Amit - Zara SCM Proposal

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Research Proposal

Supply Chain Management Challenges in the Fast Fashion Retail Industry:

A Case Study of Zara

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Research Proposal - Supply Chain Management Challenges in the Fast Fashion Retail

Industry: A Case Study of Zara

1 Introduction

Modern day corporations realize that, in order to survive and thrive in a market environment that

is constantly changing, they need to increasingly rely on third party support. Supply chains are

no longer limited to a supplier-buyer relationship. Various aspects of a business such as product

life cycle have led to further complications in the formation of an effective supply chain. Supply

chain management has become of the most critical functions within an organization as it stands

to deliver the business with a clear competitive advantage over rivals (McGraw-Hill, 2013). The

growing emphasis on supply chain efficiency has led to extensive and wide spread research

being conducted on the subject. As a result various models of supply chain have been proposed

by scholars and experts in the field. The suitability of these models for a business depends on the

industry that it operates in (Bowersox, Closs, & Cooper, 2002). In the case of the fast fashion

industry, manufacturers have to find a fine balance between sourcing and creating quality

products and distributing them with as much efficiency as their globalized operations permit.

Sustainability has become an imperative, with supply chains needing to be highly flexible and

adaptive to cope with the swiftly changing demands of the market and strategies of the

organization (Cai-feng, 2009).

1.1 Problem Statement

The constantly evolving market environment in the fast fashion industry makes it an imperative

for organizations within the industry to have highly efficient supply chains. While some fast

fashion brands such as GAP and Marks and Spencer’s tapped onto the globalization early and

were hence able to adapt their supply chains to meet the demands of a geographically wide

operation (Cai-feng, 2009). However, Zara had been focused on catering to the European market

and has only recently begun to diversify its operations into the further off Asian markets. As

such, its supply chain may not be organized in a manner to enable it to cope with the demands of


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such an expansion. As such, it will need to understand the challenges that its current supply chain

model will face should the company continue with its expansion into new markets.

1.2 Importance of Research

Considering the critical part that supply chain management plays in giving companies a

competitive edge, understand the challenges that fast paced changes in the operational

environment is critical for creating optimized and efficient supply chains. Particularly in the fast

fashion industry, the need for constricted time-to-market of products and adapting product

designs to meet rapid changes in fashion, supply chains management needs to focus on flexibility

and agility. By studying the challenges faced by Zara’s current supply change, this research will

present a consolidated set of issues that would enable the formation of supply chain model more

adept at addressing the needs of modern fast fashion companies.

1.3 Aims and Objectives

This study aims to evaluate the challenges faced by the fast fashion industry supply chain

through a case study of Zara’s supply chain management approach. By doing so, the study,

through the synthesis of extensive existing and current literature, will bring to the forefront the

challenges facing the industry’s supply chain management approaches. Hence, the study’s

objective is to deliver meaningful analysis of supply chain challenges in the fast fashion industry

to facilitate the formulation of more effective supply chain strategies.


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2 Literature Review

This section of the paper will provide the reader with an in-depth understanding of the theoretical

foundations of the research – supply chain management, with a focus on the specific industry

being studied – the fashion retail industry.

2.1 Supply Chain Theory

The primary objective of the supply chain management is to stay efficient yet as economical

across the complete supply chain structure. Hence, the main target of supply chain management

is not simply on decreasing inventories or the value of transportation rather has to do mostly with

the development and implementation of a systems approach (Frazelle, 2002, p. 8).

Since supply chain management covers the economical integration of warehouses, suppliers,

makers and stores, there is a need to stay attentive to the actions of the organization most times,

from the strategic level to the operational level. The strategic level problems have more to do

with choices which would bear long lasting effects on the organization. At the operational level,

supply chain management encompasses regular choices that require to be taken by the

organization together with on time scheduling, quotations, routing and truck-loading (Delfmann

& Albers, 2000).

