zara's agile supply chain
Post on 02-Jan-2016
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ZARA: FAST FASHION
AGENDA
Industry Overview
Zara Overview
Zara Supply Chain
Zara Challenges
Recommendations
INDUSTRY OVERVIEW
• High Demand Uncertainty• Push vs. Pull Method• 30% of world production exported from developing
countries
• Geographic Differences• Per capita spending and preferences different in any
given market
INDUSTRY OVERVIEW: COMPETITION
Gap, Inc. H&M Benetton Zara
Production Outsourced Outsourced In-House40% In-House
60% Outsourced
Production
Lead TimesHigh High High Low
Net Margins -.06% 9.6% 7.05% 10.47%
INDUSTRY OVERVIEW: POSITIONING
Fashion - Fashion +
Price -
Price +
ZARA
H&M
Gap
Benetton
ZARA OVERVIEW Owned by Inditex (Industria
de Diseno Textil)
Largest of 6 Inditex Chains
500 stores in 30 countries
For women, men, and youth
From infants to age 45
Zara starts with “Z”
Zara
Massimo Dutti + Bershka+ Pull and Bear +
Stradivarius + Oysho
$2,153
$782
$0
$500
$1,000
$1,500
$2,000
$2,500
Sales
('00
0,000
's)
Zara vs. 5 other Inditex Chains (2001 exchange rate: 1.15 Euro=$1)
The “yoo-goo-goo-lizer” –you know, the guy that speaks at funerals!
ZARA OVERVIEW: ADVANTAGES
• Vertical Integration
• Quick Response to Demand (Pull System)
• Small Batch Production
• High Product Turnover
• Central Distribution Center / Strong IT System
INDITEX MANAGEMENT /
DESIGNERS
Determine apparel designs and
manufacturing locations
IN-HOUSE (40%)
High QRHigh Cost
EUROPE / N. AFRICA
(40%)
High QRHigh cost
ASIA(20%)
Low QRLow Cost
DISTRIBUTION CENTER
Increased shipment frequency increases QR
Small batch production lowers cost of demand
uncertainty
STORES
Decentralized store management supplements
QR
Managers determine products to sell and return
IT SYSTEMS
Provides accurate demand information to
determine manufacturing locations
and production levels
Manufacturing
Design SaleDistribution
System is designed for short productioncycles, quick response (QR) to demand,
and reduced number of markdowns
Returns from stores either rerouted or disposed of in local stores near dist. center
ZARA OVERVIEW: SUPPLY CHAIN
ZARA CHALLENGES
Aggressive growth strategy needed 76% of equity value based on future growth expectations
Need to maintain competitive advantages in new geographic markets Data collection, Quick response, High product turnover, Strong
IT System
RECOMMENDATIONS
Short-Term Solution: Expand in Europe Focus on Italy (63 Billion Euro Market) Implement “Oil Stain” expansion method
Long-Term Solution: Expand Outside of Europe Establish operations in North America North American Distribution Center (Mexico) Initially focus on coastal cities Implement “Oil Stain” expansion method
Culturally Diverse Management Team
Q & A
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