Zara Supply Chain Analysis

Zaras Secret to Success In comparison to its competitors, Zaras tack on drawstring is quite unconventional. Instead of focusing on competitive product prices and advertising Zara has developed a super integrated supply chain paralleled by a few(prenominal) (1). This supply chain allows it to rapidly respond to market demand and have extensive control over its design and production process (1). Inditex, the wearing confederacy that owns Zara is extremely vertically integrated. It is comprised of over 100 design, manufacturing, and distribution companies (3).Contrary to the common practice of ousting unnecessary labor, it handles most of its own manufacturing (60%), outsourcing only simple clothing designs. This extensive integration allows Zara to design, manufacture and distribute in as little as 15 days, which is lightning fast in the clothing industry (1). This is the essence of Zara. Zara releases reinvigorated clothing designs every two weeks (2), creating a made to order f eel as customers often have only genius opportunity to buy a specific product (3).This strategy increases the frequency that customers visit the store and also decreases the need to mark down prices on unsold merchandise, saving the company coin (2). Furthermore, this unusual practice reduces the cost of running out of one item. They sometimes even encourage stock outs to promote scarcity and therefore higher demand- a technique unheard of elsewhere (1). Image 1 Workers assembling clothing at a manufacturing plant Success of Zara and Goals of TargetZaras responsiveness to consumer demands is one of its greatest accomplishments. Its designers perform extensive fashion research and communicate exceptionally with its retailers to accomplish this (2). Target releases new clothing every 6 months which is a pull togethers pace comp atomic number 18d to Zara. By improving the fashionableness of its products Target could expect more sales and less inventory to hold. Also, if Target could leverage more of its capital assets in the way Zara does more flexibility of production operations would result.Zara mainly integrates backwards in its supply chain in order to control its production operations (2). Mimicking this aspect would allow for more control of Targets order sizes, order frequencies, and quality. Also, this would improve communication within the supply chain and therefore fall the bullwhip effect. Furthermore, Zara produces more voguish and less basic clothing than Target. If Target augmented its ratio to be more similar to that of Zara it could realize more sales, especially in the womens department. What Target Could Learn from ZaraSpecific ways that Target could improve its supply chain operations based on Zaras model are as follows For one, Target should improve its realization of market demand by increasing communication from consumers, and retail departments to producers. Programs should be implemented to foster constructive relationships amidst re tailers and designers to communicate up and coming fashion trends. Also, designers should use consumer surveys, attend fashion conventions, and research the market to further meet demands for future trends.Furthermore, a method of lay in consumer feedback should be used to further study the desires of customers and how to meet them. This could be done at a relatively low cost and without much alteration to the supply chains basic function. Difficulties could include financing extra designer education, and obtaining valuable, relevant feedback from consumers. These are minor problems that would not be insurmountable. Increasing Targets backward integration of the supply chain would increase production flexibility.Large manufacturers and suppliers that produce multiple major store product lines should be targeted. Integrating them into the mountain could potentially reduce extraneous costs due to order size inefficiency and the bullwhip effect. Product quality could be better contro lled as well as communication. towering costs of purchase and dealing with overseas firms could pose problems to this idea, but could result in a more efficient supply chain. Augmenting the ratio between smart and basic clothing would also be beneficial to Targets sales.Target currently sells 80% basic clothing and 20% trendy clothing. With the popularity of womens clothes high, Target should move towards producing more fashionable clothing in more styles within the womens department. This would boost sales of the more expensive trendy clothing and simultaneously decrease excess basic clothing inventory, increasing revenue and decreasing holding costs of basic clothing inventory. Making the slickness to more trendy clothing production could be costly, but if done gradually would not have a huge impact on the monetary sector.