Analysis
Zara is one of the renowned apparel brands in the entire world. Zara has been founded in 1975 by a Spanish successor named Amancio Ortego Gaona. It is situated in La Coruna in North Western Spain. Although, Zara is a leading name in the apparel industry, it is a subsidiary of the parent company Inditex. Inditex is the largest apparel brand of the world. Zara is known as a huge profit making organization. It has influenced women from every corner of the world by its quality and innovative product range. The supply and logistics management of Zara is considered as key component for its success. Zara in its initial days was an outlet of rejected orders of women’s products. The organizational management of Zara has learned the importance effective supply chain management from the initial stage. Strong supply chain management plays a vital role in the organizational growth. It helps the organizational management to operate organizational function in an appropriate manner (zara.com, 2017).
The below mentioned article has concentrated on the supply chain and logistics management of Zara. It has emphasized the impact of supply chain management on the success of Zara. Therefore, it has presented some recommendations to resolve the issues that can be harmful for the organizational growth of Zara.
Importance of Supply Chain and Logistics Management:
Supply chain management is considered as one of the integral part of the organizational structure in recent time (Lu and Swaminathan 2015). In this competitive age, it has become highly important for business organizations to maintain healthy relation with all the suppliers and distributors to enhance the growth of the organization. Suppliers and distributors and other members that are involved in the supply chain and logistics management of an organization play an important role in the organizational development (Christopher 2016). Some analysts have claimed that Supply chain and logistics management is one of the pillars of the organizational structure. It leads the organization to earn desired position by providing quality service to the potential consumers (Stadtler 2015).
Supply chain management stimulates the customer service. Customers expect to have quality product from their favorite brand. Strong supply chain management provides quality and flawless products and service to the distributors and consumers on time. Effective supply chain management helps the organizations to meet the expectation level of the consumers.
Reduce Production Cost:
Effective supply chain management plays a vital role in reducing the production cost of the organization and by providing quality raw materials on time it helps the organizational management to maintain a balance between the product quality and the production cost. Supply chain management helps the organizational management to decrease the supply chain cost as well (Monczka eta l. 2015).
Supply Chain and Logistics Management of Zara
Competitive Advantage:
Supply chain and logistics management provides competitive advantage to the business organizations. By providing quality and uninterrupted service to the consumers the business organizations becomes capable of matching the expectation level of the consumers. This helps the organizational management to battle against other rival companies (Brandenburg et al. 2014).
Expansion in the Global Market:
Supply chain management helps the business organizations to set an example in the global market. It helps the organizations to perform actively in the foreign countries as well. In this modern time every business organizations look for an opportunity to extend their business organization in the international market. In this era of globalization it has become very easy to reach to the global consumers and set benchmark in the foreign industry (Fernie and Sparks 2014).
Increase Profit Margin:
Effective supply chain management helps the business organization to earn huge profit and establish a strong relation with the consumers. The business organizations that maintain a healthy and interactive supply chain is capable of maintain healthy relation with the consumers and drawing the attention of large number of consumers. Eventually this will increase the profit margin of the company (Holweg and Helo 2014).
As per the given case study, it can be stated that the organizational management of Zara always maintain healthy and effective relation with its suppliers and consumers. The designers of Zara always stay in touch with the suppliers and new trends. It leads them to match the expectation level of the consumers. Zara is known for its fashion trend and efficient product service. Many customers claim that Zara does not make its consumers wait for a long time for any new fashion trend. The supply chain management of Zara is a secret of its success. The organizational management of Zara maintains transparent relation with its suppliers (Qrunfleh and Tarafdar 2014). This is highly responsible for the growth of the organization. Zara’s organizational functions include designing, sourcing, production and distribution to the outlets. These are the key sectors of the supply chain management of Zara. The organizational management of Zara needs to focus on these sectors to achieve the organizational goal. The primary objective of Zara is to earn huge profit by providing quality service to its consumers. It has become very necessary for all the business organizations to expand business in the global market. Zara is one of the leading names among the business organizations that are operating successfully in the international market. It has its retails shops in all the major countries. It is not easy to manage the operation of all the retail shops without an effective supply chain and logistics management. The higher authority of Zara always pays close attention to the requirement of the foreign consumers. They consider buyers as the key element of their organization. They always incorporate new techniques to improve the quality of their supply chain management to fulfill the requirement of their international consumers (Stevens and Johnson 2016).
