Zara Supply Chain Management Sample

Question: Discuss about the Zara Supply Chain Management. Answer: Introduction Zara is one of the most popular Spanish garments company. It is considered that the success of Zara is highly depended on its supply chain management. In the current article, a research study has been conducted in order to identify various crucial aspects of Zaras supply chain management. It has been able to identify the flow diagram of the companys supply chain management (Tokatli 2014). It has properly depicted the strengths and weaknesses of Zaras SCM. The article has been able to evaluate various integral aspects of Zaras supply chain management. It has been also able to identify the suppliers of the company and the process of integrating logistical information. Furthermore, it has suggested several crucial ways to improve the supply chain management process. Diagram: Figure 1: Zaras Supply Chain Management (Source: Viardot 2015) Discussion of Zaras Supply Chain Management: Strength and Weakness Biggest strength of the organization is its goods are delivered within 24 hours of the receipt of the order on Europe and about 40 hours in other locations (Viardot 2015). Most of the supplies of the organizations are handled through its centralized warehouses in of the European locations. Besides, the organization follows zero advertisement strategies in order to decrease expenses. That is why; it can focus its capital on expansions. They depend on brand name product quality. In addition to that, it has been identified that one of the most important strong suit of Zara is maintain a just in time inventory management approach. The major benefits of the inventory management are lower warehouse costs, better supply chain management, better customer satisfaction as well as less waste. It effectively increases the effectiveness as well as efficiency of Zaras supply chain management. Major weakness of the organization comes from its dependency on the European markets. More than half of its stores are located in Spain and surrounding countries. Therefore, it can be said the company is mostly dependent on European markets to gain its revenues. This makes Zara vulnerable to economic changes. Besides, all of its designers are Spain which leads to a situation where the design might become too localized. Besides, the fashion tastes reflect heavily the European perspective (Christopher 2016). That means the organization is overlooking the fact that at the time of expansion it will have to satisfy international customer which currently looks impossible. As if the organization wants to make a mark in Asian markets, it will have to design cloths according to their culture which is not possible by Spanish designers. Each Element of Zaras Supply Chain Management In order to maintain an agile supply chain the company purchase fabrics of only four colors. Moreover, it also cuts and designs all of the fabrics in house. In addition to that, the suppliers are kept very close to the production house so that the company can order the materials according to their requirement. The company stores their cloths ironed and packed with price tags in advance so that the cloths can be used for manufacturing any time. The company emphasizes on starting the delivery of the products to the various stores around the world in overnight fashion (Khan 2012). This controlled and integrated process is known by just in time inventory management. It assists the company to provide fashionable garments to the customers within a very short period of time. Suppliers: Zara purchase cloths from more than 1725 suppliers in over 50 countries (Ross 2015). This vast number of suppliers enables the company to provide a wide range of products to the customers. Zara is highly popular for its capability to manufacture its own products up to 60%. This particular strategy is extensively referred to vertical integration. Recommendation: Zaras supply chain management is superior in that any other retail organization in every way. However, one and only problem of their supply chain management comes from their ownership of all the channels of supply chain. The organization owns all the supply chain channels and as a result, it is difficult for them to expand to far locations as it will be extremely expensive to distribute products in far locations. Therefore, it is recommended that the management of the organization should start thinking about outsourcing their supply chain management to some third party logistic organizations (Tsay 2014). Globalization is on the move and each organization is slowly but steadily adopting it by making necessary changes in their operations. Zara is currently doing great because of its supply chain management which provides agility than any other organization. However, if they do not enhance their supply chain management they will lose their leading market position. It is obvious that in this current globalized market, they will have to look to expand their business to other countries. They cannot do that unless they enhance their supply chain management and start doing outsourcing. Cloud computing is another thing they will have to implement. If the organization decides to expand their business in global market, then their supply chain management will become more complex than before. In that situation if they do not implement cloud computing then cost and time related to their distribution will increase which will hamper their value chain management (Kim 2013). Besides, cloud computing will also help them to reduce overall operations cost without negotiating with their current organizational objectives. It will help the organization to perform more complex supply chain operations without recruiting a huge number of employees. Conclusion Justifying Zaras Supply Chain Management: The company has been able to acquire an impressive competitive advantage concerning numerous fashion retailers around the world. The vertical integration of Zara is capable of cutting cost and time within the supply chain. It also avoids the conflicts occurred from different channels. It imperatively provides an edge with regards to the competition in this global market. The supply chain management of the company has been proved to be highly agile as well as customer driven process. It has been able to transform the operation into a most flexible and profitable activity (MacCarthy et al. 2016). Zara has been able to grow in a rapid speed in the foreign countries with the help of their particular supply chain management. It has been identified that currently the company has been operating its business over 50 countries and generated revenue of 15.9 billion USD in the year of 2016. References Christopher, M., 2016. Logistics supply chain management. Pearson Higher Ed. Khan, O., Christopher, M. and Creazza, A., 2012. Aligning product design with the supply chain: a case study. Supply Chain Management: An International Journal, 17(3), pp.323-336. Kim, B., 2013. Competitive priorities and supply chain strategy in the fashion industry. Qualitative Market Research: An International Journal, 16(2), pp.214-242. MacCarthy, B.L., Blome, C., Olhager, J., Srai, J.S. and Zhao, X., 2016. Supply Chain EvolutionTheory, Concepts and Science. International Journal of Operations and Production Management. Ross, D.F., 2015. Distribution Planning and control: managing in the era of supply chain management. Springer. Tokatli, N., 2014. Single-firm case studies in economic geography: some methodological reflections on the case of Zara. Journal of Economic Geography, p.lbu013. Tsay, A.A., 2014. Designing and controlling the outsourced supply chain. Now Publishers Incorporated. Viardot, E., 2015. Managing and Influencing Consumer Behavior to Become a Worldwide Leader in the Apparel Industry.