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Among the many case studies, discussions and activities in the classroom, the case study of Zara

caught my particular attention as it portrayed how a company can leverage supply chain

management tools to gain competitive advantages to achieve supply chain management goals such

as waste reduction, cost reduction and flexibility. Additionally, the lessons learned from the case

study could well be linked to learning outcomes from the courses of Global Business Strategy and

Lean Supply chain Management.

Zara is a spanish company and evolved as the most dynamic and successful apparel business. Despite

their manufacturing systems having no significant differences, they could stand out by uniquely

integrating their supply chain.

Lessons learned:

The company gained competitive advantage over its rivals from the following sources

aa) Vertical integration: By vertically integrating the supply chain, a company can effectively control

and monitor all its business activities such as from designing and manufacturing to distribution to its

retail stores. Short turnaround times, flexibility and reduced inventory reduced the risk of

obsolescence to the greatest possible extent. The strategy to produce and distribute products in a

small number closely resembles the PULL system strategy of Make to Order in lean supply chain

management.

bb) Short lead time: By ensuring short lead times, the company can supply stores with clothes that

the consumers want at that time. Zara can identify and deliver a winning fashion trend more quickly

than its competitors and thus gain from margins with more sales happening at full prices and fewer

discounts. This strategy resembles the first movers strategy. Zara monitor POS data, seeks customer

input and is in touch with the retailers through constant exchange of emails and thus can identify

change in trends quickly and respond to it in as little as 2-5 weeks resembling a PULL and JIT system

of Lean Principles. Moreover, Zara chooses manufacturers that provided speed over cost so that it

could respond to dynamics of the apprel industry.

cc) Information technologies: Zara invested in IT very early in a simple and effective manner. IT

shortened the lead time it took from design conception to availability at retail stores. Efficiency is

maximised by housing the designers, pattern makers and merchandisers, and others on one floor

resembling a Line process flowimparting agility in that the lead time is shortened and flexibility is

attained.

dd) Lower quantities and more stylesZara adopted a marketing strategy of keeping a less number

of items to generate scarcity, resulting in increased demand and exclusivity.

However, Zara also had its share of weaknesses(What could have been done) which if capitalised

could well turn into opportunities such as

aa) Advertising: ZARA does not advertise its products. Advertising is a persuasive strategy and makes

the customers aware of the products and services resulting in increased sales.

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bb) Weak Online presence: Unlike its competitors, Zara is weak and is not leveraging the potential of

online sales. Online retailing has become an important tool to sales and customer retention in

modern times.

cc) Centralized distribution system: A centralized distribution system entails a centralized

warehouse being flooded with items from suppliers and not to the retailers. This may sometimes

take more time in meeting the demand at the retail stores.

dd) Stockouts: Resembling a lean and JIT system of distribution may result in stockouts and lost sales

due to vagaries in the supply chain. A reasonable amount of safety stock would reduce the risk of

stock outs and lost sales.

ee) Drawbacks of Lean and JIT: Most of the drawbacks of lean and JIT that we came across in the

case study of Barilla(D) shall apply to Zara.

Conclusion:

Zara practiced agile supply chain in the fast fashion industry and gained a sustainable competitive

advantage. Also by maintaining a balance between in house and outsourcing activities, a company

can achieve short lead times and thereby gain market share. The case study was a perfect example

of an agile enterprise in that the supply chain partners of Zara are also agile and the whole

organization gained as a whole. By producing minimum, Zara limits its inventory and wards off the

risks associated with forecasting as product specifications are finalized closer to delivery.