Question:
Discuss about the Logistics Management and Strategies of Zara.
Supply chain management is one of the vital managerial strategies of a company that helps it to achieve a significant position in the global market. Zara is one of the well known brands in the fashion industry.
This report analyzes Zara’s strategies and methods of logistics management, the customer values and its competitive advantage also understanding the influence and significance of supply chain management. The different approaches in manufacturing and supply chain patterns have been investigated along with the other related factors such as the organizational culture, innovation, education and knowledge management and disposition of core competence. With the help of this report, Zara’s business strategy has been compared to the management of Dell and Myers.
The purpose of this report is to analyze and understand the managerial strategies of Zara in comparison to Dell and Myers as well highlight on the factors, which is responsible for its competitive advantages.
Zara is one of the well-known retail stores that exclusively serve women of various target market. Spanish born Amancio Ortega Gaona in the year of 1975 found and established it. The authentic store dealt with the products of the manufacturing company Zara and was outlet that handled the cancelled orders, which included the women nightwear. The company has been established in a strong foundation, based on the concept and realization of the association between a manufacturer and a retail trade. The prior concern of Zara and its parent company Inditex, is customer as well as demand centric supply chain (Myerson 2012). Although, Zara is a multinational company, the parent company Inditex own more than a hundred textile companies. Zara is only one of the flagships of the Inditex Branding.
With reference to the PESTEL analysis and Porter 5 forces, Zara’s competitive advantages as well as the internal and the external can be determined. The detailed analysis concerning Zara unveils that this company has been contending a tough competition with its other competitors, which are mainly, Gap, H&M and Benetton, where all of them are battling for holding the biggest stakes in the Global market. All of the companies are at constant rivalry to achieve the title of the biggest fashion retail outlet (Williamson et al. 2013). However, the current economic scenario has completely changed the phrase that has lent a direct impact on the entire retail industry including these fashion retail companies. The shorter product life cycle combined with the unstable market, situations have completely shaken these companies, making it difficult for them to hold on to the grounds (Wagner III and Hollenbeck 2014).
However, the strategic management of Zara is one of the key strengths that enabled this company to reach out to the customer despite the market downturn. The speed of the product delivery, the vertical integration as well as the implementation of the just-in time(JIT), along with the incorporation of the technologically advanced logistic systems has enabled the company to keep up to its expectations (Fernie and Sparks 2014). The combination of the primary tasks, the strategic utilization of the organizational resources as well as the understanding of the core competencies of the company is one of the major contributors in the achievement of Zara’s competitive advantage.
Zara and dell are two different yet successful companies with one being a manufacturer of Information Technology and the other being one of the leading producers in apparel and fashion (ap.dell.com 2017).
Since both the companies are quite different from each other, it can be assumed that the supply chain management is also dissimilar from each other. The departments of designing, sourcing, manufacturing, distribution networks are the main functionalities of the supply chain management.
However, the supply chain management of Dell is quite dissimilar from that of Zara. Dell follows a horizontally integrated supply chain management whereas Zara takes up the integration, which is just the opposite (Schönsleben 2016). Dell is completely isolated from the production process, as well as it depends on the third party supplier for the delivery of goods and the finished products. In contrast to it, Zara has complete and total control over the business from the designing to the manufacturing and the delivery (Christopher 2016). The absolute control of the company enables it to take charge and understand the changing trends in the changing fashion trends as well as understand the customer needs and preferences. This authority and control of Zara enabled it perform quick action regarding the changes in the designing and the production in comparatively shorter span of time (Dekker et al. 2013). However, it can also assumed that the horizontal integration system has its own benefits such as it can also be controlled at ease since minimum responsibilities are to be taken in the task of the assembling (Oakland 2014). On the other hand, Dell has to coordinate and synchronize with a number of different procedures to take the control over the entire process as well to make the necessary changes that would have been much easier (Rushton, Croucher and Baker 2014). Therefore, it can be considered that both the companies’ supply chain systems are corresponding to their nature and activities.