Each call taken within the supply chain management system delivers a significant proportion of

queries and trade-offs. The pattern of the distribution network of an organization, for example,

falls inside the compass of the supply chain management and this can be a severe downside for

enhancement which warrants improved approaches and technology emerge with up with an

answer. Supply chain management has to select a group of warehouses, their capacities and their

locations. Hence, deciding the assembly levels for each product in a particular unit and

establishing transportation routes inside the amenities in an efficient way that minimizes

production, total inventory, and transportation prices (Delfmann & Albers, 2000).

The associations that are formed between the purchasers and the suppliers are forged with the

assistance of supply agreements that specify pricing and discount volumes. Lead time of

deliveries, quality and returns also included. It can be difficult to discount the influence of

volume discount and revenue-sharing contracts on the efficiency of the supply chain. Supply

chain management is critical in the effectiveness of distribution strategies which are one of the


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key challenges faced by any organization. The judgment pertaining to what level of the

distribution system should ideally be centralized or decentralized could be established through

the supply chain management system (Oliver & Webber, 1992).

The supply chain consists of a complicated network of amenities that have been scattered over a

broad region and, often, throughout the world. Of the diverse services existing under the sphere

of supply chain management, all have contradictory and changeable goals. The supply chain is a

vibrant system that goes through advancement as time progresses (Belaya & Hanf, 2011).

Consumers not only enquire about the competencies of the supplier and manufacturer and ask to

change with time, but the associations of the supply chain can also be altered. As the influence of

the consumers increases, a greater pressure is positioned on the manufacturers and suppliers to

forge a diverse offering of high-quality goods and hence manufacture tailors products for

customers. There is also a need to regard the time based system fluctuations in the supply chain

management system. During periods when the exact degree of demand is identifiable, the

planning process should include the demand and cost constraints over the various periods of time

due to the sway of the changes based on specific changes, promotions, advertising, trends, and

competitive pricing. These aspects which change over time, and demand, make it difficult to

comprehend the most effectual supply chain management policy.

An assimilated, globally optimized supply chain can have a substantial impact on the efficiency

of a company and the market share it commands. Recently, companies in general favor

integrating their supply chain and enter into strategic associations to be able to acquire greater

power. Partnerships are predominantly take the form of collaborations of two or more

organizations. This has a significant impact on the operational mechanism of the current supply

chain management system of the organization. The partnership aspect drives organizations and

businesses to re-evaluate the supply chain strategy that they follow as it focuses on coordinating

the different functions within the supply chain in addition to ensuring the identification of items

that need to be purchased from external sources and those that can be manufactured internally

(McGraw-Hill, 2013).

Supply chain collaborations have, since the mid-1990s, been promoted rather vigorously by

scholars and consultants (Center for Logistics and Supply Chain Management, 2003). It was


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found that the establishment of an easy to manage, synchronized supply chain would be more

attractive as would lead to lesser inventory expenses and higher responsiveness (Mclaren, Head,

& Yuan, 2004). Supply chain collaboration may take several varied forms, however, it mostly

reveals itself as the common objective to establish demand patterns that have high clarity and

visibility, and that would be applicable to the comprehensive supply chain (Maloni, 1999).

However, organizations have not come to utilize the full possibilities of the advantages that can

be derived from external collaborations. The utilization of demand visibility can be made use of

to improve capacity utilization and inventory turnover. Organizations generally tend to have

conflicting short-term objectives and these contradictions hold the potential of lowering the

dedication of supply chain collaboration and sharing of comprehensive common demand data.

Due to the intricate and complex nature of the global chain of supply, it can be difficult to

establish which approach would be best suited for integrating external supply chain collaboration

initiatives with internally managing inventory and internal collaboration of the supply chain, As

a result, many organizations find it to be a challenge to derive the full potential of benefits for

their initiative of forming associations and collaborations with partners in the supply chain (Brau,

Fawcett, & Morgan, 2007).

2.2 Supply Chain Management in the Fashion Retail Industry

As discussed earlier, changing environment in global markets requires supply chain to be highly

agile. The life-cycles of products as well as technology will continuously become shorter while

demand is expected to become increasingly unpredictable (Cai-feng, 2009). Changes in

consumer behaviour have revealed that changes in style are being demanded more frequently

(Bruce & Daly, 2006). These developments play a critical role in determining the synergy

between suppliers, retailers, and consumers.

