Zargistics Team:Blake VanderBerg - 821278942John Whelly - 820501401Jessica Weingert - 820853059Krisztina Virag - 821250982Jenna Zucker - 820920437Akwaugo Udenze - 821218781

• Zara is a Spanish clothing retailer • 1700 stores

• 78 countries worldwide

• Zara practices fast fashion – trends moves from the runway to stores within weeks, as opposed to months.

• Zara’s supply chain has undergone tremendous changes in order to sustain its competitive advantage in today’s market

• Zara has continually maintained its mission to provide fast, affordable, and fashionable items

Inventory Management

• Focus on reducing response time

• Launched approximately 11,000 new items per year, compared to 2,000 - 4,000 for H&M and Gap

Inventory Management

• Stock outs are not uncommon

• Short shelf life attracts more customers more often

• Zara holds 6 days worth of inventory, while H&M holds 52 days, and Spanish retailer Cortefiel holds 94 days of inventory

Forecasting Extensive market research Quick input and output

response Frequent new styles

• Near-term forecasts

• Short product life cycles to reduce errors and improve current products

• Customer feedback

6

Procurement• Keeps approx. half of its production in-

house

• Separate procurement staff for each clothing line

• Procures basic textiles from global suppliers

• Uncomplicated items are outsourced to China

• Difficult items are produced in Zara factories and by local subcontractors

• Most suppliers are located in close proximity to its distribution centers

Production Planning• Centralized Design & Production

Centre

• Constant flow of data throughout the supply chain

• Zara allows its retailers to change 40%-50% of its orders

• Factories operate on a single-shift mentality, and can change quickly according to unforeseen demands

• Under produces products in order to create scarcity value

7

Warehousing• “High-velocity” shipping

• Merchandise is selected, sorted, and routed to the “lungs” of the warehouse

• Merchandise is delivered, Retailers hold products in local distribution centres or in retail store stockrooms

• “High-velocity” shipping relies on rapid information flows

Warehousing• Stores are electronically linked to the company’s headquarters

• Logistics system is based on two core concepts: speed and flexibility

• Currently building a new state-of-the-art warehouse and facility complex in Zaragoza, Spain

Transportation • Effective and efficient transportation

network

• Fast delivery time

• Coordinates with all aspects of logistics

• Quick response in supply chain

• Ability to distribute merchandise within 2 weeks

• Final step in order fulfillment

• Promotes service quality

Customer Service

• Founder: Amancio Ortega

• Customer Service

• Elements & Measures of Customer Service

• Product Availability

• Order Cycle Time

• Logistics Operations• Response to Certain Events

• Stock-outs• Extra Inventory

• Future outlook

Performance Measurement

• Dedicated to creating time to market efficiency

• Order fulfillment and customer satisfaction

• Tight linkages between demand and supply

• Improve performance in accordance with changes in demand

• Customer loyalty and brand recognition

• Expansion into a global market

EFFECTIVENESS

EFFICIENCY

RESPONSIVE

13

Technology• Competition: 2% of revenue and 2.5% workforce in IT

• Zara: 0.5% of revenue and 0.5% workforce in IT

• In store:

• handheld PDA

bi-weekly order, communication with HQ, feedback from customers, inventory.

• In Store: DOS=old, slow.

• Suggested: POS=speed, efficiency, connectivity.

• WWW: Online stores open now. Better late than never.

• iPad + Smart phone apps

• In house: 200km tracks=60,000 items/hour

• Short-term goals should see Zara expand into North American and Asian markets as well as continued growth throughout Europe

• In the future, Zara should increase its production outsourcing to Asian countries to reduce costs

• Overall, Zara seems to be heading in the right direction as the company is growing at a tremendous rate and does not show any signs of slowing down