(2004). The German Customers even didnt liked to be accompanied by the Cheerful employees either, as they would like to make choices by themselves. The brand is a part of Inditex, a retail corporation that also features other clothing brands, such as Pull and Bear, Stradivarius, and Massimo Dutti. It is impossible to smoothly run any organization, until there is co-operation between the employees and the employer. Wal-Mart Stores, Inc. is the largest retailer in the world, the worlds second-largest company and the nations largest non-governmental employer. Strategic values of technology-driven innovation in inventory management: a case study of Zara's RFID implementation. They have bucked the trend by making productions in Europe instead of shifting their entire production to Third World or Developing countries. Furthermore, average inventory holding at Zara is 6 days compared to 52 days at H&M and 94 days at Cortefiel. A Zara company. Its CEOs changed every year, this in an obvious way effected the companys performance. But a serious research would have shown that Germany had strong national values resistant to change; possibly the most deeply rooted retail traditions in Western Europe. They also dont have to depend on anyone else as they can get everything done by themselves. Explore legal resources, campaign finance data, help for candidates and committees, and more. This demand forecasting, or predictive analytics, is used throughout the fashion supply chain. The fashion market is a fast changing one characterized by quick shifts in consumer demands. However some of their clothes are manufactured in parts of Asia due to the fact that they have a longer shelf life. WebIn this case study, I will be talking about the Zara Fast Fashion distribution system, it supply chain and it is vertical and horizontal integration. Required fields are marked *. This leads the business closer to the customers. It does this as well as, or even more effectively than, its internationally acclaimed rivals such as Benetton or Gap, with one of the most effective quick-response systems in its industry.. In the first half of the 1990s, Zaras supply chain consisted of problems of inconsistency, imbalances and market saturation for three of the store chains of Zara, plus the inefficient launch of fashion position had created difficulties in joining the U.S. garments market. She is currently an adjunct professor of marketing at Rowan University and a social media marketing consultant. Smart Reminders. Institute of Logistics and Transport. A key factor in Zaras success is the fact that it has sourced its products from the right places. management. In the following paragraphs it is He had previously supervised around 200 Supercenters in America. MBA Knowledge Base 2021 All Rights Reserved, Case Study: Zara's Supply Chain Success Story, Case Study: Business Strategy Analysis of Wal-Mart. Quite informative. Zaras biggest advantage is the fact that its economies of scale are really good and that they have been able to ramp up their distribution system. However with talks of revolution in the air and other geo political problems it can be a risky bet. The short time cycle reduces working capital intensity and facilitates continuous manufacturing of new merchandise. Just in time is invented in Japan. Wal-Marts initial entry into German market was through the acquisitions of renowned 21 store Wertkauf chain for an estimated $1.04 billion in December 1997.It was followed one year later by the acquisition of In-terspars 74 hypermarkets from Spar Handels AG, the German unit of the French Intermarche Group , for 560 million. Four case studies will be presented, namely, 7-11, Tesco, Walmart, Amazon and Zappos. Journal of Fashion Marketing and Management, 10(3), pp. Zaras Secret for Fast Fashion. Holding inventories costs are reduced as well because orders do not have to be placed for a season in advance and kept in the storerooms before the periodic shipment arrives and Zara is able to react and respond quickly to changes of customer demands which also reduces the risk when final demand gets amplified as they are fulfilled quickly by transferring new designs to the supply line. Mr. Nitish Bhagat says, " We have been using Zoho Inventory for a year now, We can say that it has increased sales by at-least 15-20 % as of now by managing the stock in a better way. All businesses hold stock of raw materials, finished goods, or both. By defying conventional wisdom, Zara can design and distribute a garment to market in just fifteen days. Zara is known to use teams of designers instead of individuals. Zaras strategy qualifies its operations as a Type A Product-Process Mix, with high flexibility, low inventory volumes and high variety as in Figure 4 below: As further described by Ferdows et al in their article, Zaras Secret for Fast Fashion, Zaras development and organization facilitated an easy flow of information from customers to store managers, from store managers to market specialists and designers, from designers to production staff, from buyers to subcontractors, from warehouse managers to distributors, and so on. Case Study: Supplying Fast Fashion. All about Supply Chain Management. For example, if technology company Pear Products does not meet the minimum standards on order qualifiers, then customers will ignore or reject their products and services. Learn how your comment data is processed. & explain objectives of inventory management. They can also target South America but the problem is that it is not a very stable region and any geopolitical problems can lead to profits being low. A. Case Study of FedEx: Pioneer of Internet Business in the Global Transportation and Logistics Industry, Case Study on Marketing Strategy: Starbucks Entry to China, Case Study of Qantas Airlines: Business Model and Strategies, Case Study on Entrepreneurship: Mary Kay