The document discusses Zara's highly efficient supply chain which allows it to respond rapidly to fashion trends. Zara is able to design, produce, and deliver new clothing to stores within 2-4 weeks, much faster than competitors. This speed allows Zara to offer a wide variety of affordable, on-trend clothing and keep its stores fresh with new inventory twice a week. Zara's vertically integrated supply chain, with designers, factories, and distribution centers located nearby each other in Spain, minimizes delays and bureaucracy. Zara's supply chain model has provided it with a competitive advantage in the fast fashion industry.
The document discusses Zara's highly efficient supply chain which allows it to respond rapidly to fashion trends. Zara is able to design, produce, and deliver new clothing to stores within 2-4 weeks, much faster than competitors. This speed allows Zara to offer a wide variety of affordable, on-trend clothing and keep its stores fresh with new inventory twice a week. Zara's vertically integrated supply chain, with designers, factories, and distribution centers located nearby each other in Spain, minimizes delays and bureaucracy. Zara's supply chain model has provided it with a competitive advantage in the fast fashion industry.
The document discusses Zara's highly efficient supply chain which allows it to respond rapidly to fashion trends. Zara is able to design, produce, and deliver new clothing to stores within 2-4 weeks, much faster than competitors. This speed allows Zara to offer a wide variety of affordable, on-trend clothing and keep its stores fresh with new inventory twice a week. Zara's vertically integrated supply chain, with designers, factories, and distribution centers located nearby each other in Spain, minimizes delays and bureaucracy. Zara's supply chain model has provided it with a competitive advantage in the fast fashion industry.
The document discusses Zara's highly efficient supply chain which allows it to respond rapidly to fashion trends. Zara is able to design, produce, and deliver new clothing to stores within 2-4 weeks, much faster than competitors. This speed allows Zara to offer a wide variety of affordable, on-trend clothing and keep its stores fresh with new inventory twice a week. Zara's vertically integrated supply chain, with designers, factories, and distribution centers located nearby each other in Spain, minimizes delays and bureaucracy. Zara's supply chain model has provided it with a competitive advantage in the fast fashion industry.
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Value Chain:
Value Chain is applied procedures that a company do to add value to a product or services
and also decrease costs and increase competitive advantage (Hastings, Howieson and Lawley,
2015). Focus on customer, value chain has in a supply chain it’s a crucial part to companies
compete between them on agility( supply chain’s effectiveness to react on the market’s
demands and modifications), adaptability (capability to adapt supply chains process to
respond to macro-economic changes) and alignment (Capacity to align all the vendor and
supply chain participants ‘s interests with the company’s one to improve performance and
share risks and responsibilities) to leverage through the market (Li, Wu and Holsapple, 2015),
(Lee 2004).
In a fast market that we live today, is essential to a company to respond really quick the
trends and customer changes to keep its business (STRATEGIC DIRECTION, 2005),
(Lee,2004) . Retailers such as Zara, realized it and set up a very efficiency supply chain that
can keep them on top. Instead outsourced many of your production like its competitors, Zara
keep a huge time compound to marketing, designers, dresser etc in a complex at La Coruna
Spain to minimize bureaucracy and delays as well as maximized speed on decision makers
(Zhelyazkov,2011) (STRATEGIC DIRECTION, 2005).
Dutta points out in his case study the Zara’s idea to success (“short lead times= More
fashionable clothes, Lower prices = Scare supply and More styles = More choice, and more
chances of hitting it right” (Dutta,2002). It contributes to minimized inventory and
transportations costs, more options to the stores as a result rapid turn over. Most of its
inventory (around 80%) are seeing as a basic line (does not have much change on the market)
(Bruce and Daly 2006) and it is send to be factored outside Europe sometimes even
uncoloured to wait for the trend colour It has low production costs and higher time to delivery. The 20% left are the fashionable clothes, which are design at Zara’s complex,
factory in Europe to quick be delivered in the stores (Zhelyazkov,2011).
To keep that business, Zara supplies its stores twice a week with small quantity of each piece.
As a result, the stores always have something new to show. In case the piece is not selling, it
will be on sale.
The stores managers have also an important part, they update the system about the products
was sold and the one that remains and order directly to system, making the order unique to
attend each store and providing data which will help reveal the customers tasty for that
particular location(Zhelyazkov,2011).
Pionner on ASC( Agile Supply Chain), Zara can respond a new trend from a clothes design to
a store in an average of time to 2-4 weeks (Zhelyazkov,2011). It is much faster than it’s
competitors which the average is 4 months.
