ZARA’S OPERATIONS STATEGY, A CRITIQUE OF A BUSINESS CASE.
Operations management is in regard to all operations within the organization responsible for creating goods and services that organizations pass to their customers. This function is at the heart of all organizations, giving the means of achieving their aims and reason for their existence. These activities include: managing purchases, inventory control, quality control, storage and logistics. A great deal of focus in operations is on efficiency and effectiveness of such a process.
An example of successful operations strategy in the retail industry is the strategy employed by Zara which is discussed in this ...view middle of the document...
What makes Zara such successful when other competitors are falling? Which business model does Zara use? What are the challenges that Zara faces? The questions can be best answered through a SWOT analysis of the firm.
3.0 S.W.O.T Analysis.
* Zara’s strong supply Chain Management.
An efficient supply chain is becoming more and more key success factor for companies. According to McMillan and Mullen (Operations Management Vol-2, 2002), “the purpose of SCM is to integrate all tasks associated with the bi-directional flow of materials, information and finance into organized, coherent, managed processes in order to provide end-to-end management and control.”
* To analyze Zara supply chain, it is interesting to look closely at the product design, inventory management, evaluation of suppliers and vendors, logistics management, material management, time scheduling, information systems which are the main contributors in allowing Zara to offer cutting edge fashion at affordable prices.
Zara as part of the Inditex group has a very strong distribution network. Hence their superior supply chain management enables the retailer to deliver goods within 24 hours of the receipt of order at its European stores and 40 hours at its American and Asian outlets. Inditex’s logistics is carried out from distribution centers located in Spain. Currently the company’s logistic department employs more than 5,000 people and distributed 697 million garments, in the financial year of 2008
This competitive distribution network enables Zara to enhance its operational efficiencies and thus increase its customer satisfaction
It is also interesting to consider other key performance indicators of Zara comparing to other peers in the retail market
* Design and Production- Just in Time Production
Zara delivers fashionable and trendy cloth addressing all tastes through a controlled design and integrated process – Just in Time . Just In Time concept is a concept from Japanese philosophy focusing on the elimination of waste in management or production system. Zara designs all its products itself. Concurrent method design could be an adjective to the of product design process which involve the whole commercial team , designers, market specialist, procurement team as well as continuous feedback from store managers to ensure that the products reach the customer just in time.
Young Designers (26 average) draw the design sketches then discuss it with market specials and planning & procurement staff. Designs inspiration is copied from different sources (trade fairs, catwalks, magazines) from all around the world. It is worth to mention that out of 40,000 designs only 10,000 are approved. This illustrates the flexibility of ideas generation and on the other hand the huge number of designs reflects the ability to meet almost all the fashion requirements by customers of all ages (up to 55).
Zara business is organized...