Types of Supply Chain and Logistics Management of Zara
The organizational authority of Zara always maintains its control over the manufacturing procedure and trade. The organizational management maintains healthy relation with the production department to retail shop managers. They often review their organizational function to identify the gap and loopholes in the organizational structure and supply chain. It is one of the key factors that influence the growth of the organization. Due to have a complete control over all the sectors of organizational function, the organizational management is able to identify the change that needs to be implemented to provide quality and effective service to the potential consumers (Chopra and Sodhi 2014). The organizational management of the Zara always pays close attention to the changing fashion trends. Due to have a good control over the organizational function, they are able to implement new and innovative designs and fashion trend to achieve the desired target in the apparel industry. The organizational management of Zara is capable of managing risks as well. As the organizational management often supervises the organizational activity, they can identify their future risk very easily. It helps the organizational management to reduce the risk before it leads the organization to meet an awful consequence. Zara is capable of providing fashionable products to its consumers in a very short span of time. Control over the organizational supply chain management is one of the major reasons of this success. As the organizational management is capable of maintaining the activity of various sectors of the supply chain, it can examine the organizational performance. The organizational management of Zara is aware of all the activities of their retail shops and they maintain healthy and interactive relation with the shop managers to understand the present situation and the requirement of the potential consumers (Ross 2015). It helps the organizational management to understand the market situation and recent trend which is highly beneficial for the growth of the organizational productivity. Eventually it helps the organization to meet the satisfaction level of the consumers by identifying the preference of the consumers. According to many reports, Zara always concentrates on the fashion trend and the quality of the products. It is the responsibility of the organizational management to monitor the performance of the supply chain management and maintain transparent relation with the suppliers and distributors. The higher authority of Zara make sure that all the sectors of the supply chain management are performing in an appropriate manner, as it is highly responsible for the growth of the organization and establish a strong bonding with the consumers. Consumers are the key element of the business organizations. Thus, the priority of every business organizations must be matching the expectation level of the consumers. By maintaining healthy relation with all the relation and maintaining a link between the various departments of the supply chain and logistics management, the higher authority of Zara is capable of meeting the expectation level of the potential consumers. Many customers of Zara claim that Zara is one of the most preferred and loved brand in the apparel industry (Crandall, Crandall and Chen 2014).
The organizational management of Zara believes in vertically integrated supply chain. It leads the organizational management to practice control over the suppliers. It helps the organizational management to meet the market demand as well as productivity level of the organization is also maintained by such practices. The organizational management of Zara pays close attention all the activities of their suppliers to ensure that the suppliers are providing high quality raw materials to the organization (Breen et al. 2015). The development of the organization is highly dependent on the quality of the raw materials. In recent time, people are very concerned about the product quality. They do not want to compromise on the product quality while they are paying the price. It has become very important for the manufacturing companies to use high quality raw material while producing any goods to make sure that they are providing quality products to the potential consumers. The organizational management of Zara is highly concerned about the fact. It influences the, to maintain control over suppliers. It is evident in the given case study that the designers and other members of the organization stay near to the suppliers and maintain healthy and interactive relation to define them the requirement and preference of the consumers and new market trend (Kozlenkova et al. 2015).
Zara is known for launching new trends and new products often. This is one of the major philosophies of Zara. The organizational management of Zara believes in providing modern and unique products to its consumers. This distinguishes Zara from other brands. The loyal customer of Zara does not need to wait for a long time to get introduced with a new fashion range. Zara believes in authenticity and uniqueness (Choi and Cheng 2015). It leads the organizational management to avoid any kind of advertisements of their products. This remarkable and unique strategy has helped the organizational management of Zara to establish a brand image among the potential consumers. This strategy works as a weapon for the Zara to grab the attention of the large number of consumers from every corner of the world. This strategy spreads a curiosity among the potential consumers about the new product range of Zara. At the same time, it puts a significant impact on the sale of products as well. Due to have limited supply of the products influences the buyers to often visit the stores to check out the new arrival products. The demands of the clothes are different in different countries, such as- in the tropical climate the demand of the summer clothes are high than cold climate. The scenario of the cold climate is different from the tropical climate. The organizational management of Zara always concentrates on the requirement of different consumers from the different part of the world. Such production philosophies have brought revolution in the apparel industry and led Zara to become the leading name of the apparel industry in all over the world (Wilhelm et al. 2016).
Zara maintains many warehouses to store their products. It has many warehouses in different parts of the world. The organizational management of Zara concentrates on storing sufficient products in the warehouse. They make sure that the products are supplied to the consumers in an appropriate manner. They always try to match the expectation level of their consumers (Deshmukh and Mohan 2016).
