We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

Zara’s operations strategy Led Essay Sample

essay
  • Pages: 4
  • Word count: 1,046
  • Rewriting Possibility: 99% (excellent)
  • Category: requirements wage zara

Get Full Essay

Get access to this section to get all help you need with your essay and educational issues.

Get Access

Introduction of TOPIC

We will depict how Zara’s operations strategy led to a sustainable competitive advantage in the global apparel industry. Zara’s supply chain vertically integrated, controlling most of the processes in its supply chain. By 2000, Zara increased the portion of outsourcing production as a result of increasing global advantage. One of the most important factor of outsourcing was low labor cost which ate up 40% cost of goods sold. Moreover, outsourcing increased quality of production in low wage countries, where were 50% production exported to Europe whereas just 20% imported of high quality segment and other reasons like available raw materials, skill requirement of workers, reducing transportation time, costs and other trading barriers such as Quotas on product from China.

In EU, the benefits were high tech technologies, network of economy, special strength of design and staying close with customers, which near enough to provide rapid turnaround and easily to monitor the quality. Because of above reasons, Zara had increased its proportion of production in Asia up to 29%, rest of Europe 15 %, in rest of world up to 9 %. However, they reduced the proportion of its products produced in Spain from 29% in 1998 to 20% in 2000 while the proportion of origin production in Portugal and European Union reduced 5% to 22% and 5 % respectively by 2000. In brief, Zara increased 10 % of outsourced products of high labour intensive processes up to 56% and reduced in-house capital intensive processes 10% down to 44% by 2000 in order to low down relative costs, which the analysis of wage levels were important factor and with shorter lead times, more easily avoid inventory backlogs. What is Operation’s Strategy?

Zara’s quick response capacity was possible by focus on enhancement efficiency of cost while boosting service delivery several times a week. First of all, the strategy of bottom up: Zara stimulated the bottom up perspective to boost its innovation. Moreover, Zara mainly depended on word-of-mouth information to promote clothing and its brand name. For instance, its store managers could report directly to the Zara headquarters, the feedback on preferences from their customers. Hence, Zara‘s priority was to understand the dynamic trends of fashion from the experience thru its store managers, its customers’ wants and advanced designers. Factors affecting Zara’s Strategic Decisions Capacity

Zara’s objectives were working without stocks and responding quickly to rapid growth and competitive market.

Zara achieved short lead times, lower inventory and increase variety of styles/choice by collecting

Sorry, but full essay samples are available only for registered users

Choose a Membership Plan
and exchanging the remaining inventory of its stores or then providing new inventory many times a week to illustrate to its customer and encourage them visit stores today. In short its retailing was final allocations of new items and not require to stock. So far, Zara employs a chase demand capacity management heavier at such times. As a result, Zara was able to adjust its resources to match. During season periods, as new stock delivery, procurement and production planners made estimates of manufacturing costs and available capacity. Being 15-25% season inventory, the more basic items – 6 months in advance of the season and in the beginning of season 50-60% of its season inventory committed already manufactured or committed with specification. There was 80% committed for apparel retail.

Moreover, in house production weighted 85% of current season production and 15% of next season production. Whereas, 40% of sewing outsourcing with subcontracted network of 400 smaller firms within rural areas because of high overhead labors, labor’s skill and the advantage of components worked together. So far, turnaround time for sewing ran a week or two. Zara with its in house for design, pattern making, and cutting capacity and its network sewing subcontracted required as little as 10 day from start to finish. In this way, Zara allowed close –to-sale-time relocation within two weeks, retailers to change a maximum of percent of their orders once the season has started. While avoids costly overproduction and the subsequent sales and discounting of the industry from, 30 or 40% down to only 15 to 20%. Supply Networks

The vertical Integration advantage can be seen in Zara’s centralized logistics and distribution. Zara had maintained a very high control of its supply networks as a strategy in achieving fast response. It strictly limited quantities of stock. This ensures minimizing inventory of old stock in any part of its supply chain from raw materials to end user. In short, the majority of Zara’s processes was in house processing while outsourcing only labor intensive tasks. Process Technology

