Zara Supply Chain Network

 The following is an explanation of the supply chain network analysis at the Zara company.

This analysis is a form of our learning in the Operation Management lecture at the Bandung Institute of Technology.

Zara Supply Chain Network

1. Starting from Zara sketch new Fashion Clothes

2. For the raw material zara has a sources from across the world, 70% zara suppliers are from europe mostly spain and portugal and 30% are from Asia

3. Zara has 22 factories in spain 

4. Zara pack and label the final product before sending out

5. Zara distribution centre is in La Couruna Spain  but they also have distribution arround the world such as China and Turkey

6. Zara Stores is located arround the world ( China, Israel, Turkey, Indonesia, Hongkong, and many more)

7. And at this stage the product has delivered to the customers and they can buy the product 

Zara Product characteristics

There're 3 type of business competitive strategy:

1. Cost leader (meaning that you become the lowest-cost producer in the industry)

2. Differentiation leader (meaning that you compete in areas other than price valued by customers)

3. Quick Response (meaning members collect timely market information for better forecasting, and then respond promptly to the market changes by adjusting initial inventory decision)

From the product characteristics above, we can conclude that the supply chain strategy applied is both Innovative and Responsive Strategy. 

Zara Supply Chain Responsive Strategy

To support Responsive strategy, as foundations of our analysis, Zara implementing these 2 strategy below:

• Just-in-time, Zara uses Just in time production, they keeping a significant amount of its production in-house and make sure that the capacity is adequate for season adjustment. In-house production make company be flexible in frequency, and variety product to be produced. This strategy also made Zara Responsive to the market
• Lean Inventory Management, Zara inventory optimization models are help the company to determined the quantity that should be delivered to the retail stores. And each stores only receive what they need.
• Distribution network by making, by making string distribution network it enables the company to deliver goods to some places more efficiently. For examples deliver to the europes store within 24 hours and American and Asian Outlets less than 40 hours.

To support innovative Zara need this strategy:

• Centralized order fulfillment, Zara's dependence on centralized order fulfillment enables the company to maintain extraordinarily efficient workflows from innovative design to delivery to stores and customers. 
• Differentiation, because of the product life cycle in fashion is short zara need to keep up with the new design and differentiate the product, also make adjustments with the market demand by making forecasting demands.

Challenges/Issues of Zara Global Supply Chain 

1. Dependant to human prediction/forecasting. As we mention above, because Zara implementing Responsive strategy, they very dependant to forecasting data, which if the forecast make a critical error the customer satisfaction will be decrease. 
2. Pandemic Issues. Covid-19 Pandemic hindering the global supply chain, many entry routes to and from various countries are closed
3. Environmental Challenge in each country. Different countries have different awareness to the external environment change. there are Zara manufactures in some countries that care about the environment and some that don't. This will have an impact on operating costs
4. Political Issues. Like in Myanmar, because there was a demonstration against the government, factory workers went on strike

Recommendation to improve the supply chain

1. Respect for People (like Toyota) . Zara may be able to make efforts so that all members of the supply chain have the same vision and mission, so that each entity will do their best work. A form of appreciation from top management might be an input (Jacobs, 2018)
2. Lean Logistics. Because Zara is a global company with a lot of movement of goods, it will be very wise if Zara applies lean logistics concept, such as optimized routing; cross docking; import/export transportation processes; and backhaul minimization. (Jacobs, 2018)

Cultural Aspects that Affect Zara Global Supply Chain

1. Cultural change from country to country which results in different style to dress. In some Muslim country and conservative country Zara produce different model than other country.
2. Weather  and event plays an equally important role in selecting fabric and thus the design. In Indonesia big event like Ied, Zara produce more Ied themed clothes.
3. Design also changes due to manufacturing capabilities in the country of origin, Zara have multiple units across the world, and complexity of designs require different machines; which results in price fluctuations.

That's our analysis of the Zara Supply Chain Network, hope it helps

Reference 

https://prezi.com/a_jgedn2xfsg/zara-design-and-management-supply-chain/

https://www.scribd.com/document/508578891/Supply-Chain-Network-Structure

https://www.tradegecko.com/blog/supply-chain-management/zara-supply-chain-its-secret-to-retail-success

https://www.statista.com/statistics/268829/number-of-stores-of-the-inditex-group-in-asia-and-africa-by-country/

Jacobs, F Robert, Chase, Richard B, Lummus, Rhonda R. (2011). Operations and supply chain management (15th ed.)