Zara case Study

Spanish retailer Zara has hit on a formula for supply chain success that works. By defying conventional wisdom,
Zara can design and distribute a garment to market in just fifteen days. In Zara stores, customers can always
find new products—but they’re in limited supply. This makes the customer eager to visit the store more often and
in an urgent manner. Whatever is sold will not be back again. Such a retail concept depends on the regular
creation and rapid replenishment of small batches of new goods. Zara often beats the high-fashion houses to the
market and offers almost the same products, made with less expensive fabric, at much lower prices.
This “fast fashion” system depends on a constant exchange of information throughout every part of Zara’s supply
chain—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. Most
companies insert layers of bureaucracy that can bog down communication between departments. But Zara’s
organization, operational procedures, performance measures, and even its office layouts are all designed to make
information transfer easy.
Zara’s cross-functional teams meet on short notice and without bureaucratic procedures. They can examine
prototypes in the hall, choose a design, and commit resources for its production and introduction in a few hours,
if necessary.
Zara stores receive small shipments and carry little inventory, the risks are small; unsold items account for less
than 10 percent of stock, compared with the industry average of 17 percent to 20 percent.
Zara’s ways have proven to be successful and efficient, and at the same time they encourage customers to visit the
stores more often and to purchase whatever they like before it gets sold out. This shows how important logistics
can be in securing successful operations and processes resulting in products being at the right amount, the right
price and the right place.
Analyze and discuss the importance of successful operations management and supply chain on gaining a competitive
advantage.

Use the case above, and the relevant B200B material covered so far, to analyze the success of Zara’s operations.
Clarify what made Zara so successful, and discuss current related issues in logistics and operations using the
E-library (i.e. EBSCO).

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