Zara's Supply Chain Success: How SCM Led to Industry Leadership - Essay Sample

Introduction

In recent times, the number of multinational businesses has increased. The increase has led to stiff competition in different sectors. One of the areas is the clothing industry. For affirm to beat its competitors, it needs to have a competitive advantage. Zara, our company has grown to become one of the leaders in the industry. The report will show how supply chain management has contributed to the growth of Zara.

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Supply chain management considers all the activities involved in planning and conducting the flow of products, starting from raw materials to distribution to the customers (Hugos, 2018). Zara's way of operating may seem crazy to other people. Although the stores are spacious, customers usually find a few products on display. Since the products are few, they are generally in high demand. Also, goods sold are regularly replenished, ensuring the goods are per the preferences of the customers. A regular flow of information is essential for the whole process. "But Zara's organization, operational procedures, performance measures, and even its office layouts are all designed to make information transfer easy" (Ferdows et al., 2004). Also, Zora designs, produces and distributes all its products and owns most of its retail shop. The company is, therefore, able to connect with the customers and control the movement of information and products.

Zara's highly responsive unit ensures that the company does not produce clothes that are not wanted by the customers. The company stocks many different products in small quantities. When one product is finished, customers are motivated to try another product in the shop; hence, the unsold items are few. Also, the firm produces a low capacity to be able to react to unexpected demands faster than its competitors (Hilletofth & Hilmola, 2008). In less than two weeks, the firm can deliver a product from the drawing board to the store hence dealing with any increase in demand. Faster response to unexpected requests ensures increased profits.

Handheld computers connect the retail stores and the headquarters in La Coruna. Important information about sales, trends, and customers' reactions to the products is exchanged. Also, telephones are used. The free flow of data and the absence of bureaucratic procedures ensure the success of the company. Some firms may use PDAs, but essential data is usually delayed on the way. When the company decides to produce a prototype, computer-aided systems are used to refine colors and texture, and barcodes rack the garment pieces through other processes (Ferdows, et al., 2004). The use of this information system gives the company a competitive edge.

Zara follows a predictable method of doing things. The goods are produced in smaller batches and shipments made twice a week. Every activity in the supply chain follows a given pattern. The pattern is used for decision making by the managers. Also, by following a strict rhythm in activities such as replenishing retail shops, customers know the schedule and hence, identify the appropriate time to visit the retail shops (Ferdows et al., 2004). Regular replenishing of the shops ensures the customers' satisfaction by giving them a range of new products regularly. Customers know the time to expect new products. Besides, replenishing also provides the best clothes since the less desirable ones that were never sold for some time are take back from the shops.

Conclusion

Zara has a unique supply chain management. Some of the principles governing the processes include proper communication and regular replenishing of shops. The company is also highly responsive to any change in the market, and all its activities follow a given pattern. The pattern is crucial in decision making, and customers use it to know when to expect sales. Supply chain management has dramatically affected our growth.

References

Ferdows, K., Lewis, M. A., & Machuca, J. A. (2004). Rapid-fire fulfillment. Harvard business review, 82(11), 104-117.

Hilletofth, P., & Hilmola, O. P. (2008). Supply chain management in the fashion and textile industry. International Journal of Services Sciences, 1(2), 127-147. //www.inderscience.com/offer.php?id=19608

Hugos, M. H. (2018). Essentials of supply chain management. John Wiley & Sons.