This report mainly points out the logistics and supply chain management of fashion and retail industry in the given case of Zara. It is well known that the company Zara is able to achieve the growth and success in the operating market due to its effective logistics and supply chain practices. This report will point out the issues grounded on the case and will also provide some strategies related to supply chain to the company so that company will able to grow and attain a better market share. The company Zara was established by Amancio Ortega Gaona in 1975. The main business of the company was to manufacture the products of fabrics which can satisfy the needs and preferences of consumers in the market. By using active supply chain management process, the company wants to focus on providing the best quality of cloths to its customers. Zara is successfully operating itself above from its competitors like Benetton, Gap, and H&M. This report considers the issues which are faced by the Zara in the market and also provide logistics management strategies to get competitive advantage in retail world (Ferdows, 2003).
The prime activities in supply chain of Zara are crafting, trading, manufacturing and providing the product to the customers on time. To control the activities of its suppliers, Zara has adopted vertically integrated supply chain. Zara believes that there should be various designs available to the customers in the market. In this manner the company launches new designs and products in its showrooms all over the world as new arrivals. With the continuation of former strategy, the company also tries to sell its products in the market as soon as possible. Both the strategies lead to generate the curiosity among its customers. The company never used to advertise its products as it believes to create a unique brand image of its products among its customers. The company also adds up the philosophy of serving its customers by keeping focus on their tastes and preferences according to their regions in its strategy. The company also has a number of warehouses to store its clothes and to supply them to the market effectively and efficiently (Bisen & Srivastava, 2011).
Dell is a successful company in terms of its effective logistics management. In the supply chain, customers place the order for the products and company provides the parts to the suppliers. Suppliers supply those products to the customers. Dell has horizontally integrated supply chain which is the key factor of its success. On the other hand, using vertical supply Chain Company is able to fulfill the demands of its customers easily where production philosophy of Zara always gives importance to new products and designs (Butler, 2015).
In case of Myer, the company does not divide the market into segments such as demographic and psychographic lines of the customers and their demands. On the other hand, Zara has divided the market based on the demographic and lifestyle segmentation. The business concept of Myer with the logistics management is very unclear. Along with this, the customer service of the company is unsatisfactory. Myer does not have well organized strategic plans for the business operations.
Zara supply its products from its headquarters which is situated in Australia. The stocks of the company are carried out to the Australian border and after it the logistics carriers take them to the stores. If the sale of a particular product doesn’t reach the standard level the company stops the production of that product. By following this strategy the company is able to remove unnecessary products from the market.by using proper and effective communication techniques the company is able to cut down its cost and make the process of manufacturing easy (Gallaughar, 2008).
It is well known that Zara is able to dominate the fashion industry all over the world by adopting new and innovative strategies every time. The company is also able to connect with its customers and designers by using effective communication system. Although there are some of the factors on which the company has to focus on to get success for long term. Since the company used to possess effective supply chain but now days customer’s preferences are more dynamic and are creating challenges to all fashion retailers (O’Marah, 2016). Some of these challenges are as follows-
Although the company has well planned supply chain but it also has to face the competition, pressure and issues related change in tastes and preferences of customers. Usually the company has to combat the situations like distribution network configuration, contracts related to inventory management supply and obvious customer value. So it is very important to use active logistics supply chain strategies by the company to get permanent success and market share in the fashion industry. As the supply chain management also has to face a number of common issues related technical and managerial factors and hence these should be addressed by the company in an effective and efficient manner and obviously it’s not easy to manage these challenges by the company (Gattorna, 2012).
A company has always possessed the need of strong and operative leadership skills along with good management system. Although the founder of the company has taken necessary and best possible decisions for the company but now days in the dynamic economic conditions, it becomes very essential for the company to plan new strategy for enter into new market and new products according to needs and preferences of customers. There is also the need of strong human resource development in the company so that low cost and high quality products can be manufactured. Also the problem with Zara is that it has not yet developed distribution centers and this leads to increase in cost causing manufacturing of bad quality of product (Maguire, 2012).
As it is clear that Zara is very famous brand among the customers however there is still need for active and effective supply chain in the company. The brand has already connected itself according to different values of the customers. The company has also possessed effective strategies related to speed and response. Supply chain management is the crucial part of business operations that is helpful in managing various processes of business. It can be seen that Zara already has effective strategies in terms of response and speed and there is only need to improve them to overcome from the above discussed issues ((LU, 2014). There are some strategies that should be adopted by the company in its business operations.
The theory of planning and control leads to strong and operative effect on the operations of a company. Concept of planning and control will help Zara in various areas of business operations like IT resources and infrastructure development in decision making process. The key factor towards success of Zara is the effective control by its management according to plan. This would also help in understanding the changes which used to take place in the tastes and preferences of customers (Cowe, 2011). Planning will help the company to manage the resources on their optimum and efficient use. It will lead to sustainable development of the company on a higher scale. By the effective planning and framing the ideas, company would be able connect the new concepts and new ideas with the business to implement significant change in terms of improving customer satisfaction and their values in the clothing industry. The key objective of the company with planning and control would be to analyze different situations and trends in market and the strategies of the company accordingly (Sadre, 2012).
