Fundamental reasons for success
Based in Spain, Zara is a potential company in fashion apparel. The potentiality has been pronounced at the global platform as well. It is a multinational company; however it is a subsidiary of world famous apparel retailer “Inditex”. The company is quite different to others in the same business. The core difference lies in an efficient handling of the supply chain operations. The company has capably handled the operation of that apparel also that has challenged the others. The unsold items are a burden to may apparel manufacturers. However, Zara has efficiently managed such products also (García-Álvarez 2015). In Zara, products are labeled with the different country’s names. If any of the shipped products are not sold, then Zara recalls the entire shipment and relocate it to another location. Interestingly, they relocated shipments gets sold at the end. This gives an example of supply chain efficiency. The main purpose of this assignment is to understand the benefits of efficiency in supply chain operations. The study makes this apparent by giving the example of supply chain operations of Zara (García-Álvarez 2015).
Zara has been successful due to various reasons that also include the supply chain management. They are capable in delivering the products in less time. They are capable due to their utterance control on the logistics. The control brings the much needed difference that helps to deliver the products at a quicker time. The use of Just-in-Time approach helps them to take measurable approach. This also helps them to have a better forecasting capability, which is necessary to prevent the products from getting waste. Additionally, a better use of the different tasks, capability to effectively utilize the different resources and its core competencies are the few factors that contributes to the success of Zara and helps the company to have a competitive advantage. Their designers are in touch of the latest fashion trends on a regular basis. The core competencies and the strategy to be in touch of the latest fashion trends help Zara to manufacture products in quick time. Products once manufactured are labeled with the different country’s name and then sent accordingly. If some of the shipments are not sold in the target market then those are recalled and are labeled for another country. In this way, they are able to utilize even the unsold items. This also prevents the products from getting wasted. The strategy to prevent the wastage is an uncommon fact to many other apparel manufacturers across the globe (García-Álvarez 2015).
Comparison with one successful and one unsuccessful company
Some of the strategies that Zara uses just show its control on the supply chain management. It also shows how capably they understand the market (Bi et al., 2013). The strategy to minimize the product’s wastage adds values to its supply chain efficiency. The company is able to understand its market. An efficient forecasting capability enables Zara to understand the customer’s demands. They are quick on manufacturing once the orders have been placed (García-Álvarez 2015). This is indeed necessary for an apparel manufacturer that it has a capable forecasting ability, have better counter actions for unsold products and capable to manufacture in quick time.
Both Dell and Zara are highly successful companies. Both the companies represent the two different domains. Dell is specialized in manufacturing the computers while Zara is specialized in manufacturing fashionable apparels.
Dell follows a very simpler form of the supply chain. This can be divided into three segments such as customers, Dell and the suppliers. When orders are placed, Dell approaches to its respective suppliers to get the work done. They approach the suppliers to get the required materials. The collected materials are then assembled to get the orders completed. The completed orders reach the market largely through online sales. This is indeed an intelligently picked strategy that helps the company to save on the processes that are usually required to send the goods to the market (Dell.com 2017).
This is significantly different to Dell. Zara has an efficient logistics that is utterly required to efficiently manage the supply chain operation. Their designers keep a close look at the market and inform the same to the company. The report is generated through an extensive market research that their designers do. Distributors help them to know the market orders. The company uses the Just-in-Time approach to respond to the customers in real time. They are also able to prevent the wastages through the mentioned process. They do so by rolling back the unsold shipments to a different location where it gets sold (García-Álvarez 2015).
Dell follows a horizontally integrated supply chain whereas Zara uses a vertically integrated supply chain. Dell does not manufacture the computers. It rather uses the third party suppliers to get the orders done. Dell just takes care of assembling the different parts. Through this approach, the company has concerns only about assembling works. This is indeed a lot easier process and dell capably manages the operation (Dell.com 2017).
Comparison between Zara and Dell’s logistics management
Zara follows a vertically integrated supply chain in which they will also be required to control their suppliers as well. In a vertically designed supply chain network that Zara follows, it is required to maintain an effective coordination with the suppliers and the designers (M. Beheshti et al., 2014). The company rightly does the same. It is also evident in a fact that they are able to deliver the orders in quick time. Zara has the utmost control over its manufacturing process. They use an agile manufacturing process that helps them to understand the actual market demand and manufacture the orders in quick time (García-Álvarez 2015).
Dell operates through a horizontally integrated supply chain network. This is indeed an easier approach that just waits for the demands. Once the orders are generated, Dell approaches its suppliers. The company has listed 15 suppliers from which it gets its 85% of the required orders. The suppliers might not be aware of the expected demands; however, Dell ensures that through its efficient strategy. This is why the company does not fail in fulfilling the demands (Dell.com 2017).