Ash, Case Study: Merger Between US Airways and American Airlines, Case Study: Johnson & Johnson Company Analysis, Case Study: Corporate Social Responsibility of Starbucks, Business Ethics Case Study: Caterpillar Tax Fraud Scandal, Effect of Agglomeration in Urban Economies, Managing and Leading Change Effectively in Organizations, Importance of Financial Statements to External Users, Integrity Testing in Employee Selection Process, Case Study: Corporate Merger Between Volkswagen and Porsche, Case Study of Nestle: Training and Development. Wal-Mart stores are designed for customers who are willing to spend lot of time shopping. They make most of their own products inside Spain or other European Countries as they own a large number of factories in both Spain and Portugal. ZARA Official Website (2022). Wal-Marts initial entry into German market was through the acquisitions of renowned 21 store Wertkauf chain for an estimated $1.04 billion in December 1997.It was followed one year later by the acquisition of In-terspars 74 hypermarkets from Spar Handels AG, the German unit of the French Intermarche Group , Business Ethics Case Study: Caterpillar Tax Fraud Scandal, Case Study of Rolls Royce: Innovating for the Future, Case Study: Johnson & Johnson Company Analysis, Case Study of Nike: Building a Global Brand Image, Case Study on Marketing Strategy: Starbucks Entry to China, Case Study of FedEx: Pioneer of Internet Business in the Global Transportation and Logistics Industry, only two weeks are required for Zara to complete the development and shipment of a new product to its stores, digital customer input provided by Zara stores, Effect of Agglomeration in Urban Economies, Managing and Leading Change Effectively in Organizations, Importance of Financial Statements to External Users, Integrity Testing in Employee Selection Process, Case Study: Corporate Merger Between Volkswagen and Porsche, Case Study of Nestle: Training and Development. Copyright 2003 - 2023 - UKEssays is a trading name of Business Bliss Consultants FZE, a company registered in United Arab Emirates. The proximity of their manufacturing and operational processes allows Zara to maintain the flexibility necessary to design and produce over 12000 new items annually. (Dik & Lewinski, 2002), (Ferdows, Lewis, & Machuca, 2005). Answering: Question 1. Excessive inventory storage is wasteful in the current manufacturing scenario causes JIT philosophy. Wal-Mart faced a severe labour unrest,which hampered its brand-image. Advertising can pull in a lot more customers than just word of mouth. (OPPapers.com, 2009). Zara should give employees the ability to look up inventory balances for the items in their own store as well as in the other Zara stores. Schain24.Com H & M Supply Chain management: A case study % Search for: Schain24.Com. Alex. The way they operate can also prove to be their undoing due to the model they are currently utilizing. WebSupply chain management of ZARA. The Group is engaged in the operations of retail stores located in all 50 states of the United States, Argentina, Brazil, Canada, Japan, Puerto Rico and the United Kingdom, Central America, Chile, Mexico,India and China. Adapting the Slack & Lewis Strategy Matrix (Nigel Slack, 2008) for Zara, The supply networks, capacity and Process technologys speed is critical to the organizations performance as shown in Fig 5. JIT helps to make small batch production and is also helps to keep commitment towards continual process & product improvement. Nearly 75% of its stores are in the United States, but Wal-Mart is expanding internationally. Home Management Case Studies Case Study of Zara: A Better Fashion Business Model. Germans prefer to bag groceries themselves into reusable carriers, or at least to pay a small fee for the avoidable sin of needing a plastic bag. Compared to their competitors, they outsource very little to Asia[6]. Executive Summary. the phenomenon of increasing demand variability in the supply chain from downstream echelons (retail) to upstream echelons (manufacturing). WebZara Case Study Solution - Free download as Word Doc (.doc / .docx), PDF File (.pdf), Text File (.txt) or read online for free. Such a retail concept depends on the regular creation and rapid replenishment of small batches of new goods. Zaras vertically It their flagship range of chain stores and are headquartered in Spain. The underbanked represented 14% of U.S. households, or 18. Understand the shortfalls, and modify it in such a way as to cater the local market in a much better way than the competitors. Thirdly, though Zaras supply chain has higher cost but it allows the advantage of low inventory and higher profit margins. WebZara is often described as a supply chain icon since its success mainly comes from the highly efficient supply chain that continuously boosts sales, profits, the number of stores opened and its customer base. Instead Wal-Mart chose to use its US style merchandise display strategy where premium priced products are kept at eye level and discount products are kept at higher shelf or in the bottom racks. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. 