This concept is basically includes of understanding the expectations of customers regarding the products of the company. Each and every customer has different perception towards the provided products and services. Although company satisfies its customers in terms of quality control, assurance and improvement in the products but still there is need of effective quality management in performance and activities of Zara. The concept of quality management would be able to focus on the quality of the products of the company and helpful in achieving the quality standards of products in the industry (Macchion et al, 2015). A study show that Zara has its image in the market due to its major participation in quality, so to further increase the market share it has to develop innovative products by maintaining quality standards. It will also help in bringing a drastic change in the roles related to leadership, management responsibilities etc (Lysons & Farrington, 2012).
This is the most crucial part of the supply chain management for any company. To deliver the best products and services efficient and active inventory management is needed in Zara. With the help of effective inventory management concept, Zara would be able to connect the key factors of supply chain i.e. logistics and inventory with the business. For the financial lead in the market, it is important for Zara to control and review the inventory management process effectively. It will also help in keeping and maintaining strong connection with customers as well as suppliers. So, it can be said that inventory management will be the backbone of operative functions of Zara (CIPS, 2014).
It is well known that resources are limited in the business operations as compared to demands in the market. So, the company has to utilize its resources in an optimum manner. Zara is the most popular brand in all over the world (Kerber & Dreckshage, 2011). The company’s operations are taken place in almost all the countries of the world. For effective management of operations, the company must adopt lean synchronization strategy. It would be helpful in improving the trust of the customers for the brand and its clothing products (Christopher and Towill, 2000).
In the present and modern era, internet, e-mails and other social media platforms are helpful in getting success to many companies. Now day’s factors and concept related to IT are more important in applying marketing practices in business. Various digital media platforms are very effective in analyzing the current trends of the market. In case of Zara, there is always need of effective capacity management for effective functioning of the company. This concept will help the organization in interacting with its overall performance. By monitoring the continuous performance of data measurement, company would be able improve the capacity of storage of products (De Brito, Carbone & Blanquart, 2008).
Zara being a popular brand always gives priority to its activities related to IT and infrastructure. Zara being a dynamic organization has always adopted efficient technology and infrastructure in its business. IT infrastructure of the organization use various resources like networks, software, data center and hardware facilities which are generally helpful in making basic functioning of the organization. This efficient and prominent factor will definitely add up the value in the business process of Zara. By adopting technologies, the company will also able to increase customer’s value in the business and maintain healthy relations with both external and internal environment (Gorrepati, 2016).
The IT sector leads to great impact on fashion industry by providing resources of integrated and better value. With the use of his infrastructure, the company will be able to transfer its goods to major centers and stores. Adoption of this strategy will be very helpful in balancing the position of the company and also help in collecting important information regarding business matters of Zara. So it can be said that technology is the biggest factor which will help the company in expanding its business along with quality (Romano, 2009). Following are some important technologies which can be used by Zara efficiently-
Enterprise resource planning-
It is very important factor which helps the company in visibility of supply chain. ERP is regarded as backbone of supply chain management in which the entire element related to functions is connected. ERP has the quality of developing specialized solutions for the identification of needs and preferences of customers. However Zara uses SAP and people soft factors but there are some more technologies like categories, season which will help Zara in proper understanding of its customers (Lashen, 2012).
Computer-aided design-
CAD is another technology which can be used by Zara. This technology will help the company in fulfilling the ideas of designers associated with fashion into finished products. There are many competitors of Zara which used to follow this technology to improve the life of their product cycle management. By coordination in work of employees and implementing CAD, Zara can easily improve its production and development process (Mihm, 2010).
The main goal of providing quick responses is that it will help the company in understanding needs and preferences of customers based on the designs of the products and their willingness to pay on it. It is regarded as classic “pull” philosophy which can be adopted by Zara. This strategy will aid the company in improving the flow of information across supply chain to the customers. It is clear that information and communication technology is very important resource for an organisation and it will be very helpful for Zara to increase it market share.
(Source: Lashen, 2012)
Basically, it is not suffieceint to gather the infoarmation so, the inforamktion must be shared for the growth of the company. for all the business level activities, information technology is the most essentail part as it includes operation, planning, execution communication with the customers and decision supprt (Jones & Robinson, 2012).
Zara is known for its effective and operative supply chain in the business process or in another words supply chain is the key factor of Zara for its success. This chain includes sourcing, designing, manufacturing and distribution of outlets. As customer is the kingpins for Zara and hence it manufactures its clothes and accessories only on that level which can satisfy the preferences of its customers. Above discussed strategies would also be effective for other companies i.e. Myer. The reason is that when any customer buys from the retail store then he expects that product will be in good quality. In such case, effective supply chain and other strategies would be helpful for the company to improve the quality of products. To make system of the company efficient and relevant and to get success in long run, above discussed strategies would be very effective and helpful.
Conclusion:
Above discussion about the company Zara provide the proposals to the company to present a stromg competition in front of its competitors. It is the fact that Zara is already doing well in supply chain management of its busines. Hhowever it is very important to stay connected with the customers in dynamic conditions of market. The demand of the customers is continuously increasing and hence there is the need for the company to adopt efficient technologies so that changes are easily identifiable and accordingly corrective actions are taken.
References:
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