Coming on the suppliers Zara has been following a vertical integration system in its supply chain and has exerted a control over the suppliers. This is effective, since the demand is easily met by the effective production, which is easily met. Dell, on the other hand manages to control its supply chains since fifteen of its major suppliers are instrumental in the completion of 86% of its entire production. Although, dell has a number of suppliers in the company list, but agility and precision is one of the major concerns of the company, since this company is also liable to its clients and customers. However, there are certain risks that are involved in the process, which includes the risks of uncertainty, insecurity, shortage in the resources and the goods as well as delay in the time of the delivery. Even after the lessening of the supply, Dell keeps its focus in the speed of the delivery, which is only possible since majority of the suppliers are positioned in close proximity to the manufacturing units of the company (Alexander 2013).
In contrast to the manufacturing philosophy, dell follows the principle of make to order strategy, which is primarily customized and done within a short span of time. These orders are taken and fulfilled based on the customer’s requirements at a sensible price. Most often the core competencies of the company and its partners including the other subsidiaries are leveraged with the other mediums such as the internet to help incorporate its value chain. This includes the advertising of the assortment ranges over the online portals and the official website to help the customers know about the brand and understand their needs and requirements for customization. On the other hand, Zara in prompt in the introduction of its new in line and launches pretty quickly. The ideology of more styles being reciprocal to the more number of choices is the primary concept behind the actions. The limitations in the exclusive inventories make the product exclusive and as a result, these products tend to sell out fast. This strategy is one of the prime strategies to keep the customers keen and interested about the next in line of products that would be rolling out in the outlets. However, Zara does not believes in the advertising of its products, since they are not a keen believer in the building of a brand image, their main concern is meeting the needs and the requirements of the customers. The fewer inventories are thus facilitated by frequent footfalls by the customers who tend to look forward for new arrivals in the stores as well the respective region.
With respect to the inventory management, Dell bears a low inventory cost with no additional cost in the warehouses, with a less time span of seven hours of the bearing the inventory instead of ten working days. On the contrary, Zara has a number of warehouses to circulate their products equally and efficiently among the various outlets.
The distribution networks of Dell includes the company’s distributors, the suppliers ad the customers. The business-to-business model of Dell allows its suppliers and customers to order and sell the products online. The company and its customers are directly linked and connected, which in turn upshots the transportation cost of Dell. On the other side, the products offered by Zara are shipped directly from the manufacturing site through its Logistics facility. However, the inventories are not confined to the outlets and are distributed as per the necessity and the needed frequency (Oakland 2012).
Myers is one of the companies that has made no significant efforts to align its market with relevance to the demographic lines and the psychographic deviations of the customer buying pattern, whereas Zara has synchronized itself with demographic lines as well as the customer behavior. Zara has been branded as one of the most reputated brands in the fashion industry whereas the concept of Myers lingers in an ambiguous notation. Zara is a fashion brand that primarily caters the needs of women fashion, between an age group of 20-35 whereas Myers has established itself as a departmental outlet that offers an extensive collection of products and offerings with a comparatively compromising customer service (myer.com.au, 2017).
Both the companies are focused on the strategic management of the supply chain divisions that currently operates for the occupational improvement and achievements. The logistics management is a chief source of customer satisfaction and achieving a greater competitive advantage. The supply chain management is the division that primarily deals with the relationships with the suppliers along with the customers to help deliver a best customer service in a cost effective manner. The logistics are fundamental in meeting the demands and requirements of the customers with low cost, thus the maintenance of the stockpile along with the customer service is one of the fundamental subject of supply chain management (West, Ford and Ibrahim 2015).
The Just in time strategy is a crucial pioneer approach of the Japanese technology, which efficiently monitors the inventory of the company. It has been observed that using this specific approach the wastes can be eliminated by the minimization of the inventory costs, the time for the production and effectively decreasing the defects (Madsen and Walker 2015). In the current scenario, JIT (Just in Time) is one such approach that is being used by most of the companies and their manufacturing units, to lean down the inventory cost across the supply and chain management divisions (Goetsch and Davis 2014). Zara has reached its pinnacle, using the same strategy, technology as well as the principle concepts, prioritizing customer value. Therefore, it can be highlighted that Zara has effectively adopted these lean and agile strategies to help it achieve its objectives, as a reputated fashion brand in the Global market.
