Logistics management is the part of the supply chain management; it develops implements as well as manage the storage and flow of services and goods to fulfill the requirement of the customers (Christopher, 2016). Logistics management is a fundamental aspect of the success of the operations of any business and has a direct influence on its bottommost line. As the volume of freight increases and transportation becomes more difficult, the prerequisite for the management of the logistics increases (Sople, 2012). The aim of this report is to analyze the case study of Zara in order to understand the reason behind its success in comparison to its competitors present in the market. Moreover, the report will highlight the concepts through which Zara can maintain its competitive advantage in the market.
Zara is a famous reputed fashion manufacturing and designing company. It has been announced as the well organized and market retorting enterprise in the fashion industry of United Kingdom. Mr.Amancio Ortega, the organizer, and creator of Inditex is respected for his planned decisions along with his winning strategies for market competition that have been adopted by his rivals (Inditex, 2018). Zara is one of the Inditex brand, established in 1975, is the famous and renowned fashion icon. The company is only making high profits but the consumers in armlet appreciate it. The most of the seized market by the parent company i.e. Inditex is for Zara. According to the estimations, Zara earns 80% share of the company’s profit (Zara, 2018). Zara is Spanish based business and effectively established itself as a leading business. The company is considered as the fashion icon, which is offering services in the industry since decades and still, its consumers are very much satisfied that in the future it is going to be better.
The strongest businesses of two different industries i.e. fashion and manufacturing are Zara and Dell. Zara is known for manufacturing clothes and Dell is known for manufacturing computers. Both the companies have operative strategies and effective supply chains.
Supply chain management of Zara is dissimilar from other businesses. There are diverse portions in its supply chain such as manufacturing, distributing, crafty, and sourcing to channels (Trade Gecko, 2018).
In Dell’s supply chain, three key players are suppliers, business, and customers. In its supply chain, the customers place the order and company provide its parts to different suppliers. After this, the suppliers of the company directly deliver the order to their consumers (Dell, 2018).
The supply chain of both the companies i.e. Zara and Dell is completely diverse. The supply chain of Dell is horizontally integrated whereas, the supply chain of Zara is vertically integrated (Logistics Bureau, 2017). Dell is involved in the computer’s production as well as employs third party suppliers in order to deliver goods to end user. Considering Zara, it is involved in the manufacturing of garments and cloths in diverse areas. The main success causes of the company are designing, the capability to deliver products on time, trade, and manufacturing. With the strong control on every part of the organization, Zara is capable to recognize the customer’s preferences in the diversified environment. The control over the successful supply chain procedure, Zara is capable to create quality products in the short time duration. The advantage of Zara’s supply chain is that it could be managed effortlessly as there are very limited accountabilities. While, Dell needs to pact, manage, and control diverse process in its supply chain (Vijayan, Mukherjee and Kamarulzaman, 2016). Therefore, the supply chain of Zara and Dell are proper and right as per their operations of the business. The difference in the supply chain of both businesses is presented below:
The strategy of supply chain used by Zara is vertically integrated under which company has complete control over its suppliers. In this type of supply chain, the business is accomplished to meet the customer demand and produce goods effortlessly (O’Marah, 2016). On the other side, Dell possesses a numerous number of suppliers though there is an issue concerned with the accuracy and speed in Dell’s services (Dell, 2017). There is some type of risks involved in the services of the company like uncertainty, product shortage, insecurity, raw material, and delay in product delivery. Despite the products shortage, Dell is capable to provide the on time delivery of its products. This is conceivable because 95% of the company’s dealers are placed close to the production division (Reliable Plant, 2018).
Considering the condition of Dell, it complies with the approach of make-to-order. Under this approach, the business produces goods in the shorter time. Generally, business manufactures products according to the customer’s demand at reasonable prices. The company possesses a varied range of products and services for its customers (Blanchard, 2010). Besides this, Dell offers all the product related information on its online website. Therefore, due to the internet the company is capable to offer information related to a range of services. In addition, company easily plans made-to-order products.
Zara majorly concentrated towards innovative designs and new products development. The business relies on that there must be additional products as well as designs for the customers in the market. The business introduces its offering through showrooms where it suppliers new pieces of designs (Destination Innovation, 2018). The company possesses the policy to vend new products rapidly in the market. It has increased inquisitiveness among the consumers about forthcoming products. In addition, Zara avoid marketing of its offering with the support of advertisement, as it desires to have a big image of the brand in an exclusive manner. Motive of business is to offer the best services in the fashion market and content the demand of the consumers. Because of limited products, consumers visit the store of Zara in order to check out new designs and products. The customers demand the products of Zara differently in different regions (Martin Roll, 2018). Hence, Zara’s production philosophy served the preferences and taste and preferences of the consumers and on the other side, Dell concentrated on the production philosophy that is make-in-products.
