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Requirement
ASSIGNMENT interms of logistic and supply chain management
-highlighting the importance of these area in both manufacturing and service context
-relevant to zara free trade agreement
-Outsourcing 3PL,
Integrated technology, inventory system, integrated communication technology
-vertically integrated ETC……
After reading the case study uploaded on the subject web site, prepare a 2300 – 2500 word report ( executive summary, table of contents body, conclusions and recommendations) analyzing the issues in the case, and identify logistics management strategies that enable Zara (page 71 in the text) to become so successful. Contrast this with Dell and Myer.In your report you need to consider :
? The Fundamental reasons for success, with a comparison to another successful and an unsuccessful company?
? How can Zara maintain its competitive advantage, here the concept of sustainability may be introduced?
? Are there similarities between Zara Dells and Myers formula for success and could this be suitable for other companies and if so explain why, if not explain why?
Sources such as Wiki…, scribed.com, docstore.com, etc. are not considered acceptable sources and should not be used – reliance on such sources will result in a fail grade.Use academic journal article ..
Presentation:
Report format – 2500 + 10% word Word.doc or Word.docx (word count applies to content only, not title page, executive summary, table of contents and reference list).
Responses should have a title page attached reflecting the content and the author, executive summary, table of contents, introduction, suitable headings and sub-headings to cover the relevant content and elements of analysis, conclusion, recommendations, reference list/bibliography, appendices (if relevant). Harvard referencing (Anglia version) is to be used. Remember, in business today, to even get your business applications read, let alone considered.
Solution
Executive Summary
This paper deals with the study of supply chain management and logistics of Zara, a fashion retailer for boosting their customer value. The primary idea of competitive advantage and sustainability is considered with different plans of action and contrasted with successful and unsuccessful organizations. The paper contrasts the supply chain management and logistics and business techniques of Zara with Dell and Myers.
Introduction
Supply Chain Management (SCM) has been considered as a successful factor in the fast growing fashion business. The supply chain management deals the suppliers, their suppliers, customers and even customer’s customers sometimes. This management looks after all the processes taking place from raw materials and their origin to the customer consumption. The output is a combination of time, form, and place along with a function of the service or the product proposition (Cai-feng, 2009). SCM and logistics are viewed as an emergent field along with an emerging academic field. The perspective on this issue is not yet to be fully mature but poses a significant promise. SCM as well as logistics is all about influencing the behavior in defined directions and specific methods.
SCM encompasses a series of various interdependent upstream followed by manufacturing and then downstream processes that are targeted towards transforming the raw materials into the service/products so as to meet the demands of the customers.
Toby B. Gooley once stated that "It's about time- Supply-chain management and time-based logistics together can give companies an unbeatable opportunity to increase profits."
Traditionally, companies have always grouped their customers on the basis of their industry, trade channel or products and then it provided the same level of service to the concerned people within each segment. In contrast to that, the SCM groups its customers on the basis of service needs irrespective of the industry and then it finally tailors services to these particular segments.
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ZARA CASE STUDY
Zara was founded and established 1975 by Spanish-born Amancio Ortega Gaona. The actual intention was to have an outlet for all the canceled orders of the night wears and lingerie, but the organization realized the importance of the manufacturing and retailing and that guided towards the evolution of Zara (Ferdows et al., 2003). The significant need of Zara and its guardian group Inditex is their clients and a demand driven supply administration. In spite of the fact that Zara is a worldwide multi-national organization, however, it is a backup of Inditex which is world's greatest attire retailer. The Inditex group possesses more than 100 textile organizations. Zara is the lead brand of Inditex, enthralling greatest deals (Gallaugher, 2008).
Report
This report involves a profound analysis of strategic methods of Zara to Supply Chain and Logistics Management, competitive advantage and customer value, understanding the impact of the supply chain in this. Porter's generic strategies (1980), supply chain patterns and Just-in-Time manufacturing are considered as the theoretical framework for the study, and other related elements like are hierarchical culture, education, modernization, and knowledge administration and the disposition of the core competence. Finally, the report studies the contrast between the logistics management strategies of Zara, Dell, and Myers.
Dell and Zara’s Logistics Management
Dell and Zara, both are successful organizations. Dell manufactures computers whereas Zara manufactures apparels.
Dell’s Supply Chain
The supply chain of Dell is very simple and consists of three fundamental players: Consumer, Dell, and its supplier. The customer is the one who places the order, Dell procurers its supplier and other parts, instantaneous assembly and then finally supply to the concerned customer.
Zara Supply Chain
Its supply chain is entirely different when compared to Dell. The key functions of the supply chain are designing, sourcing followed by its manufacturing and then distribution to the outlets.
Point of Difference
Type of supply chain of Dell
Zara follows a vertically integrated supply chain whereas Dell follows a horizontally integrated supply chain. Dell is detached from the production process, contracts outside suppliers for the completed products as well as delivery.
