MGT 300 LOGISTIC MANAGEMENT ZARA CASE STUDY

Name :Shubashini Maniam

Student :ID11301111

Lecturer : David Rich

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Table of Contents

1.0 INTRODUCTION ......................................................................................................... 3

1.1 The global textile and clothing industry ...............................................................................................3

Zara Supply Chain Management Characteristic .................................................................................4

2.0 COMPARISON AND SIMILARITIES ............................................................................... 6

2.1 Myer ..........................................................................................................................................................................6

2.2 Dell .............................................................................................................................................................................7

2.3 Toyota.......................................................................................................................................................................9

4.0 CONCLUSIONS ........................................................................................................ 10

5.0 REFERENCE.................................................................................................................. 11

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1.0 INTRODUCTION If one asked which is the most successful retailer in the world then surely Zara would be

the number one answer. One can imagine the sheer size of Zara from the number of the

country which it is operating, 59 countries which is a feat that is hardly can be matched

by other retailers. Despite such achievement most of the researched done on Zara was

published on Spanish and very little on English thus this research paper examine Zara’s

internationalization process and address its process gaps accordingly by reviewing

company documents such as annual reports. Before discussing case study of Zara, the

research paper starts off with global textile and clothing industry’s brief overview while

the main portion of the research paper will focuses on examining the key aspect of Zara’s

internationalization. The further breakdown the aspect will be focusing on international

marketing, market selection and entry strategies. In the final part of the research paper it

will discuss on the comparison between Zara and its two main competitors, Gap and

Toyota.

1.1 The global textile and clothing industry One of the key driving for in the development in the clothing sector is the decision of

removing all of the import quotas in the clothing and textile industry which was made in

the January 2005 which allows World Trade Organization (WTO)’s members

unrestricted access to Canadian, American and the European markets (Keenan, et al.,

2004). For larger exporters like India and China this has created new opportunities for

them as their market share can be increased considerably and it creates challenges for the

members of European Union to be internationally competitive. Below are the

characterizing and restructuring of clothing and textile industry:

The European textile and clothing industry is characterized by fragmented production

with a large number of small and medium-sized companies mainly located in

Italy, Great Britain, France, Germany and Spain (Nordas, 2004), whilst

distribution channels are highly concentrated (Stengg, 2001).

Increasing internationalization in the textile and apparel sector and the emergence of

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international competitors (Cerviño, 1998). Consolidation of the sector through

mergers, acquisitions (Dunford, 2004) and strategic alliances (Samiee, 1995).

Sub-contracting or delocalization of textile and clothing production to countries with

lower labor and transportation costs and reduced lead-time (Berkeley and Steuer,

2000).

Re-evaluation of the business models to adapt to the customers ́ changing taste

(KPMG, 2005). Fashion companies are becoming more flexible and vertically

organized, limited vertical integration being more frequent than complete

integration (Samiee, 1995). Adoption of new technology to expand productivity

and increase competitiveness (Berkeley and Steuer, 2000).

Democratisation of the fashion sector over the last decades (Mazaira, et al., 2003). Zara

has contributed greatly to this shift by offering the latest design at attractive

prices.

Zara Supply Chain Management Characteristic

Zara is a vertically coordinated organization that claims distinctive levels of the inventory

supply. Zara own all of the different manufacturing to warehouse to retail outlets. This

permits Zara to optimize globally rather than locally. This sort of centralized choice

making diminishes the bullwhip impact on the general supply chain. Information is

additionally centralized permitting penetrability amongst the diverse layers in the supply

chain. Then again, Zara's vertical integrated strategy is not so much without its

disadvantages. With having just few manufacturing offices, Zara is not able to exploit

economies of scale keeping in mind the end goal to deliver a lot of attire at a generally

cheap unit cost. Likewise, with Zara's high renewal rate of store selection, it needs to put

resources into exceedingly adaptable machinery and extremely talented workforce

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keeping in mind the end goal to create clothing in a fast and effective way.

Another fascinating viewpoint about Zara's supply chain is that Zara does not estimate

the figure of coming season's items before production. Rather, their design group watches

the style patterns at that second and responds to purchaser's taste. All together for this

model to work, the supply chain has short lead times and Zara states that it has the

capacity go from design to last item conveyance in 14 days. Zara's vertical incorporation

structure makes this conceivable. Since a lot of its creation is in Spain, it has a unified

dissemination focus in Europe. Be that as it may, Zara confronts incredible weight to

grow universally. Ease and piece of the overall industry are the significant reasons why

Zara needs to extend universally keeping in mind the end goal to stay aggressive while

different organizations get to be worldwide. In any case, with the extension of Zara in

Asia and North America, stock administration issues will be more entangled and

unpredictable as more stores are included. Lead times to these extensive stores will be

longer and Zara would not be as compelling in responding to customer's tastes and

requests. Transportation expenses will likewise increment since the item needs to travel a

more extended separation to achieve its end clients. While Zara has an extremely

successful and productive model in its home European market, it should roll out

improvements in its supply chain with a specific end goal to grow to different markets

worldwide.

