Zara, the hunger beast.

7/30/2019 Zara, the hunger beast.

1/23

ZARAs Supply ChainManagement

NUR HANISAH BT ABD RAHMAN 2012432598

NUR FATIHAH BINTI MOHD NANI @ MUSTAFA 2012489138

W.NUR IZZATI BINTI W.MOHD PUZI 2012815698

NUR RASMIZA MUHAMMAD 2012837656

WAN MOHD HARITH BIN WAN ABD. MANAN 2012679818


2/23

Zara is a Spanish clothingand accessories retailerbased in Arteixo, Galicia

Founded in 1975 by AmancioOrtega and Rosaa Mera.

It belongs to

Inditex is a global specialty

retailer that designs,manufactures, and sellsapparel, footwear, andaccessories for women, menand children through itschains around the world.

Zara is one of the largestinternational fashioncompanies of the sixretailers that Inditexowns: (Zara, MassimoDutti, Pull & Bear, Bershka,

Stradivarius, and Oysho).The customer is at theheart of their uniquebusiness model, whichincludes design,production, distributionand sales through theirextensive retail network.


3/23

H

O

I

S

T

R

Y

Amancio Ortega opened the first Zara store in 1974 in a central street indowntown A Corua, Galicia, Spain

Ortega named his store Zorba after watching the classic film Zorbathe Greek, but apparently there was a bar that was called the same,

Zorba, two blocks away, and the owner of the bar came and said,

"this is going to confuse things to have two Zorbas." They had alreadymade the molds for the letters in the sign, so they just rearrangedthem to see what they could find, and they found Zara.

In 1980, the company started itsinternational expansion through Porto,Portugal.

This international expansion was increased in the 1990s, withMexico (1992), Greece (1994), Belgium and Sweden (1994), etc.until reaching its current presence in over 73 countries.

During the 1980s, Ortega startedchanging the design,

manufacturing, and distributionprocess to reduce lead times and

react to new trends in a quickerway, in what he called "instant

fashions".

By the end of 2001, Zara operated 507 storesaround the world, including Spain.

In 1989 it entered the United States and in 1990France.

The company based itsimprovements in the useof informationtechnologies and using

groups of designersinstead of individuals

The first store featured low-priced lookalike products ofpopular, higher-end clothing fashions. The store proved to be a

success, and Ortega began opening more Zara stores

throughout Spain.


4/23

Who is the customer?

Womens (60%),

Mens (25%)

Childrens (15%)

Young, price-conscious, and highly sensitive to the

latest fashion trends.

TARGET MARKET

SEGMENTATION

They have an

advantage over

traditional retailersbecause they do not

define their target by

segmenting ages

and lifestyles giving

them a much

broader market.


5/23

SU

PPLYCHAIN

PROC

ESS

DELIVERRETURN

MAKESOURCEPLAN


6/23

Zara Supply

Chain Process

Designand orderadmin

Production

DistributionRetailing


7/23

Zara Business Model


8/23

PRODUCTIONDESIGN

AND ORDER

ADMIN

1. After in-house CAD controlled piece

cutting, Zara use subcontractors for all

sewing operations (500 sewing

contractors from La Coruna in the

Galicia region and most work

exclusively for Zara)

2. then subcontractors bring back sewn

items to the same factory (for ironing

by machine and hand)3. finished products are then placed in

plastic bags with proper label and then

sent to the distribution center (used

system of aerial monorails connects

then of the factories in La Coruna to

the distribution center)1.

1. Designers draw out design

sketches by hand and discuss

them with colleagues (using a

CAD system)2. Make a sample of those

designs

3. final decisions concerning

what products to make, when

and in what volumes are

normally made collectively bythe relevant groups of

designers, market specialist,

and buyers and after decision is

taken the buyers take charge of

the total order fulfillment

process


9/23

Distribution Customer who

enter a Zarastore and see

something they

like, they know

they have to buy

it straight away,

because it

probably wont

be there next

week Companyexecutive, Zara


10/23

Distribution (cont.)

Zaras major distribution center in

Las Coruna Most sophisticated and up to date

automated system (developed byZara/ Inditex staff)

Distribution center operates4days/week

Order for each stores packed inseparate boxes

Ready for shipment 8 hours afterreceived

Small central distribution : Brazil,Argentina and Mexico

Zara trucks run to published

schedules Speed is clearly overriding concern


11/23

Retailing

Stores orders and receive shipments twice perweek

Most items stays in the stores less than 2 weeks Zara seek to minimize the risk of oversupply by

keeping production volumes low at thebeginning of the season

In-season commitment at Zara are 40% to 50%whereas the industry average ranges almostnothing to a max of 20%


12/23

System & Strategy

Software

Arrangement

Supplier

network????


13/23

Software

DBMS

DBMS is a set of software programs that controls the organization, storage,

management and retrieval of data in a database

ERPERP software application to improve the performance of organization's

resource planning, management control and operational control

RFID

Radio-frequency identification is a technology that uses communication via

radio waves to exchange data between a reader and an electronic tag, forthe purpose of identification and tracking


14/23

Software

ZARA unique approach in technology system had made the company

increased its revenue and become one of the worlds largest fashion

retailer

PDA deviceZARA use personal digital assistant to gather customer input

ZARA used this data to make decision on what the customer would like to

see more in the shop

1

POS system

linked to PDA device that enable to record customer s purchase

information

2


15/23

Arrangement

Customer

testing

DisplayCustomer

information

Place

order

New

design

Production

START

FINISH


16/23

ISSUE:Zara also uses the

PDAs forordering and for

tasks such ashandling garment

returns to DCsand transmittinginformation from

headquarters toall stores

Problem: The screen of the

PDAs is small

Issues of ZARA


17/23

ISSUE:Zara also uses the PDAs for ordering

and for tasks such as handling garmentreturns to DCs and transmittinginformation from headquarters to all

stores

Problem: The screen of the PDAs is small


18/23


19/23

ISSUE:Supply ChainManagement.

There are fewerinventories in the entire

supply chain

Problem:Lack of computers in stores, makes it

difficult to match the exact inventory.


20/23

Problem:Difficult to manage theintegrated supply chain in

global

ISSUE:The vertically integrated

supply chain would be more

complex to manage at a globallevel especially when comes toaddressing different trend and

clothing preferences in

different region


21/23

ISSUE:Zara hold its retails store

to a rigid schedule forplacing order and

receiving store. This

expedited supply chainmakes Zara as much as 12

times faster thancompetitors

Problem:Competitors trying to

immediate the Zaras strategy


22/23

Problem:Firms often hedge risks that

could shut down operations thinkweather, natural disaster, terrorism,

labor strife, orpolitical unrest by spreading facilities

throughout the globe. If problems occur in northern

Spain, Zara has no such fallback.

ISSUE:Consider the limitations of Zaras Spain

centric, just in time manufacturingmodel. By

moving all of the firms deliveries

through just two locations, both inSpain, the firm remains

hostage to anything that could create adisruption in the region


23/23

Conclusion and recommendations

Zara, the hunger beast.

Documents

Transcript of Zara, the hunger beast.