In the fast fashion industry, SCM can provide organizations with a significant competitive edge.

As the industry has become highly time sensitive, particularly in terms of time-to-market of

products, an agile supply chain enables them to identify and capitalize on opportunities faster

than rivals. An Agile Supply Chain or ASC is swifter, shorter, driven by demand, and more

flexible when compared to other supply chain models (Barnes & Greenwood, 2006). Information


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including inter-business information sharing and market data is a critical component of ASC.

This allows ASC to be more responsive to volatile demand.

The case of the fashion brand Zara is a good example of the effectiveness of this information-

centric supply chain management model. Established in 1975 and retaining its headquarters in

Spain, the company today has a fast growing global presence with over 1,770 stores in 86 nations

(Bertfield & Baigorri, 2013), with sales totaling US$13.6 billion in the year 2012 (Loeb, 2013).

The company has a closely integrated team of product managers and designers who

comprehensively handle the design, sourcing and production of products. Another important

aspect of Zara’s supply chain is the it manufactures products locally in the markets where is

sells. The integration of functions and in-house manufacturing enables it to drastically shorter

lead times – with goods being replenished in less than 2 weeks – and makes for greater flexibility

(Loeb, 2013).

Although Zara’s supply chain is considered to be its biggest competitive advantage, it has not

been mimicked by its rivals (Bertfield & Baigorri, 2013). One of the major reasons for this may

be that Zara is not yet as globalized as its rivals such as Marks & Spencer’s or GAP. Its highly

focused and controlled manufacturing abilities and the efficiency of its integrated supply chain

will be greatly tested as the company continues to expand into new and emerging markets,

particularly China (Bertfield & Baigorri, 2013). With over half its product offering being

manufactured at its unit in Arteixo, Spain, managing inventory and maintaining supply to far off

geographies while minimizing time-to-market will be a key challenge. Another major factor that

will put strain on the agility of the company’s supply chain is the fact that, regardless of where

its products are manufactured, they are first shipped to its Spain headquarters to be distributed to

its stores across the world (Bertfield & Baigorri, 2013).

The company produced its fashion range at its Spain headquarters as well as units in Turkey,

Morocco and Portugal, whereas basic and regular products are produced at low cost in Asian

units. These basic products are ordered six months in advance. However, while rivals produce 8-

% of their products that far in advance, Zara only manufactures 50%. While this enables the

company to makes changes based on new trends, it also raises the risk of not producing enough

to meet spikes in demand (Bertfield & Baigorri, 2013).


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2.3 Conclusion

From the review of the theoretical literature on supply chain management, it has been revealed

that SCM has become an integral part of a successful business strategy. In the fast fashion

industry, supply chains need to be highly agile and adaptive in order to meet the increasingly

volatile consumer demands and changes in consumer behaviour. As a fast growing global

fashion brand, Zara faces a set of unique supply chain challenges. While its centralized and

highly controlled supply chain has served it well so far, the company will need to make drastic

changes to its supply chain if it is to successfully tap into new and emerging markets. As the

company attempts to reach geographies that are farther off that its major production facilities and

centralized distribution centre in Spain, it will need to review its supplier base, manufacturing

capabilities and distribution and logistics network.


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3 Methodology

This study happens to be a descriptive and qualitative case study of the supply chain challenges

facing the fast fashion retail industry. The research will focus on a case study of the fashion

brand Zara and the supply chain challenges it is currently facing. The tactics used for the purpose

of research offer a real sense of direction in terms of the formation of the structural pattern and

helps analyse the research elements from reality.

3.1 Research Method

Descriptive in nature, the research outlines the process of supply chain management and the

ongoing quest for power in order to ensure sustainability. The research is even going to include

explanatory analysis to evaluate the effect of collaborative practices on the power dynamics

across various industrial sectors. The study will rely on data collected by earlier research, albeit

research conducted in or after the year 2008. This is because these researchers have all the tools

and knowledge to conduct the study. This form of research was chosen as facts are easily

obtained. The accuracy of this method is also reliable (IHMCTAN, 2006).

3.2 Data Collection

In the case of this particular paper, statistical, opinion or numerical information that has been

collected and made available by the institutions or researcher will be taken into account. Both the

internet along with published volumes has been utilized for the accumulation of information.

