Zara And Supply Chain Essay

848 words - 4 pages

Zara was founded in A Coruña, Galicia, Spain in 1975 by Amancio Ortega. In the beginning Zara clothes offered affordable replicas of expensive designer clothing. In the 1980s Zara’s founder Ortega began to make adjustments to Zara’s manufacturing, distribution, and design strategies to help create a responsive supply chain. These adjustments to Zara’s supply chain proved to be successful and allowed them to open retail stores in more than seventy three countries. Today Zara is the world’s largest fashion retailer which is due to its vertically integrated value-chain and responsive supply chain.
It is a well-known fact that Zara employs a team of over two hundred designers to implement ...view middle of the document...

Next, these subcontractors send the finished garments to Zara’s distribution center.
Zara’s distribution center system adds significant value to their supply chain. With the continued use of JIT principles Zara doesn’t have to experience high inventory cost. Zara’s distribution center system includes two large distribution centers and three small satellite centers. Zara’s four hundred thousand square foot distribution center located in Arteixo is where their distribution process begins. Once the garments arrive they are fitted with mobile tracking devices that allow them to be sorted into its corresponding barcoded area. Inditex’s director of logistics Lorena Alba stated that “The vast majority of clothes are in here only a few hours” which displays the company’s practice of using distribution centers as places to move garments to rather than store garments. Orders are usually shipped by time zone to allow Zara to better meet customer demand. Zara utilizes the services of 3PLs two days a week to ship merchandise by truck to their European retail stores. The non-European shipments are shipped by air.
Zara’s retail stores help distributes merchandise downstream directly to the customer. Store locations are usually chosen according to the traffic in shopping districts. With a less than one percent advertising budget Zara’s retail stores are the face of their company. Zara’s prices are usually set to be lower than their competitors and they provide limited designs for multiple garments, meaning no two garments will have the same design.
Zara’s design...

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