Zara, on the other hand, operates through a vertically integrated network. It is required to closely work with the suppliers. Moreover, the logistics need to be efficient enough. The demands for fashionable apparels are very high and it changes frequently. This is why numerous other fashion apparel manufacturers fail to meet the demand (Nenni, Giustiniano and Pirolo 2013). However, Zara successfully manages it through the agile manufacturing process. This allows working closely with the suppliers and having an utter control on the logistics. In this way, they are able to control the entire process from orders to the collection of the required materials and then deliver those to the market. This is why the company is very quick in dispatching the orders (García-Álvarez 2015).
Dell does not bother about the inventory management. They respond to the orders, which are placed. Dell does not actually manufacture the computers; it rather assembles the different parts. They just contact their suppliers when there are orders placed. The strategy helps Dell to save significant expenditures, which could have been used in storing the manufactured products (Dell.com 2017).
Zara stores its product to the suppliers fro where the apparels are sent to its different stores twice in a week. In this way, the company is able to save on expenditures that could have been made on storing the goods (García-Álvarez 2015).
The distribution channel of Dell includes suppliers, retailers, assimilator, distributors and the end users. The B2B model is implemented in the company that allows its majority of clients to book the products online. This is indeed an intelligent move as it helps to cut down on the expenditures and saves time as well (Dell.com 2017).
Zara follows a different strategy. The company does not stock its inventories. Inventories are rather shipped twice in a week to its different stores. Shipments are labeled with the different country’s names. If any of the shipments are not sold then those are recalled and shipped to some other location by labeling a different country’s name to it (García-Álvarez 2015).
Myer is an iconic retailing company in Australia. It has lived up to the status by bettering its supply chain operations. The supply chain efficiency has increased after TPG took over the Myer. The process had then sensed the urgency to better the supply chain operation. The supply chain follows the fundamentals of supply chain operations. However, it has moved a step further with some more strategic plan. The venture was able to deliver a world-class supply chain management. They have distribution centers where the manufactured products are stored for packaging and labeling. They also have four hubs at the international locations. Those hubs are used to stock the new inventories. They also have a warehouse management system. They have used e-commerce to maximize their capabilities in terms of generating orders online as well. To bring effectiveness in the delivery service they did introduce roll cages. Roll cages have helped to ensure the process from stock replenishment to point of sale. In this way, they maintain both accuracy and the time (Myer 2017).
Zara on other hand does not believe in stocking the manufactured products. It rather sends the manufactured products to its different stores. The products are indeed stored with the suppliers. The core competency of Zara is the control that it has on the entire supply chain process. They have controls over the suppliers. They also control the logistics operation. Moreover, they are able to meet the demands of customers. This is due to their designers who are engaged in thorough market research to understand the current market trend. This is also due to the agile manufacturing process that enables it to efficiently understand the demands and respond to that in quick time (García-Álvarez 2015).
The competitive advantage of Zara is because of several reasons. The company follows a vertically integrated supply chain. This implies that the company will need to control its suppliers and the logistics. Moreover, it is always a challenge to understand the exact market demand. Zara does that all convincingly through its strategic capabilities. It has an utter control over the logistics, which is of high importance in respect to a timely delivery. Logistics do their works on their own. They are needed to ouch to get the work done (García-Álvarez 2015).
Zara does not store the manufactured products in the storage house. The products are generally kept with the suppliers and sent to its different stores twice in a week. In this way, it manages to get rid of storing needs. Moreover, they are able to save a significant sum of amount through this strategy (García-Álvarez 2015).
Their designers are always engaged in market research. They help to get the latest fashion on demand. The distributors provide the actual market needs. This way they manage to know the current trend and the market demands orders. Zara uses the agile manufacturing process that facilitates a quick understanding of the market. Moreover, this also helps the company to respond to the identified demands in real time. This is indeed a challenge to many other fashion apparel manufacturers (García-Álvarez 2015).
Their strategy to use the unsold items and then send it to some different location is a real treat. The unsold shipments are rolled back to its temporary stores where products are stored twice in a week. It is the aligned with a different location where it gets sold. This also states the supremacy of Zara in understanding the market demands. They better understand which market to use in case of rolling back the unsold items (García-Álvarez 2015).
There are no such similarities in between Dells, Myer and Zara (Ha-Brookshire and Hawley 2013). Dell uses a horizontal method to handle the supply chain operations. In this way, it is able to reduce the complexities of supply chain operation. It does not manufacture the products. Their suppliers rather manufacture the products for them. They just assemble the different products to make that available online. In this way, Dell is able to save on storing the gods in storage house (Dell.com 2017).
Myer, on the other hand, uses a much-strategized approach to reduce the complexity of supply chain operation. The company has a distribution center. It also has a warehouse management system where the packaging and labeling are done. They also have international hubs which they use to stock their inventories (Myer 2017).
Zara, on the other hand, has a different approach altogether. It does not believe in having a storage house. It rather stores the manufactured products from its suppliers. The company sends the products to its different stores twice in a week. The products are then delivered to market from there only. It uses the agile manufacturing process to efficiently understand the market demands and to deliver the products in quick time. Additionally, it controls the suppliers and the logistics to remove any sort of flaws from it. The supply chain management of Zara is indeed better than the both Myer and Dell. This is only because the controls that Zara has on it supply chain (García-Álvarez 2015).
