Objective of this project report is to study the
supply chain management practices at Zara, one of world’s largest retail chain
in fashion and apparel industry. Objective is also to get the insight of all
the changes implemented by Zara and their effect on efficiency and
the company: –
Zara enjoyed 77th position in “The
100 Top Global Brands” in 2005. As of 2018, Zara ranks 51st Rank in
Forbes World’s most valuable brands. The sales turnover of Zara in 2018 is
$17.2 billion. By 2000, Zara had its operations in more than 50 countries. Zara
manufactures around 450 million clothes every year. Zara has more than 2,200 stores across 93 countries with
around 436 stores in Spain alone as of in 2018. Ortega’s
parent company Inditex consisting of Zara and other entities
altogether, reported sales of US $20.7 billion in 2012, 66% of which was
contributed by Zara (US $13.6 billion in total).
Zara is a fashion retailer chain
headquartered in Arteixo, Galicia, Spain. Zara was founded by Amancio Ortega in
1975. Rosalia Mera, who co-founded Zara with her former husband Amancio Ortega,
died in 2013 at the age of 69. She was the wealthiest self-made woman in
the world with a fortune estimated at $6.1 billion at the time of her death. Ortega
in 1963 started his own retail business named Confecciones Goa, to manufacture
housecoats. A German customer cancelled a major order in 1975 after which
Ortega started selling clothes from an outlet in his factory. He called this
outlet as Zara. Very soon Zara started making its presence in different cities
in Spain. Zara made its first appearance in New York in 1989 and Paris in 1990
and kept on expanding globally.
is Supply Chain Management: –
constitute of certain approaches to efficiently integrate the flow of
materials, finances, and information from suppliers, manufacturers,
wholesalers, distributors, retailers to the final customer, and back again. Supply chain management (SCM) is the
oversight of materials, information, and finances as they move in a process
from supplier to manufacturer to wholesaler to retailer to consumer.
Supply chain management involves
coordinating and integrating these flows both inside and outside the company.
It is said that the ultimate goal of any effective supply chain management
system is to reduce inventory, improve efficiency and productivity to
ultimately increase profitability and customer satisfaction. Organizations increasingly find that
they must rely on effective supply chains, or networks, to compete in the
global market and networked economy.
Advantages of an integrated SCM (Supply Chain Management)
Systems are: –
Lower Costs – After implementing an efficient
Supply Chain Management system in a business, the company can lower cost of raw
materials drastically. This system efficiently plans for materials to be
brought to your company from the lowest cost provider possible and at just the
right time to ensure there is no excess or deficiency in the material. A good Supply
Chain Management system can enhance company’s relationships with suppliers, vendors
and customers so that the cost cutting opportunities like discounts on a volume
can be availed or given.
Improved Collaboration – A Good Supply Chain Management
system with appropriate IT support can allow a company to know the status of raw
materials and finished goods are available by tracking with suppliers and
distributors. SCM can also keep track of where good are to be delivered or sent.
This transparency keeps relation between businesses strong. Generally, the reports
are automatically created in these systems which keep the managers updated about
every step of supply chain. These reports also help businesses to analyze
potential areas for improvement.
Cycle Times – The time taken by a business
to turn a product from the raw material to finished product, supply it to the distributor
and receive the money is called a cycle time. Using this money received companies
buy new raw materials and same cycle repeats. Any delay or bottleneck in any of
these processes can increase the cycle time which can harm the businesses in competitive
environment. A good Supply Chain Management system reduces cycle time and
ensure that raw materials are provided when they are needed so production never
Resolving Conflict – A business never always runs smoothly
as there could number of factors that can lead to problems such as issues with labors
in the production. If the distributor goes out of business, you will have to
find another way to sell the product. A SCM system lets your company better
cope with problems at either side of the production spectrum. You can quickly
and easily figure out a response to the problem instead of being surprised by
it at a later time.