Interestingly, Zara has full control over various stages of garment production. The organization has been successful due its full control over the crafting, trade, manufacturing, to for delivery. Complete control of the organization empowers them to respond rapidly to the changing style, fashion, and preferences of customers. This complete control grants Zara to issue new outlines and designs in a brief length of time. Another advantage of following horizontal supply chain is that it can be controlled effortlessly since least number of responsibilities are there in the production system and assembly line. On the other side, Dell needs to organize various little systems, control the entire thing and roll out fundamental improvements which is much simpler. Both types of the supply chain are appropriate for the respective organizations.
Suppliers
As Zara follows vertically integrated supply, so it practices control over all its suppliers. Demand is, therefore, effectively met and manufacturing is effortlessly accomplished. Dells has been managing its supply chain exceptionally well, and it has been seen that 15 suppliers' conveys 85% of their total services. In spite of the fact that they have some suppliers, however, speed and exactness are the essential concern for Dell towards their services of clients and customers. Risks of insecurity, uncertainty, deficiency of merchandise and postpone in delivery are involved. However, rather than lessening their stocks, Dell strains on fast delivery of products and services. This is conceivable since 95% of their suppliers are found near their manufacturing unit.
Production philosophy
Dell has been following make-to-order procedure. Such a procedure is custom – made for a limited period for their particular client that is the orders are made according to the necessity of the client at sensible costs. Once in a while the core competencies of the accomplice firms or suppliers and IT are utilized, for example, the Internet, to consolidate a value chain. Dell gives the scope of a range of customized products and services on their website. They likewise design items and products which are effectively customized.
Zara is eager towards presenting its new designs as well as dispatching new items rapidly. They have a belief that more styles are equivalent to more choices. They launch their products in a constrained showroom in which stores gets only a few pieces of the newly launched products. This technique of making their product restrictive sold out the stock rapidly additionally creates a curiosity in their customers regarding their next launch and assembly line, making the following item selective as well as demanding. This strategy of the lower amount of products is equivalent to restricted supply and further is equivalent to the impulse purchase. Zara does not publicize their apparels and other products since they do need a brand picture. Their objective is their product and desire to the customers towards their products. Since their apparels and products are restricted, clients now and then visit the store to check fresh arrivals. Some garments are exceptionally demanding in some area while alternate garments in another district. For example, in India interest for summer garments is high due to their tropical atmosphere, though in Europe interest for woolen garments is high because of their frosty atmosphere throughout the year. Europe is considered as the fashion capital of the world and can market their items/products in another locale, for example, Asia. Such a production philosophy is beneficial for serving the tastes of the customers. Dell advances their rationality of make-in-order items and products.
Storage
Dell has low-inventory expenses with no additional expense on their distribution centers and warehouses. Rather than ten days, they have an inventory of only 7 hours. Different costs like distribution center/warehouse, supplier storage along with transporter, direct delivery, or retail storage with direct client pickup further helps them for cutting down the expense. Dell does not have an inventory policy. Contrastingly, Zara has number of distribution centers and warehouse for storing their clothing and for circulating them proficiently.
Distribution
Indirect Distribution Channel of Dell incorporates suppliers, retailers, assimilator, distributors and the end client. Dell follows the B2B model which permits 90 percent of suppliers for making orders online on the web. Dell offers its laptops and PCs online directly according to the immediate model. In that way, the in-between phases are evacuated adding to the additional time and cost, and Dell is straightforwardly linked with its customers. This, therefore, upshots transport expenses of Dell.
Products of Zara are delivered from the main and the only manufacturing site in Spain via Corunna stop or Zara Logistica. Their inventories are not supplied and are disseminated to the Zara stores twice in a week. For abroad circulations, the inventories are conveyed to the outskirts of the Spain, and the logistics transporter of the nation brings it down to the stores. Stores arrange for more stocks from offers by placing orders, company managers takes the orders and goes on to the logistics who are responsible for handling the stock. Stores are further graded as per the deals, sales and precision of orders, this rank represents their priority level towards the supplies of the orders. In case any of their products has not been selling in the business sector then the production of these products is promptly halted. This implies no stocks will be heaped up. In the event that an item is not selling in specific stores, the organization stops generation of that item. This disposes of pointless stocking of unsold products. This procedure adjusts to purchaser's inclinations rapidly.
Communication
In Zara, the new designs and new collection with new assembly line are overhauled week by week and released. Zara shops’ supervisor places orders using La Corunna on sold as well as the unsold items. This reports an apparel or product is to be changed or kept at the store, and new outlines are to be created or not. The designers rely upon attire deals, sales, reactions, and comments from clients. This correspondence system is cost effective and further paces up their procedure. This is a shortcoming in the case of Dell since they need foreknowledge regarding the worldwide styles. The client orders are their just feedback.
Myer and Zara’s Logistics Management
Myer has not attempted to section their business sectors along the demographic lines as well as psychographic lines of clients and their utilization of services and products, though Zara has divided the business sector along demographic lines and the lifestyles lines. Zara has successfully branded itself as the pioneer of fashion industry offering cash value. Myer's "My Store" idea is completely vague. It has a general focus of business sector. Zara's targeted group include youth, especially between 20 – 35-year-old youthful design markets. While, Myer has positioned itself as a departmental store with the broad assembly of items and products but have unsatisfactory client service. It utilizes discounting of sales strategies for inviting more clients. Rather, Zara is roused on propelling seasonal style products with enticing promotional exhibits and satisfactory client administrations.