“Supply chain adaptability adds to firms’ competitive performance through routines
contributing to recognition of, and response to, macro-economic changes. Most
companies do not realize that, in addition to unexpected changes in supply and demand,
supply chains also face near-permanent changes in markets. Those structural shifts
usually occur because of economic progress, political and social change, demographic
trends, and technological advances. Unless companies adapt their supply chains, they
will not stay competitive for very long (Lee, 2004 ).”(3}
Zara gets the credit to be pioneer in Agile Supply Chain and most researchers explain its
success with its efficient ASC (Dutta, 2002; Tiplady, 2006; Sull and Turconi, 2008; Zhang, 2008). Zhang (2008) suggests that “whole process of the supply chain in Zara could be
divided into four parts: product organization and design; purchase and production; product
distribution; sales and feedback”. (4)
“The samples are collected from various sources, like pret-a-porters, haut couture (Dutta,
2002), moulded by culture, for example what is happening on the street, in clubs, lifestyle
hotspots and fashion “flash points”, and not from a mood board or a trend prediction agency
12 months in advance of a selling season (Barnes and Greenwood, 2006). The only place
where Zara's is predicting heavily its ordering its fabrics. Fabrics are considered raw
materials and need to be present before the season starts due to long lead times. Anyhow,
there is still efficiency applied in this process. The fabrics are ordered uncolored and this
gives flexibility to change the color depending on the trends. As Cai-feng (2009) mentioning:
majority of stock is held as “work-in-process” awaiting configuration instructions.”(4)
“Customer demand - Lately there is a growth in companies product mix, while shortening
products life cycle. A good example are Zara designs, they produce small quantities and wide
variety, that way updating the shop outlook every week and cutting down on promotions and
reductions.”(4)
“Zara is producing fashion outfits, this has low complex, but high uncertainty. Cai-feng
(2009) argues that uncertainty is also a characteristic of competition among organizations and
will increase due to a combination of factors in future supply chain environment. However,
Zara is minimizing its uncertainty by focusing on a limited range of and basic shapes, so that
it deals with a rather narrow product range. In that case even if a product does not sell well, a small number has been shipped and it is going to be markdown and replaced with new one
shortly.”(4)
“The Zara basic label is daily commodities with no shelf life, e.g. underwear, basic t-shirts,
socks, etc. and are mainly produced in China, which presume cheaper production and longer
lead times. On the other hand the high-end trendy Zara labels like Zara RTF, mainly
consisting of up-to-date fashion outfits are produced in Portugal and Spain, meaning higher
production cost and shorter lead times, but helping fast reaction on demand.”(4)
“Zara is consider to be the pioneer in fast fashion, with its twice a week supply to its stores
with new fashion items. For comparison, the usual times are from six to nine months (Bruce
and Daly, 2006) for far east clothing industry, 4 months for an international brand and only a
week for Zara (Zhang, 2008)”(4)
“The raw data comes from quantitative and qualitative approaches. Sales and replenishment
reports are examined hourly by the Zara’s store managers. On the other hand store managers
order items themselves instead of relying on what has being sent from the headquarters. The
accuracy of their forecasting affects their compensation, which makes them more responsible.
Part of the qualitative data gathering is direct customer feedback given to shop assistants
daily. Another one is after shop closes, the store manager and assistants turn to a recovery
team and try to recall what happen during this day, as well as sort out tried, but unsold items
in fitting rooms and try to find a pattern, which can be fed to the design team.”(4) “You would be forgiven for assuming that such a task should pose few problems.
However, customers are notoriously strange creatures and habits can be short lived.
Throw in the fact that trends inevitably come and go – some much quicker than others –
and it becomes obvious that the success of any organization will depend heavily on its
ability to meet demands and respond quickly to fluctuations and change.”
Roteiro:
Definicao:
“Louis Grestner Junior once said that everything starts with the customer; and while few
would argue with the former IBM CEO, ensuring that the right products end up with the
customer is arguably even more important. However, this will only occur if the supply
chain is efficient enough to make the journey from factory to shelf as smooth as
possible.” (1)
“Modern competition has shifted from “firms vs firms” to “supply chains vs supply
chains” (e.g. Lambert and Cooper, 2000 ; Davis and Speckman, 2004 ; Ketchen and
Guinipero, 2004). Within this context, best-value supply chains characterized by agility,
adaptability, and alignment, have been theorized as a crucial means for firms to obtain sustainable competitive advantage and superior firm performance (e.g. Lee,
2004; Ketchen and Hult, 2007 ; Li et al., 2008; Gligor and Holcomb, 2012 ). “(3)
“ This stems from two major gaps between theoretical foundations for best-value supply
chains and empirical testing. The first gap is that current studies fail to provide adequate
first-level evidence, which examines whether or not all three qualities of best-value
supply chains (i.e. agility, adaptability, and alignment) contribute to firms’ competitive
performance.”(3)
“Agility refers to the capability of a supply chain to be alert and respond to sudden
changes in demand or supply (Lee, 2004; Li et al. , 2008). Adaptability refers to the
capability to track macro-economic changes (e.g. structural shifts in markets), and adjust
supply chain designs to respond to those changes (Lee, 2004). Alignment refers to the
capability for creating shared incentives among participants for better performance ( Lee,
2004).” (3)
“In this paper, we conduct two studies to investigate effects of best-value supply chains
on firms’ competitive performance. Results of the two studies help answer the question
of whether SCM pursuing best-value supply chains just a cost of doing business, or
might it be worthy of the attention, resources, and investment needed for excellence?