The World Retail Congress, due to its effective and efficient practice in the international retail industry, has titled Inditex as the International retailer of the year. It has also received the highest rating in the Global Stock Exchange due to its social responsible investments. These tributes signify that Zara has been constantly evolving itself and expanding its business, in the Global market (McGrath 2013). Zara has been constantly under pursuit of innovations and inventions, which is one crucial cause for the achievement of a higher competitive advantage, in the current customer centric market. Zara’s efforts for the development of new product lines and innovations have been acclaimed globally along with its leadership in customer service (Peteraf, Gamble and Thompson Jr 2014). Every successful business understands the significance of partnerships and alliances with respect to the supply chain management, which is undeniably one of the principle strengths of Zara. The consistent efforts to improve, innovate and collaborate as well as customer centric approaches by Zara are its main strength of establishment as a Brand.
Finally, the brand credit and reliability holds less authority in the current global market. The brand value is one source of understanding the competitive advantage. The value chain demonstrates brand value that Zara as acquired in the end. Some of online sources positions Zara in the number if 219 amongst the top Global brands all across the world. H&M is ranked as the highest with being positioned in the 89th place, with a gap of 425 in between the two brands, whereas Benetton fails to leave its mark. Zara is being positioned at the same level with Dove and M&S and advances in comparison to Sanyo, Hyundai and Colgate, in the list of top grossing international brands (zara.com 2017).
Conclusion
With the help of this report, it can be concluded that supply chain management is one of the vital managerial strategy of a company that helps it to achieve a significant position in the global market. Zara’s supply chain management analyzes and investigates about its intricate value chain. It customer centric strategies and services, just in time methods, advanced technologies, logistic management tactics as well as its vertical integration has been adopted from its parent company and is inarguably the key strategies of its success. The contribution of its supply chain management system, combined with the innovations, collaborations as well as sufficient knowledge have equal involvement in the success of Zara and its establishment as a brand
References
Alexander, K. ed., 2013. Facilities management: theory and practice. Routledge.
ap.dell.com (2017). Dell Australia Official Site | Dell Australia. [online] Www1.ap.dell.com. Available at: https://www1.ap.dell.com/content/default.aspx?c=au&l=cn&s=gen&st=dell%20australia&VEN1=sGgAWlBX0%2C238250829983%2C9015m67626%2Cc&pdv=c&DURL=http%3A%2F%2Faltfarm.mediaplex.com%2Fad%2Fck%2F13669-85385-3840-0%3F&VEN2=e%2Cdell+australia&dgc=st&dgseg=csb/hsb&acd=10589631962341420&VEN3=412604077193701928 [Accessed 9 Dec. 2017].
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Dekker, R., Fleischmann, M., Inderfurth, K. and van Wassenhove, L.N. eds., 2013. Reverse logistics: quantitative models for closed-loop supply chains. Springer Science & Business Media.
Fernie, J. and Sparks, L., 2014. Logistics and retail management: emerging issues and new challenges in the retail supply chain. Kogan page publishers.
Goetsch, D.L. and Davis, S.B., 2014. Quality management for organizational excellence. Upper Saddle River, NJ: pearson.
Madsen, T.L. and Walker, G., 2015. Modern competitive strategy. McGraw Hill.
McGrath, R.G., 2013. The end of competitive advantage: How to keep your strategy moving as fast as your business. Harvard Business Review Press.
myer.com.au (2017). Myer. [online] Myer. Available at: https://www.myer.com.au/ [Accessed 9 Dec. 2017].
Myerson, P., 2012. Lean supply chain and logistics management. New York: McGraw-Hill.
Oakland, J.S., 2012. Oakland on quality management. Routledge.
Oakland, J.S., 2014. Total quality management and operational excellence: text with cases. Routledge.
Peteraf, M., Gamble, J. and Thompson Jr, A., 2014. Essentials of strategic management: The quest for competitive advantage. McGraw-Hill Education.
Rushton, A., Croucher, P. and Baker, P., 2014. The handbook of logistics and distribution management: Understanding the supply chain. Kogan Page Publishers.
Schönsleben, P., 2016. Integral logistics management: operations and supply chain management within and across companies. CRC Press.
Wagner III, J.A. and Hollenbeck, J.R., 2014. Organizational behavior: Securing competitive advantage. Routledge.
West, D.C., Ford, J. and Ibrahim, E., 2015. Strategic marketing: creating competitive advantage. Oxford University Press, USA.
Williamson, P.J., Ramamurti, R., Fleury, A. and Fleury, M.T.L. eds., 2013. The competitive advantage of emerging market multinationals. Cambridge University Press.
zara.com (2017). ZARA Official Website. [online] Zara.com. Available at: https://www.zara.com/ [Accessed 9 Dec. 2017].
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download
