Essay on Zara Supply Chain

2403 Words Jan 23rd, 2012 10 Pages
A network and flow explanation to Zara’ success
Angel Díaz and Luis Solís
Instituto de Empresa, Maria de Molina 12, 5°, Madrid 28006, Spain E-mails: angel.diaz@ie.edu; luis.solis@ie.edu Abstract Zara is a Spanish fashion manufacturer and retailer that has known swift success. Spaniards have become used to visiting Zara frequently, as there is always a new product. Zara launches 100 different collections every year, with over 11000 models, none lasting more than five weeks in production and with an average lead-time (design to store delivery) of four weeks. Inditex, the group to which the brand Zara belongs owns five brands with over 1000 stores in more than 30 countries. Although its global sales are still one sixth those of Gap, its
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While Gap brands, Zara intrigues. We argue in this paper that the success of Zara is explained by a business approach in which a highly automated and largely local production and distribution network facilitates very fast response times as the key competitive advantage, and that this design can be due to cultural and market characteristics of Spain.

History
The founder of Zara, Amancio Ortega started a small garment factory in La Coruña, Galicia in 1963. In 1975 Ortega integrated downstream by opening his first store, Zara. By the end of the decade six stores with that name were located in Galicia. The eighties saw important changes. Ortega created the parent company of Zara, Inditex (stands for Textile Design Industry) announcing a movement toward integrated designfabrication-retail operations. Also in this period an ex-IBM salesman, José María Castellano, the actual Vice-president of Inditex, imposed a vision of time-based competition sustained on the intensive use of technology that was to dominate the holding in the future. By the end of this decade Zara had 82 stores in Spain and six abroad. In the nineties the group developed the quick response, integrated logistics network described in this case. An important milestone was the adoption at the beginning of the decade, and well ahead of other Spanish companies, of Just in Time and lean production practices, with knowledge provided by Toyota, Japan. By the end of the century,

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