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2.0 COMPARISON AND SIMILARITIES

2.1 Myer

In Australia, Myer is biggest retail chain group with profitable 67 stores in strategic

locations. They have very much perceived brands furthermore upheld by advanced

online, mobile and digital platform

Myer is resolved to construct a socially dependable business and keep up manageability

in everyday business exercises. As indicated by them, manageability is about to boost the

positive results. They need to develop their business with manageable that consider

ecological, financial, moral and social effects of their business systems. They have built

up "five pillars" for manageability method. They are:

Customer been rewarded with Myer reward card. They have been distributed

about 50 million cards.

My Myer Team improve their development using individual reward.

My community develop their relationship with society by community support

donation or contribution.

My environment , Myer been so environmental by doing their social and

environment report and reduce their energy usage.

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2.2 Dell

Dell dependably Pay attention to client and convey what they need in their PC. They have

a motto "learn, listen and convey. That what Dell is about" .In 1990s, dell turn out to be

more proficiency on supply chain due to direct model. The immediate model is to make

to arrange as opposed to make to stock logic. This help them to diminish the process

durations to level. They took couple of days to conveyance instead of three or four week

which lead to its success. Dell is empowering its full production network potential

through a persistent improvement structure that is taking into account four stages

1. Keep Tracking what’s going on in the business

2. Design the supply chain to meet customer requirements

3. Make sure the enable the capacity

4. Stabilize the situation to make sure it works and will and will continue to keep

working. (Blanchard, 2012.)

In nowadays, there is heaps of rivalry in design retail business. Myer and David John are

extreme rivalry for Zara. There are numerous different contenders like Topshop, H&M,

and so forth in spite of rivalry in the business sector, Zara still able to make profit

successfully every year. Australian style retailer used to take no less than 12 weeks to 16

weeks to make new outline garments. Be that as it may, Zara can convey new plan in

consistently week. This powers all whole form retailer to outline their new item as fast as

could be allowed. Zara primary method is to deliver less item yet more variety. Also,

convey to all stores in 15 days. Zara don't have any season, they respond on client

request. They generally track the item deal and listen to client. This helps planner to roll

out new item with little improvements of style and shading of item. The majority of

design retailor conveys new items as indicated by seasons.

Myer is effective and costly fashion retailer. Both Myer and Zara principle is focus on

clients. Be that as it may, Zara dependably listens to client and conveys as indicated by

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client request. In comparing with Myer, Zara's primary favourable position its supply

chain technique. They can convey their item as fast as could be expected under the

circumstances. They convey new item in consistently week. Unsold items are send back

to headquarter and convey to store with high performing sales.

Dell is a successful and acclaimed on PC company. Dell dependably listens to client, find

out about it and convey the items what the client need. Zara is also a company that listen

to its client and convey the item that they need. Supply chain of Dell administration is

basic. There is association of client, dell and suppliers. Be that as it may, Zara has

inclusion of planner, producer, sources and circulation to all retail locations. Zara take

after vertical supply chain whereas Dell takes after horizontal supply chain. Dell

produces PC after client give their request. Their point is to lessen stock expense. They

intend to have no stockroom. However, Zara has got more distribution centre on the

grounds that they need to flow their articles of clothing. The designers of Zara depend on

client criticism and deals track to plan new item. Correspondence is solid point to Zara.

Dell has some shortcoming in term of correspondence. They just get input when they get

request from the client.

What made Zara to be successful is its special supply chain management. Other

unsuccessful retailer can take after its strategy to be effective. Their principle target is to

deliver less items with bunches of varieties. In light of that, they can convey new item in

at regular intervals. Each store gets twice stock in a week. They generally track its

business and listen to client. On the off chance that other organization just listens to client

input and has great inventory network administration then there is high opportunity to be

accomplishing objectives. For a few organizations, it will be difficult to convey new item

in at regular intervals.

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2.3 Toyota Toyota is still thought to be a pioneer in the field of car generation despite the fact that it

has as of late needed to adapt to challenges (e.g. reviews, generation deficiencies brought

about by regular calamities) and had lost its overwhelming position in the car business to

General Motors and Volkswagen–at minimum incidentally. The improvement of ideas,

for example, Lean Manufacturing, All out Quality Management, Kaizen, Kanban, and so

forth., can be ascribed totally or if nothing else in part to Toyota. These ideas

coordinated in the supposed Toyota Production System (TPS) are currently viewed as

standard components of present day generation frameworks and are standard collection in

business administration. Be that as it may, with spotlight on the administration of creation

frameworks, they just speak to one of the foundations of the fruitful Toyota model.