50% of the production was then shifted back to the domestic manufacturing facilities to compress cycle times, seasonal collections were cut down in order to allow reorders of well selling products in a seasons 3rd month. You can download the paper by clicking the button above. The Zara clothing line accounts for a huge bulk of its parent groups revenues. B., & Hoppe, R. M. (2001). Home Management Case Studies Case Study: Zaras Operational Model, Founded in 1975, ZARA, a Spanish clothing and accessories retailer was originally the brainchild of the Inditex Group owned by Amancio Ortega. Explore the concepts of order winners and order qualifiers by studying examples of each. The Sams club segment includes the warehouse membership clubs in the United States. [3], Mr. Ortega the CEO of the Inditex, the parent company of Zara, once said that the secret to retail success is to have five fingers touching the factory and five touching the customer. Wal-Mart serves customers and members more than 200 million times per week at more than 8,416 retail units under 53 different banners in 15 countries. Lower inventory cost is a key sustainable advantage as it enables Zara to manufacture and sell its products at cheaper prices. Understanding the cultural dimensions of a Country through proven Cross-Culture models will always help a company to formulate a specific approach that will encourage team spirit and joy among the Global Team. Programmed computer are used to track inventories at sales point registers. Wal-Mart put the company name on many German stores before being fully established. Using the framework in fig 3, Zaras operations along its value chain is analysed as follows: Zara employs a chase demand capacity management[5]in its operations. This is exactly what happened to Wal-Mart Germany. Only one week is required for this process to complete which shows the benefit of proximity and domestic control. We will write a custom Essay on Case: Operations at Zara specifically for you. Spar is considered to be the weakest player on the German market due to its mostly run-down stores, very heterogeneous in size and format, with the majority of them located in less well-off inner-city residential areas. They are known for taking around 2 weeks to develop products and have been known to come up with around 10,000 new designs every year (which is an industry record). Mr. Nitish Bhagat says, " We have been using Zoho Inventory for a year now, We can say that it has increased sales by at-least 15-20 % as of now by managing the stock in a better way. WebTo lend some scope to the number of product introductions at Zara, H&M and Gap introduce 2,000-4,000 new products annually compared to approximately 11,000 new designs introduced annually at Zara. Case Study: How Walmart Enhances Supply Chain Management with ERP Initiatives? Over time, it has become one of the notable leaders amongst the fashion brands. Zara owned many of the fabric dying, processing and cutting equipment that provided Zara added control and flexibility to adopt new trends on demand. Very helpful, indeed. Perceptions do matter a lot, So a surveys to find the customers perception about the company will also help them to change their strategies accordingly. The program will feature the breadth, power and journalism of rotating Fox News anchors, reporters and producers. These processes include management of purchases, inventory, logistics and human resources. Pricing is the most important element for maximising revenues. WebThat may be because they have confidently trusted in case studies related to them. The design and production center consists of three halls mens, womens, childrens. This meant that customers dont have the habit of spending lots of time in a store wandering around for the things they need. Most of Starbucks inventory ordering and shipments assume two ways. Saves Money, Improves Cash Flow, Satisfies Map out Zaras product design, production, supply chain management and retailing processes. To localize their offerings, Wal-Mart and other Companies that are going global companies must carry out cultural assessment of the Citizens of the Country before acquisitions. (Upadhyay, 2009). The bullwhip effect as the tendency to fluctuation in final demand to get amplified as they were transmitted back up the supply chain. MANUFACTURING & SERVICE OPERATIONS MANAGEMENT JOURNAL , 9, 457-479. Fortunately Zara is considered to be more fashionable than the rest of the brands despite the fact that its price is less than Benetton and Gap. His successors were also unsuccessful in integrating German Outlets with the Wal-Marts Business model and culture. WebZara (a brand from Inditex Group) is a very renowned Spanish company of clothing retail and manufacture. Order winners are the competitive advantages such as quality, delivery speed, reliability, product design, flexibility, and image that cause a firm's customers to select that company's products or services. Another Quality advantage is the added sense of quality to the product as the tags would be labelled with made in Europe rather than made in China due to Zaras trade-off between Low labour costs in Asia and operational efficiency. More timely information for managers. Using this information the designer figures out what are customers needs and what are their main concerns which helps them to design the product carefully and reduce the customers concern. Zara is facing a large number of issues which can cause them a number of problems in the future. Dear Abey, The founder highlighted Zaras approach to fashion which is unique, like food, must be consumed immediately rather than rot in a cupboard. Case Study on Business Ethics: Madoff Investment Scandal, Case Study: Corporate Social Responsibility of Starbucks, Case Study of Jack Welch: Leadership that Creates Innovation, Case Study on Entrepreneurship: Mary Kay Ash, Case Study: The Merger between Daimler and Chrysler, Business Ethics Case Study: Caterpillar Tax Fraud Scandal, Case Study: The Collaboration Between Sony and Ericsson, Case Study: Zara's Supply Chain Success Story, Effect of Agglomeration in Urban Economies, Managing and Leading Change Effectively in Organizations, Importance of Financial Statements to External Users, Integrity Testing in Employee Selection Process, Case Study: Corporate Merger Between Volkswagen and Porsche, Case Study of Nestle: Training and Development. Zara spend 30 million dollars to restructure the IT system, Just as there is no consensus on the definition of strategy means, operations strategy cannot be explicitly defined. WebProduct information and