Just – in – time policy
Just-in-Time (JiT) is a pioneer of Japanese innovation and also monitors inventory (Hill, 2009). Ohno (1988) watched automaker, Toyota; JiT disposes of the wastes by minimizing the costs of inventory holding, generation time and by reduction of defects (Christopher and Towill, 2000). These days JiT is being used in all the manufacturing units (Hill, 2009) and lean thinking towards the supply chain along with the business operations (Harrison and Van Hoek, 2005).
Zara has achieved its pinnacle for adapting with the innovation and technology along with the standards of client value and modernization. Market victors and front runners are primary determinants of various methodologies of lean and agile services.
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Place Your OrderZara’s competitive advantage
The World Retail Congress recently named Inditex as "Universal Retailer of the Year? for conducting best practice in worldwide retailing. It additionally got the highest score in stock exchange record for the dependable social venture, FTSE4Good, 2011. These awards demonstrate Zara's propensity for the steady extension. Its journey for development is another reason for competitive advantage in customer - driven business sector in this era. Zara's new item advancement and development have been accredited globally along with its leadership skills in services. Advanced business knows association, collusion, and clarity in their supply chain which is Zara's quality with suppliers (Romano, 2009).Persistent change, development and coordinated effort all add to the idea of learning association. Learning organization is all encompassing, discourteousness and identified with conviction. Zara's methodology is customer-based, is subjective to building up Zara and recognizing the relationship in the middle of producer and retailer, speaks to a responsive and exposed attitude.
Pedler et al. (1997) give a learning association which gives help with the group and individual learning, participative learning, partnership, organization and environmental examining in conjunction to the Top 25 supply chains. The preparation, feeling of empathy along with cooperative ethos are normal for Zara.
Dalton (2010) perceives that learning along with core competence is the main sources of competitive advantage. Value chain examination imagined the core competence of Zara. At long last, the brand credit and the fidelity are responsible for holding less power in today's worldwide business sector. Brand worth is also a major source of competitive advantage. The chain value investigation shows the brand esteem Zara has eventually accrued. One online source has placed Zara on number 219 in the top worldwide 500 brands. H&M is positioned most elevated at number 89, Gap at number 425 whereas Benetton neglects to make any evaluating. Zara is situated at standard with Dove and M&S and moves ahead of time of Sanyo, Colgate, and Hyundai. There are different strategies for ascertaining brand esteem. However, the utilized one is a marked down income (DCF) method.
Conclusion
It can be presumed that a supply chain that works for somebody might be adverse to others. Zara's supply chain management investigation gives more profound comprehension of the inward value chain. It's client was driven administrations, logistics, driving the pace, customized innovation, vertical integration and economies of scale got a handle on from its guardian organization, Inditex, are the way to its prosperity. The inputs of its store network, joint effort and inventive limit, data and information administration and an educative association have likewise emerged as the huge reason for achievement. Zara's outlook and technique are client driven administrations. SCM trusts that esteem expansion to client administration is essential to increase competitive advantage (Harrison and Van Hoek, 2005). For Ortega material riches is insensible however he is the wealthiest man in Spain (Hall, 2008).He is the real motivator towards making of quality, value or money. Succeeding his challengers and clients have made Amancio Ortega a very rich person and Zara has become indispensable for achievement.
References
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Cai-feng, L. (2009). Agile Supply Chain, Management Science and Engineering. ISSN 1913-0341, 3(2).
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Hill (2009) Global Business Today. New York, McGraw Hill Irwin.
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Ferdows et al (2003) Zara Case study. Supplier Chain Forum, An International Journal, 4 (2)pp 62-67.
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Gallaugher, J. (2008). Zara Case: Fast Fashion from Savvy Systems. 1st ed. [ebook] UK. Available at: http://www.gallaugher.com/Zara%20Case.pdf [Accessed 19 Apr. 2016].
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Porter (1980) Competitive Strategy: Techniques for analyzing industries and competitors. New York, Free Press.
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Ohno (1988)The Toyota Production system; Beyond Large Scale Production. Portland, Productivity Press.
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Christopher and Towill (2000) Supply Chain Migration from Lean and Functional to Agile and Customized. Supply Chain Management: An International Journal, Vol 5(4), pp206-213.
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Harrison and Van Hoek (2005) Logistics Management and Strategy. 2nd edition, Harlow Pearson Education Ltd.
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Pedler, M., Burgoyne, J. and Boydell, T. (1997). The learning company. London: McGraw-Hill.
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Dalton (2010) Leadership and Management Development. Harlow, Pearson Education Ltd.
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Romano, P. (2009). How can fluid dynamics help supply chain management?.International Journal of Production Economics, 118(2), pp.463-472.
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