Toyota presently works to a great degree proficient worldwide supply chains with global

creation destinations (in Japan, USA, France, Brazil, Argentina, Malaysia, Pakistan, and

so on.), all around disseminated suppliers and an overall merchant system. Toyota

actualized proficient creation (with TPS), as well as additionally supported proficient

outline and coordination of universally circulated worth included exercises. To achieve

this, Toyota has reliably built up its administration reasoning and the standards hidden

TPS and incorporated these in the Toyota supply chain.

Zara's assembling frameworks are displayed upon thoughts created in conjunction with

Toyota. The operations with a higher economy of scale (e.g. cutting, kicking the bucket,

marking and bundling) are directed in-house to upgrade cost proficiency. Other

assembling exercises including the work serious completing operations are proficient by

a system of 300 authority subcontractors. These subcontractors work only for Zara's

guardian organization, Inditex SA. They get fundamental preparing and mechanical,

money related and logistical backing as though they are secondary of Zara. The

framework is adaptable to conform all out limit contingent upon the change of interest

and creation is kept at level beneath anticipated deals to keep the stock moving. Zara's

fast and manageable development in a focused business is credited to its capacity to build

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up a dexterous supply chain which likewise fuses numerous incline attributes. There is an

example of overcoming adversity of a consolidated incline and lithe supply chain strategy

(Christopher, 2000).

4.0 CONCLUSIONS

In less than 30 years Zara has made itself from a local Spanish company to a global

brand and a successful international retail firm. This paper tries to enhance our

comprehension of the firm. The examination has analyzed the internationalization

procedure of the firm with an extraordinary spotlight on thought processes, section

choices and global promoting techniques. The primary downside that emerges in a

solitary contextual investigation is that of restricted legitimacy and representatives

which obliges the potential for making speculations (Creswell, 1998). Another

constraint is that the study was construct exclusively in light of secondary information.

On the other hand, this case is esteemed sufficient to give great understanding, and

build up the street for future studies. Despite the fact that the paper has made some

preparatory examinations in the middle of Zara and its two primary rivals, a more

exhaustive similar investigation of all the three organizations would uncover what is

being internationalized: Management aptitude and frameworks? Imaginative procedure

or solid retail brands (Brown and Burt, 1992)? Two ranges are of specific premiums in

the further study, to be specific the linkage between section procedures and the level of

institutionalization; the relationship between retail brand picture and situating in

distinctive markets.

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5.0 REFERENCE

Andrew pearson. How a business can create sustainable competitive

advantage : the story of zara. Coaching business [pdf]. Available at <

http://www.coaching-business.co.uk/admin/resources/zara.pdf >

[Accessed at 20th July,2015]

Ashley Lutz, 2012. Zara has fundamentally changed fashion and

there’s no going back. Available at:

<http://www.businessinsider.com.au/how-zara-is-changing-fashion-

forever-2012-11> [Accessed at 20th july, 2015]

Dave Blanchard, 2012. Supply chain and logistics: Dell Taps into

innovation to reach emerging markets. Industry week. Available at: <

http://www.industryweek.com/supply-chain/supply-chain-and-

logistics-dell-taps-innovation-reach-emerging-markets > [Accessed at

17th July,2015]

Dell, Supplier Accountability approach and standards. Available at:

<http://www.dell.com/learn/au/en/aucorp1/standards-for-

suppliers?s=corp > [Accessed at 17th July,2015]

Inditex, 2013. Inditex Annual Report. Available at:

<http://static.inditex.com/annual_report_2013/en/ > [Accessed at 17th

July,2015]

http://www.uniquebusinessstrategies.co.uk/pdfs/case%20studies/zarat

hespeedingbullet.pdf [Accessed at 17th July, 2015]

Manasvi Somaiya,2012. Fashion Forward – Zara’s Supply Chain

Startegies. Available at:

<http://cmuscm.blogspot.com.au/2012/09/fashion-forward-zaras-

supply-chain.html > [ Accessed at 17th July, 2015]

Myer, 2015. Sustainability at Myer. Available at:

<http://www.myer.com.au/p/about-myer/sustainability/ > [Accessed

at 17th July,2015]

Myriam Robin, 2012. How zara is still producing record profits

despite the retail gloom. Available at:

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<http://www.smartcompany.com.au/leadership/26377-how-zara-is-

still-producing-record-profits-despite-the-retail-gloom.html >

[Accessed at 17th april,2015]

Partemian khatsig Alexan, Comparison of Dell and Zara supply chain.

Available at: <http://docslide.us/documents/comparison-of-dell-and-zara-supply-chain.html > [Accessed at 08th August 15]