Dell suffers from low inventory cost and does not possess any kind of additional cost on storage houses. It has seven types of inventory. The business tries to reduce the cost by different costs like supplier storage, retail storage, warehouses, and direct delivery. Besides this, Dell does not have any kind of inventory strategy (Breen, 2018). On the other side, Zara deliver products to different stores that support business in storing the apparels and deliver successfully.
There are numerous channels of distribution for Dell like assimilators, suppliers, distributors, retailers, and customers. The company complies with the B2B model in its procedure according to which its 90% of the stock is ordered online. Dell vends its products like PCs and laptops online by following direct distribution channel (Dell, 2018). By adding extra cost and time, Dell directly connects with its consumers and patrons. This helps the company in cutting down the transportation cost. On the other side, apparels of Zara are not warehoused and are dispersed at different company’s stores two times in a week. For the product distribution, the stock is transported to the border of Australia and the carrier of logistics delivers them to the stores. If there is out of the stock situation in the store, it orders products from logistics that is responsible for managing and handling inventories and stocks. The Zara stores are graded depending on the orders and sales (SCM Globe, 2015). The company cease the production of any particular product, it is does not have worthy sales in the market. Due to this procedure, Zara is capable to eliminate the redundant stock of unsold products.
Weekly Zara manufacturers novel designs and collections and introduce them to its store. Manager of the company places the product on the internet and sells the products. Through this procedure, the business is capable to maintain the product information and new designs that are manufactured (Danziger, 2018). The designers depending on the customer’s feedback and current sales do the designing of the products. The effective communication within Zara makes the procedure cost efficient and easy. On the other side, communication is considered as one of the weaknesses of Dell because the consumers’ orders are just feedback for the business.
Considering the instance of Myer, it makes zero efforts in dividing the target market as per consumers. It does not distribute the market into psychographic lines and demographic lines of consumers (The Conversation, 2018). On the other side, Zara has divided its market based on lifestyle and demographic segmentation. The brand image of the company has been created successfully of being a leading business in the fashion industry by providing quality products at reasonable prices (Bhasin, 2018). The Myer concept of “My Store” is indistinct. The company does not have any specific target market of consumers. Whereas, Zara mostly target young age group of 20-35 years. Considering the company’s position, Myer is placed in the market as the departmental store with dense product assortment. However, company’s consumer service is unsatisfactory. Myer makes use of discounting strategies in order to appeal customers towards its product.
While, Zara introduces seasonal products in order to entice consumers with effective and suitable services in the market. Logistics classify the consumers demand and attempt to meet them at an affordable cost (Pratap, 2017). The distinct and efficient strategic plan offers a superior financial stability. The management of the supply chain is related to the hierarchy of the business. Generally, management of the company’s logistics and supply chain strategy are capable in attaining the goals of the management.
Wal-Mart is considered as the biggest industry brands of retailing. Both the businesses have adopted numerous policies in order to flourish. Wal-Mart makes use of storage houses in order to stock its product, whereas Zara refuses to adopt the strategy of storing its products. The company directly distribute goods to the stores and vend. Wal-Mart is considered as distributors and retailer. In order to attain the advantage from the supply chain, Wal-Mart makes use of ‘hub-and-spoke’ system (Flash Global, 2018). Besides this, it is utilizing a system of inventory management. It helps Wal-Mart in supplying goods quickly to the consumers and Zara utilizes the internal value chain and offer services that are customer-centric.
The parent corporation of Zara that is Inditex has attained a maximum score in the index of the stock market for socially responsible investment. Besides this, Inditex received the award from World Retail Congress of being the International Retailer of the Year for its best performs. This achievement of the Zara reflects that it is attaining competitive advantage through continuous business expansion. The invention and innovation strategy are the main feature of the company’s competitive advantage. The development of new product and innovation by Zara are very famous within the industry. Besides this, the strength of Zara is its alliances, clarity, and partnership. Zara follows customer-oriented strategy, which helps it in distinguishing itself from other businesses in the market.
There are numerous reasons due to which Zara has attained sustainable competitive advantage in the market. Some of the motives due to which it have attained competitive advantage are:
Conclusion
The report has highlighted the effectiveness of Zara’s logistics management and supply chain. The assessment related to Myer and Dell with Zara has been discussed within the study. From the examination, it could be evaluated that company’s supply chain is the essential element that is required to attain success in the market. The Zara’s supply chain study is exclusive as compared to other companies present in the market. The internal value chain is determined with the help of Zara’s supply chain analysis. The company complies with the approach of customer-centric under which its services are focused towards its key customers. Besides this, the company makes use of logistics, and customized technology that is considered as the main success factors for the Zara. It is a learning organization and putting its maximum efforts in the supply chain that is offering its success in the market in comparison to other organization. Due to the sustainable environmental strategies such as animal welfare policy and Closing the loop program, the company is able to attain a competitive advantage in the market.
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