The organizational management of Zara always uses unique and innovative techniques in the logistics management, as it is the final stage of the supply chain management and the success of the organization is highly dependent on the completion of this stage (Martínez et al. 2014). The processed products of Zara are shipped from the production sites to the Spain via Corunna depot or Zara Logistica. The products are not stocked and delivered to the Zara’s retail shops twice a week. In the case of abroad distribution, processed products are carried to the border of Spain. Thereafter the logistic carriers carried the products to the retail shops from the border. The store managers monitor the demand of the products and order more products to the stock managers. Stock managers provide sufficient products to the stores accordingly. By monitoring the market demand, the store managers can identify the product that has the lowest demand in the market. They inform it to the higher authority of Zara and the production of that product is immediately stopped by the authority. Eventually it helps the organization to maintain the stock and the organizational management of Zara makes sure that none of the products are stored for no reason. This helps the organizational management of Zara to adopt the preference of the potential consumers (Brandon?Jones et al. 2014).
The organizational function Zara is highly dependent on the feedback of the consumers. As the organizational management does not prefer to restore any product, the designers of Zara need to depend upon the feedback of the consumers over any product. Any product that fails to impress the consumers is immediately stopped by the organizational authority of Zara. The preference of the consumers also keeps changing. It leads the designers to stop making any garments of that particular design. The organizational management of Zara needs to maintain active communication with the consumers to understand their demand and their opinion over any new design. It helps the organizational management to maintain the productivity level of the organization along with the profit margin (Farahani et al. 2014).
According to many reports, supply chain and logistics management helps every business organization to maintain a link between the supply of the product and the satisfaction level of the consumers. Logistics plays a vital role in operating the organizational function successfully. It is considered as the key asset of every business organization (Lai, Wong and Lam 2015). The organizational management of Zara always uses modern techniques in their logistics management t shift their products and raw material from the one place to other place. It is not possible for any business organization to carry out any mission without maintaining a strong logistics management (Sanders 2016). Moreover, the organizational management of Zara maintains healthy relation with government of various countries to shift their products to the retail stores of that country. They follow all the transport and logistics rules of the country they operate their business in. It helps the organizational management of Zara to carry out all the initiative successfully. Logistic is an integral part of the supply chain management. It completes the supply chain of every business organization. In this scenario, Zara needs to manage transport system as it operates in various countries. The only way it has to deliver its numerous retails shops are the transport system of various countries (Truong 2016).
As per the discussion it can be seen that the supply chain of Zara is almost perfect and it is reflected in the success story of Zara. However, nothing can be flawless in this world. There are very few loopholes in the supply chain Zara, such as- miscommunication with the suppliers and store managers.
In order to resolve the issues, the organizational management of Zara must maintain contractual agreement with all the suppliers. It will build a strong bonding between the organizational management of Zara and suppliers. It will help the organizational management to avoid any kind of miscommunication with the suppliers in future. This will be helpful for the organization to achieve the long term goal.
Although, the organizational management of Zara maintains healthy relation with the consumers, they must monitor the activity of the shop managers as well. They must scrutinize that if the statements of the store managers about the market demand of any product are correct and reliable. Otherwise, the brand may leads to the wrong direction. The organizational management must interact with the store managers to monitor their activities.
The organizational management of Zara must provide some facilities to their raw material suppliers to establish a healthy relation with them, such as- provide financial support, health care facilities. It will be helpful for the organizational management to earn the faith of the suppliers and it will influence the suppliers to provide high quality raw materials in reasonable price.
Conclusion:
As per the previous discussion, it can be concluded that Zara is one of the leading name in the apparel industry of the entire world. The strong supply and logistics management of Zara is one of the major reasons of its success. The organizational management always maintains their control over all the sectors of supply chain management, such as- suppliers, manufacturing, and distribution. It helps the organization to identify their mistakes as well as by communicating with the consumers, the organizational management can easily observe the recent market trend and the preferences of their potential consumers. They make sure that no products are stocked in the warehouses and by earning the feedback of the store managers and consumers they can identify the product that is not capable of drawing the attention of consumers. They use innovative techniques to shift their raw materials and products to other places. However, to earn the faith of the suppliers and avoid any kind of miscommunication, Zara must rely on the contractual agreement. It will ensure a bright future for the organization.
Reference:
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zara.com. 2017. zara.com. [online] Available at: https://www.zara.com [Accessed 29 May 2017].
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