No, the three different formulas cannot be used by a single company. Every single part is related to another. Addition and removal of any other element will hamper the entire supply chain process. However, other companies may take lessons from Zara on how to control the suppliers and the logistics. Supply chain management has troubled many through its complexities (Bhattacharya, Mukhopadhyay and Giri 2014). However, there are some other companies that have strategically answered to the identified complexities. Walmart, Coca-Cola and Tesco are some of those reputed brands that have successfully managed its supply chain operations (Arli et al., 2013). It is indeed required to reduce the complexities of the supply chain. This can be done by considering the few strategies used by Myer, Zara and Dell.
The control of Zara on its logistics and the suppliers is a learning lesson for others. This strategy will help to get the required materials on time. This will also help to put pressures on suppliers to get the quality products. Moreover, this will help to control the logistics that make the delivery delayed. The use of agile manufacturing process is another lesson to learn. This will help to analyze the market demand and help to deliver the product quickly (Dos Santos 2012). The same technology is followed by Zara as well. Zara hires designers who are in continuous research of market trend. This helps Zara to relate the customer’s trends with its efficiency.
Conclusion & recommendations-
Zara, Myer and Dell have different approaches to the supply chain complexities. Dell uses a horizontally integrated supply chain to ease out the complexities of the supply chain. In this way, the company is able to control its suppliers and meet the customer’s demands. They get the required materials from the suppliers. They do not manufacture it; however, this is feasible only to some electronic goods. This is never feasible to an apparel industry. The strategy used by Myer is also not very feasible to other companies. Myer is able to control the supply chain operation; however, the operation does not emphasize much on how to control the suppliers and the logistics. The way Zara handles its supply chain is a lesson to many. It teaches on how to control the suppliers and the logistics. It also teaches on how to become aggressive in the market study. It preaches on how to prevent the unsold items from getting wasted. Material wastages is a burden on many organizations indeed.
Based on the analysis that has been made on the supply chains of Zara following recommendations can be suggested to other companies to help those handle the complexities of the supply chain:
- Agile manufacturing process should be followed to improve the forecasting capability and to speed up the product delivery time. However, this is feasible only for such companies that are strategically capable of handling the process. Otherwise, those companies should look for the lean manufacturing process. This helps to prepare the products based on the orders generated and helps to generate the delivery in time.
- An in-depth marketing research is indeed required. This will help to understand the market trend and allocate the orders accordingly. This is however effective much in case of the agile manufacturing process as it does work on the identified market trend.
- An efficient logistics services are also required. This means that the company must have a control over its logistics operation. This will help to deliver the products on time, which is indeed a big concern especially to those businesses that are also engaged in the door-to-door delivery system.
References-
Arli, V., Dylke, S., Burgess, R., Campus, R. and Soldo, E., 2013. Woolworths Australia and Walmart US: Best practices in supply chain collaboration. Journal of Economics, Business & Accountancy Ventura, 16(1).
Bhattacharya, S., Mukhopadhyay, D. and Giri, S., 2014. Supply chain management in Indian automotive industry: Complexities, challenges and way ahead. International Journal of Managing Value and Supply Chains, 5(2), p.49.
Bi, R., Davidson, R., Kam, B. and Smyrnios, K., 2013. Developing organizational agility through IT and supply chain capability. Journal of Global Information Management (JGIM), 21(4), pp.38-55.
Dell.com, D. 2017. Supply Chain. [online] dell.com. Available at: https://www.dell.com/learn/us/en/uscorp1/cr-social-responsibility?s=corp [Accessed 14 Dec. 2017].
Dos Santos, M.A.O., 2012. Global warming mitigation promotes corporate entrepreneurship within Woolworths’ supply chain. African Journal of Business Management, 6(31), p.9151.
García-Álvarez, M.T., 2015. Analysis of the effects of ICTs in knowledge management and innovation: The case of Zara Group. Computers in Human Behavior, 51, pp.994-1002.
Ha-Brookshire, J.E. and Hawley, J.M., 2013. Envisioning the clothing and textile-related discipline for the 21st century its scientific nature and domain from the global supply chain perspective. Clothing and Textiles Research Journal, 31(1), pp.17-31.
Beheshti, H., Oghazi, P., Mostaghel, R. and Hultman, M., 2014. Supply chain integration and firm performance: an empirical study of Swedish manufacturing firms. Competitiveness Review, 24(1), pp.20-31.
Myer. 2017. Myer. [online] Available at: https://www.myer.com.au/ [Accessed 13 Dec. 2017].
Nenni, M.E., Giustiniano, L. and Pirolo, L., 2013. Demand forecasting in the fashion industry: a review. International Journal of Engineering Business Management, 5, p.37.
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