Various literatures regarding the supply chain management in the fashion retail industry will be

identified and studied. There are different researches which have been carried out in this field

and this will enable the collection of data regarding this field. This will be a tangible source of

information and the researcher will also ensure that the literature is relevant to the research. This

will be undertaken by ensuring that the information comes from sources that are focused on the

field of either supply chain management or the fashion industry (Panneerselvam, 2004). The

target population is the scholars who have undertaken similar researches. The researcher will

ensure that the work done by these researchers are related to the research that is currently being

undertaken.


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The sources for this information will be from the internet, books and articles. This will be a sure

source of information. The data collection methods that will be used in this process will be

surfing through the various database repositories that contain academic literature articles

(Sapsford & Jupp, 2006, p. 124). These articles will be used to get the required information.

There will also be books and articles from libraries that will be used in the research. The articles

that will be obtained from the library have already been approved by other scholars regarding

supply chain management and its challenges in the fast fashion retail industry (Coolican, 1994).

3.3 Data Organization

There will be a need to organize data that has been obtained from the literature. The information

will be organized basing on the relevance to the subject matter and on the two issues that will be

analyzed in the research. Information obtained will either be assessed on its relevance to supply

chain management or the fashion retail industry (Coolican, 1994). This will then be assessed to

see if the literature addresses the issue of the supply chain management challenges being faced

by the fast fashion industry. Beginning with an introduction to the study which will include its

purpose, aims, objectives, research questions and managerial outcomes, the study will then

proceed to the literature review section. As discussed, this section will give the reader an insight

into the theoretical foundations of the study. Next, the methodology section will provide the

reader with an extensive elucidation of the research methods, data collection and analysis

techniques employed by the researcher. A separate section will be dedicated to the case study of

Zara, which will be placed immediately after the methodology chapter. After the case study, the

Findings chapter will provide the reader with meaningful insights based on the links between the

case study and the aforementioned theoretical foundation. The findings will be aimed at

identifying the challenges that Zara’s supply chain will face in the coming years. The study will

end with conclusions and recommendations. This structure will make the retrieval of important

information and its analysis easier.

3.4 Data Presentation

The presentation of the data is another important aspect that will be considered. The data will be

presented in digital format and hardcopy format. There will be the analysis of literature review

on the perceptions of different supply chain management and fashion industry professionals on


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the challenges faced by the supply chains in the fashion retail industry. There will be the analysis

of the supply chain management techniques, their applicability and effectiveness in the fashion

retail industry, and the challenges identified for the future (Panneerselvam, 2004). In order to

highlight the focus on the Zara case study, it will be presented in a section separate from the

literature review. This will allow the reader to easily understand the unique case of Zara, its

supply chain success so far and what are the challenges it is expecting to face in the following

years.

3.5 Validity and Reliability

Existing efficient research will be accepted and utilized in the form of Case Study. It is possible

to gather statistical data from current reliable sources as part of the highly efficient researches

along with the international organizations (Stenbacka, 2001).

Validity: Research instrument actually measures what it is supposed to be measured. It is an

important aspect which should be measured in the research. The validity of the study will arise

from the fact that the researcher will attain data from the literature with has a robust context of

validity and reliability itself (Seale, 1999). The validity of this information will be based on the

source of this literature.

Reliability: The reliability of the data will be obtained by using information which has been peer-

reviewed. This is information which has been analyzed by other scholars (Strauss & Corbin,

1990).

3.6 Ethical Consideration

Any sort of oversight or error in this aspect, if located on the paper after the process of

submission is complete, needs to be corrected at once by the professional researchers using only

the methods that have been deemed acceptable and efficient. It is the duty of the researcher to

make sure that no doubts exists involving the various methods and procedures used during the

course of the research prior to finally submitting the paper through the process of resolution.

Finally, the researcher has to ensure that data and information used from other works has been

cited in-text and credited rightfully.


