Zara and their successful supply chain management

Which Brand in the world can say that they can deliver the same fashion you just saw in the catwalk to the stores in less than 2 weeks? It seems impossible right? Specially in third world countries where fashion arrives 1 month later.

In the fashion industry, the correct order is to show the styles in catwalks and fashion shows, wait for the public´s answer and then start producing the garments so they can hit the stores in about 1 month or two.

Zara changed that game and they offer clients the same styles and garments seen in shows in their stores, and they do it in record speeds.

If Zara produces more than 45 million items per year, what is the key to their success? How do they do it? Zara is a company that focuses its efforts on delivering the latest trends with great speed and responsiveness since it was created in 1986 in Spain. They have grown to almost 86 countries now and they still deliver their latest creations in supersonic speed to their customers. Let’s take a look at how they can fulfill all the requirements to have one of the best, if not the best supply chain management in the world.

We first have to understand that Zara owns their supply chain and that gives them the possibility to have a fast fashion approach to the customers. Fashion comes by seasons and Zara makes sure they can keep up with every season in record times of delivery.

In order to fulfill the timetables required to be on the fast fashion track, Zara uses the very well-known strategy called Just in Time production with controlled and integrated processes. Here is more or less how Just In Time production works within Zara: the production for Zara is almost all made within their factories and they make sure that 85 percent of each factory´s capacity is reserved for last minute adjustments in every season. With their In-house production they can be very flexible when it comes to the amount, variety and frequency of their new products, styles and garments and also flexibility on the date that these products will be launched.  For their designs, the company has a sort of third party manufacturer or designer in this case. They use very sophisticated facilities for fabric sourcing, cutting, and sewing that are very close to their main offices in Spain and with direct contact with the design area and with the power of taking decisions. The employees that work at such facility have better wages than everybody else in the world that works in the same area, but in the end, it pays off.

Another thing that is done at Zara is that they commit to 15 to 25 percent of their season line with 6 months before the season. Then what they do is to release 48 to 59 percent of the line right before the season starts. This means that they manufacture and they design their clothes right in the middle of the season and they are still delivering batches just before the season is about to end. It usually happens that there are garments or fashions that start due to bloggers or fashion analysts and they can become a fast trend. Zara makes their employees work at Spain in order to get the design, create a piece and then send it to all the factories around the world so they can produce it in less than a week and have the garment or piece in stores before 1 or two weeks of finding out about the trend. Then, the store managers communicate all type of feedback on the style and that information is immediately sent to the designers in Spain who start making the necessary changes and they can send the design again to the stores.

Labor strategies also contribute to this success because what Zara does is to have extra employees ready to work if the market demands it. They work full capacity for almost 5 days per week but they leave a lot of extra time for extra shifts and hire temporary employees who are cheaper and make up when the market is going fast.

 

zara_supply-chain-management_logistics
Image courtesy of Alberto Garcia at Flickr.com

So maybe you are thinking how do they keep their inventory within normal levels? Well, they have inventory optimization models that help Zara know the amount of products that should be delivered to every store twice every week. Zara limits the stock to every store, creating a sense of scarcity and exclusiveness that helps the brand image and that controls retaining a lot of stock that is not popular or is out of fashion.

Did you like this post? Be sure to also read this post on how the internet of things work within the supply chain

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