Whether the excellence of best-value supply chains translates into superior competitive
and/or market performance? Ultimately, can the superior competitive performance be
sustained overtime?
Research on best-value supply chains is based on a fundamental assumption that striving
to excel in all three qualities (agility, adaptability, and alignment) is a worthy objective,
and that success in achieving this objective positively differentiates a firm within its
environment (Lee, 2004 ; Ketchen and Hult, 2007 ). However, aside from anecdotes and theorizing, there is little in the way of evidence-based analytical study about soundness
and generalizability of the fundamental assumption – especially in terms of all three
qualities (agility, adaptability, alignment) of best-value supply chains. Here, we explore
this assumption which, at least implicitly, underpins the literature for best-value supply
chains.” (3)
Evolucao:
“You would be forgiven for assuming that such a task should pose few problems.
However, customers are notoriously strange creatures and habits can be short lived.
Throw in the fact that trends inevitably come and go – some much quicker than others –
and it becomes obvious that the success of any organization will depend heavily on its
ability to meet demands and respond quickly to fluctuations and change.” (1)
“. Cai-feng (2009) define Agile Supply Chain (ASC) as a network‘s ability to consistently
identify and capture business opportunities more quickly than its rivals do. Barnes and
Greenwood (2006) definition can enrich it by adding: ASC is a “quick response, describe
shorter, more flexible, demand driven supply chains. ASC is driven by information such as
market data and information-sharing between businesses in the supply chain. In agile supply
chains, the visibility of information allows the supply chain to become more responsive to
changes in demand in the market place”. (4)
Como funciona na Zara:
“Zara has flourished on the principle of being responsible for its products all the way
from initial conception to the customer. Ironically, this involves defying many industry
norms. For instance, while rivals choose to minimize cost and risk by owning fewer
assets, Zara only outsources the production of clothing which is not subject to seasonal
variation.” (1)
“Zara carries out all operations under the same roof of its La Coruna headquarters.
Informality rules the roost and functions such as design, production and marketing all
rub shoulders with each other. This set up essentially removes the need for information
to travel through widely dispersed channels. It thus:
• Shortens delay.
• Minimizes bureaucracy.
• Provides the opportunity for more immediate comment and feedback.
• Allows speedier decision making.
• Lessens the potential impact of changes in circumstances such as an amendment to
retail orders. This reduces the risk of loss through overproduction.
“ (1)
“Not surprisingly, there is method in all this apparent madness. Ortega points out that
working to full capacity would strangle the system and leave little scope to react swiftly
enough to changing demands. It is the same with its sparsely replenished stores, where
small batches of stock regularly give way to newer lines. While this would stretch most
supply chains, Zara's ability to coordinate its activities enables it to cut drastically usual
industry timescales for the design and introduction of new garments from months down to around two weeks. This also forms part of the rationale for delivering in limited
quantities”(1)
“Zara almost transforms restricted availability into a virtue. Its clothing is highly
regarded, so the customer has to move quickly or risk losing out. As a result, the
company:
• sells its products more quickly and can thus operate with low working capital;
• boasts a significantly lower percentage of unsold items; and
• enjoys higher net profits than its rivals.
“(1)
“As an illustration of how supply chain agility, as a dynamic capability, helps firms
achieve superior firm performance, consider the way it is built into every link of a supply
chain (i.e. these links are plan, source, make, delivery, and return) at H & M, Mango,
and Zara (Lee, 2004 ). All three firms are in the fashion industry. At one end of their
product pipelines, the three firms have devised processes for agile design. As soon as
designers spot possible trends, they create sketches and order fabrics. This gives them a
head start over competitors because fabric suppliers require the longest lead times.
However, the companies finalize designs and manufacture garments only after they get
reliable sales data from stores. This allows them to make products that meet consumer
tastes, while reducing the number of items they must sell at discounts. At the other end
of the pipeline, all three firms have super-efficient distribution centers. They use state-
of-the-art sorting and material-handling technologies so that distribution does not
become a bottleneck when they must respond to demand fluctuations. H & M, Mango,
and Zara have become Europe’s most profitable apparel brands. H & M, Mango, and Zara have all grown at more than 20 percent annually since 1990, and their double-digit
net profit margins are the envy of the industry.”(3)
“Building on business practices, academic research suggests that indicators for firms
having supply chain agility include: agile supply chains can detect changes in
supply/demand in a timely manner through the collaboration of supply chain partners in
using multiple channels and real-time systems to track and exchange information
(Christopher et al., 2004; Li et al. , 2008). To respond to changes in supply/demand, agile
supply chains can reconfigure supply chain resources quickly to reduce supply chain
cycle time (Hult et al., 2004), increase on-time delivery (Goldsby et al.,
2006; Swafford et al., 2006), and reduce product development cycle time (Swafford et