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3.7 Limitations

Possibly the biggest limitation of this study is that it does not include any primary data

whatsoever. The research was at a disadvantage of not being in a position to conduct meaningful

primary research, as a result of which this limitation arises. Secondly, although the researcher

will be extensively evaluating a vast number of secondary sources, the synthesis of information

derived from these sources will be on the researchers own accord. While the researcher will

strive to base the analysis on the theoretical foundations discussed earlier, there is scope for

personal bias and preconceived notions to seep into the study.


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Works Cited

Barnes, L., & Greenwood, G. (2006). Fast fashioning the supply chain: Shapping the research agenda. Journal of Fashion Marketing and Management , 10 (3), 259-271.

Belaya, V., & Hanf, J. H. (2011). Power and Supply Chain Management - Insights from Russia. GEWISOLA .

Bertfield, S., & Baigorri, M. (2013, November 14). Logistics - Zara's fast fashion edge. Retrieved April 4, 2014, from Bloomberg Businessweek: http://www.businessweek.com/articles/2013-11-14/2014-outlook-zaras-fashion-supply-chain-edge

Bowersox, D., Closs, D., & Cooper, B. (2002). Supply Chain Logistics Management. New York: McGraw-Hill.

Brau, J. C., Fawcett, S. E., & Morgan, L. (2007). An empirical analysis of the financial impact of supply chain management on small firms. Journal of Entrepreneurial Finance , 12 (1), 56-81.

Bruce, M., & Daly, L. (2006). Buyer behaviour for fast fashion. Journal of Fashion Marketing and Management , 10 (3), 329-344.

Cai-feng, L. (2009). Agile Supply Chain. Management Science and Engineering , 3 (2).

Center for Logistics and Supply Chain Management. (2003). Creating Resilient Supply Chains: A Practical Guide. Bedford: Cranfield University.

Coolican, H. (1994). Research methods and statistics in psychology - 2nd Edition. London: Hodder and Stoughton.

CSCMP. (2013). CSCMP Supply Chain Management Definitions. Retrieved October 21, 2013, from CSCMP: http://cscmp.org/about-us/supply-chain-management-definitions

Davies, D., & Dodd, J. (2002). Qualitative Research and the Question of Rigour. Qualitative Health Research , 12 (2), 279-289.

Delfmann, W., & Albers, S. (2000). Supply Chain Management in the Global Context. Retrieved October 21, 2013, from EconStor: http://www.econstor.eu/bitstream/10419/59779/1/329895168.pdf

Frazelle, E. (2002). Supply Chain Strategy - The Logistics of Supply Chain Management. New York: Editura McGraw-Hill.

IHMCTAN. (2006). Research Methodology. Retrieved April 8, 2013, from Institute of Hotel Management, Catering Technology & Applied Nutrition: http://www.ihmctan.edu/PDF/notes/Research_Methodology.pdf


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Loeb, W. (2013, October 14). Zara's sectret to success: The new science of retailing. Retrieved April 4, 2014, from Forbes: http://www.forbes.com/sites/walterloeb/2013/10/14/zaras-secret-to-success-the-new-science-of-retailing-a-must-read/

Maloni, M. B. (1999). Power Influences in the Supply Chain. Columbus: Fisher College of Business.

McGraw-Hill. (2013). Introduction to Supply Chain Management. Retrieved November 7, 2013, from Highered - McGraw Hill: http://highered.mcgraw-hill.com/sites/dl/free/007298239x/450202/Chapter_1.pdf

Mclaren, T. S., Head, M. M., & Yuan, Y. (2004). Costs and Benefits in Supply Chain Collaboration. Idea Group Inc.

Oliver, K., & Webber, M. (1992). Supply chain management; logistics catches up with strategy. In C. Martin, Logistics; The strategic issues (pp. 63-75). London: Chapman & Hall.

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Sapsford, R., & Jupp, V. (2006). Data Collection and Analysis. London: Sage Publications.

Seale, C. (1999). Quality in qualitative research. Qualitative Inquiry , 5 (4), 465-478.

Stenbacka, C. (2001). Qualitative research requires quality concepts of its own. Management Decision , 39 (7), 551-555.

Strauss, A., & Corbin, J. (1990). Basics of qualitative research: Grounded theory of procedures and techniques. Newbury Park: Sage Publications.


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