inventory management: By effectively managing thousands of fabric, trim and design specifications and their physical inventory, Distribution management: Zaras state-of-the-art distribution facility functions with minimal human intervention. Better Inventory management. European stores get their goods early (around 24-36 hours) while other destinations get them within 2 days. Your email address will not be published. Firstly, David Wild, Wal-Marts CEO in 2004, believed that cultural differences between American and German consumers were considerable challenges to Wal-Mart. ; Marketing Manage campaigns, resources, and creative at scale. Procurement and production planners make preliminary, but crucial, estimates of manufacturing costs and available capacity. Just-in-time inventory management is an approach to managing stock, seeking to reduce the amount of stock held by a business. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); This site uses Akismet to reduce spam. This information transmitted to the Zaras designing professional daily. This irritated the German shoppers. Person Of The Week. It adopts an inventory management tool that makes it easy for them to determine what products, how many, and which sizes should it be delivered to the stores. It is not a tough job to tell them what they want based on the input they receive. Abstract. Though there is a cost advantage in their approach in regards to labour, the lack of flexibility in changing orders based on current trends hinders their operational efficiencies. They are able to modify their timetable easily to adjust for a change in the trends in the market. International Journal of Inventory Research , 3 (4), pp.318-336. WebMen's Health is the brand men live by for fitness, nutrition, health, sex, style, grooming, tech, weight loss, and more. These computers process data on orders, sales trends and consumer reactions to products in stores. As per German legislation it was illegal to sell products below cost,because of which Wal-Mart could never achieve the Low price leader tag. This kind of strategy gives customers a sense of originality and exclusivity. Available at: (Accessed: 1 December 2022). By breaking down the supply chain into these two categories, supply chain managers can gain deeper insight into inefficiencies or obstacles, optimize costs, and ultimately maximize customer value. This will help companies measure the effectiveness of its localization efforts and make adequate changes in local strategy & tactics as and when required. Describe reducing technique of preferred number series. (Ferdows Kasra, 2005). Germans are introvert in nature and doesnt like display of emotion in public, as they always care for their private personal space. The main distribution artery is in Spain where they have their biggest distribution center. The design and distribution cycle of the company takes just 10-15days in the whole process. Opportunities from current and potential customers can be created by understanding the customers hobbies, purchase frequency, behaviors and needs. Zara has design staffs that glen fashion inspiration by interaction with potential customers from competitors stores, clubs, fashion shows, university campuses and any other events or venues related to the lifestyles of the target customers. All work is written to order. In an earlier MIT Sloan Management Review article,2 we considered different supply chain configurations for risk and performance. The case is based on the retail chain Zara located in Spain, it is regulating under the global value chain, and it is offering premium quality products for both the middle class and the higher-class customers. Due to Zaras ownership and control of production, they ensure timely delivery and service. However the biggest advantage for them is the fact that they have vertical integration which allows them to manufacture and distribute their own stuff without having to be at the mercy of any supplier. Amazon Case Study: Operations Management Assignment on Effective Decision Making Models . Companies have to be sensitive to the local cultures and tailor their offerings to local market. Shifting from mass standardization to customization on a global scale is the most interesting aspect of the Zaras business model. 3. Wal-Mart also got its store inventory wrong, Wal-Mart stocked its store with clothes, hardware, electronics and other non-food products were given much bigger floor space than food products, as a result more than 50% of the revenue was from non-food products. Vertical integration means merging of two businesses that are on different stages of production. It ranks number one in the apparel industry, particularly fast fashion. 2003 Ruth Avendao, Andres Mazaira. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); This site uses Akismet to reduce spam. Zaras Supply Chain Management Practices Study the design, production and distribution processes of Zara This case discusses the unique supply chain management practices of Spanish garments retailer Zara, which enabled it to gain competitive advantage over other fashion retailers in the world. It is the main reason why customers purchase a company's product. WebIn this case study, we will focus on Nestle's pricing strategies. There is always a gap between customers need and quality characteristics. 322 specialists online. They are unable to match what Zara does and they end up losing big time. Also, due to wage restrictions, Wal-Mart could not practice wage bargaining, as it did back in U.S, this was a huge, uncommon expenditure for the company. Zaras value net includes: digital customer input provided by Zara stores, Zara designers sketch pads of the required styles, globally sourced textiles , hi-tech cutting plant and local workshops sewing/assembly, single distribution system.
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