changing

demand in the fast-changing environments of the fashion retail industry, its current

transportation and logistics activities are still faced with challenges that endanger the

success and sustainability of the company in the long run. These challenges include

increasing costs in its distribution chain that is closely associated with the widening

operations outside of its home country Spain; disconnection between the centre and

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creative department; trends for sustainable clothing; and recycling focus in the next

business direction.

First, one of the biggest challenges that Zara is facing is the increased costs in

its distribution chain, given how it is expanding its operations in China. Previously,

the main hub for production of Zara products is still in Spain, however, now that it is

expanding its operations outside the country, the costs will significantly increase

given the required capitals for new warehouses, purchases for equipment, costs of

labour and other new facilities (Barnes & Lea‐Greenwood, 2016). However, this is

also to address the costs for sole operations in Spain, for example, if every time an

order is placed and that items must be shipped back to Spain for adjustments and

inventory stocking, it can also trigger associated costs as well. Therefore, aligning

with the expansion of production hub in China, Zara needs to address its cost

increasing challenge.

Second, given the current issues in the European region, it is possible that the

transportation and shipment of materials might be faced with unforeseen

complications such as severe weather conditions, terrorism, political disturbances or

labour strife (Camargo, Pereira, & Scarpin, 2020). This will affect the connection

between the centre and the creative department and thus can negatively impact the

exchanging of information within the network and the world. For a fast fashion

company when the life cycle is extremely short down to two weeks, this will pose a

big problem for its smooth operation.

The third challenge is that there emerge the big trends for customers rooting for

sustainable clothing. Consumers are becoming more and more environmentally

conscious consumers, which will affect the complete model of fast fashion when

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consumers tend to purchase less than they used to (Emerald Insight, 2015). Though

this trend is not endangering the company and the industry right now, it raised a

concern for companies to consider the adoption of sustainability in the business

conduction.

The fourth challenge is the raise of recycling in fashion industry. Though Zara

under its mother company Inditex which is among the players that have enough

financial power to push recycling technology in its production. However, with the rise

of clothes renting trend, the process of lending and then sending them back for

cleaning before renting to the next client can place pressure on the transport and

logistics activities.

2.5. Discuss four aspects to enhance sustainable logistical activities at Zara

Though Zara is still achieving significant success with its business, there are

still room for improvement that could help the company enhance its logistical

activities in a more sustainable manner.

The first aspect that Zara can consider improving is to foster its lean inventory

philosophy by the expansion of its e-commerce activities. The adoption of e-

commerce is proven to help with maintaining a lean inventory because the products

will only be availed based on the demand (Kaipia & Hartiala, 2016). Therefore, the

company can consider the usage of the current distribution network to increase its

online presence and ship the products directly to the customers. This is especially

applicable in the current market situation after the pandemic hit the world, when

online business is witnessing a surge, urging Zara to strengthen its e-commerce

activities and focusing its smooth online handling for its logistical activities.

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 Second, though the approach that Zara took in supply chain management was

unique and brought it tremendous success, it is important to realise that it will be

applicable for the initial phases only, and later in its long-term development, Zara

should build strategic alliances with competitors in supply chain management. This is

aligned with the ideal of co-opetition of logistics, where the formation of horizontal

collaboration would help the company avoid supply chain disruptions.

Next, Zara could consider the adaption of its business model towards a slow

fashion approach to align with the sustainable development goals. As the current

model, it is posing significantly unsustainable impacts to people as well as the

planets, therefore, Zara as the leading in global fashion world, should really adjust is

model and subsequently its associated logistics activities to support these

sustainable goals.

Finally, Zara can aim to achieve sustainable logistical activities by adopting

green logistics, including the switch to use electric vehicles for transportation,

reduction of reliance on air freight as well as using green packaging instead of using

plastics that would result in more waste, especially in the addition of online presence

that often involves enormous packaging.

3. Conclusion

Through the case of Zara – a successful company that has leveraged its

business achievements in the usage of an integrated supply chain management –

various facets of transport and logistics management has been discussed in depth.

Overall, it is advisable that companies operating on a global basis like that of Zara

should adopt an efficient transport management system that acts as a centralized

source of information where optimization can be enabled through data analytics.

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Also, companies should look out for sustainable practices to meet with the future

trends as well as help its business thrive in the long run.

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4. References

de Jorge Moreno, J., & Carrasco, O. (2016). Efficiency, internationalization and market
positioning in textiles fast fashion: The Inditex case. International Journal of Retail
& Distribution Management, 397-425.

Royo‐Vela, M., & Casamassima, P. (2011). The influence of belonging to virtual brand
communities on consumers' affective commitment, satisfaction and word‐of‐mouth
advertising: The ZARA case. Online Information Review, 517-542.

Papadopoulou, M., Papasolomou, I., & Thrassou, A. (2022). Exploring the level of
sustainability awareness among consumers within the fast-fashion clothing industry: a
dual business and consumer perspective. Competitiveness Review, 350-375.

Emerald Insight. (2013). Zara creates a ready to wear business: Leading fashion label designs
its whole operation to fit the customer. Strategic Direction, 24-26.

Lopez, C., & Fan, Y. (2009). Internationalisation of the Spanish fashion brand Zara. Journal
of Fashion Marketing and Management, 279-296.

Mazaira, A., González, E., & Avendaño, R. (2013). The role of market orientation on
company performance through the development of sustainable competitive advantage:
the Inditex‐Zara case. Marketing Intelligence & Planning, 220-229.

Cambra‐Fierro, J., & Ruiz‐Benitez, R. (2019). Advantages of intermodal logistics platforms:

insights from a Spanish platform. Supply Chain Management, 418-421.

Kim, B. (2013). Competitive priorities and supply chain strategy in the fashion industry.
Qualitative Market Research, 214-242.

Cook, S., & Yurchisin, J. (2017). Fast fashion environments: consumer’s heaven or retailer’s
nightmare? International Journal of Retail & Distribution Management, 143-157.

Chen, C.-J. (2019). Developing a model for supply chain agility and innovativeness to
enhance firms’ competitive advantage. Management Decision, 151-153.

Barnes, L., & Lea‐Greenwood, G. (2016). Fast fashioning the supply chain: shaping the
research agenda. Journal of Fashion Marketing and Management, 259-271.

Emerald Insight. (2015). How Zara fashions its supply chain: Home is where the heart is.
Strategic Direction, 28-31.

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Kaipia, R., & Hartiala, H. (2016). Information‐sharing in supply chains: five proposals on
how to proceed. The International Journal of Logistics Management, 377-393.

Camargo, L., Pereira, S., & Scarpin, M. (2020). Fast and ultra-fast fashion supply chain
management: an exploratory research. International Journal of Retail & Distribution
Management, 537-553.

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