Zara’s communication and coordination through daily exchange data information systems on its website. The phenomenon of increasing demand variability in the supply chain from downstream (retail) to upstream (manufacturing). Daily sales are immediately shared with its stores, its headquarters and production network. By providing the shops with the necessary technology such as customized handheld computers and logistics capabilities to collaborate with other partners in the company’s supply chain. The updated data exchange between the stores and manufacturing units helps Zara mitigate the risk of the bullwhip effect. Development and Organization

Quality
Another Quality advantage was the huge number of designs. Designers (of average age 26) draw the design sketches then discuss it with market specials and planning & procurement staff to meet almost all the fashion requirements by customers of all ages (up to 55). Zara’s designing, manufacturing and delivering process to the retailers required period of six months. The design and distribution cycle took 10-15days in the whole process. Allows Zara to maintain design and produce over 11000 styles each year five times as many as comparable but also in commercial orientation by shortening the throughput time of their products from design to store. Zara’s speed to market in product development exceeds the capabilities of its competitors, provided additional value to affordable prices. In conclusion, Zara produces most of its products in Europe compared to their competitors, outsource very little to Asia. Though the cost of production in Spain is 17-20% more expensive than Asia. A cost advantage in regards to labor, the flexibility in changing orders based on their operational efficiencies resulted in lower inventory cost that enabled Zara to manufacture and sell its products at cheaper prices.

We can write a custom essay on

Zara’s operations strategy Led Essay Sample ...
According to Your Specific Requirements.

Order an essay

You May Also Find These Documents Helpful

How to Minimise The Chance of Project...

Introduction Here I am going to explain using examples many different kinds of ways that can be prevented from projects failing. In order for a project manager to detect something wrong happening in a project, they have to always double check it and also see if it works just the way the client wants it to work. Project managers always need some kinds of backup, if a project all of a sudden goes horribly wrong, they need some kinds of backup which can include extra members of staff or maybe working long hours to achieve their goal. Lack of staff expertise When hiring new members of staff, a project manager has to always be careful when checking whether they have the right qualifications or not, by giving a new member a small test to see if they are worthy of using different kinds of tools can help to decide whether...

Software Requirements Specification

Introduction 1 Purpose The purpose of this document is to describe all external requirements for online job portal. It also describes the interfaces for the system. 3 Project Scope The scope this product is to provide a system where • The job seekers will have an easy access to the different opportunities available in the IT world ,apart from those that are available through the campus placements • The recruiters will have access to a quality candidate poll 4 References The website referred for this project is : http://www.w3schools.com/ Overall Description 1 Product Perspective The Online Job Portal System is a package to be used by agencies to improve the efficiency of business. The Online Job Portal System to be developed benefits greatly the members. The system provides jobs catalogue and information to members and helps them decide on the jobs to apply. The Admin can keep the jobs catalogue...

Competency Assessment and Certification

• Visit/inquire assessment schedule and requirements at our TESDA District/Provincial Office. • File CAC application form and submit requirements. • Note schedule of exam/assessment. • Make sure you have the admission slip before you take the assessment. What are the requirements? • Authenticated Birth Certificate (2 xerox copies) • 1 pc. 1x1 photo (colored) • Employment Certification / Training Certificate - related to occupational area applied • 2 copies CAC Application Form (NMIS Form 001) -c/o TESDA District/Provincial Office • CAC Testing Fee - may vary according to occupational area applied (c/o TESDA District/Provincial Office) • Admission Slip - required upon taking the assessment Notes : • There are two parts of the assessment - knowledge and skills • Examinee should take the knowledge assessment before taking the skills assessment. • Passing the knowledge assessment is not a requirement in taking the skills assessment. • If the examinee fails in...

Popular Essays

logo

Emma Taylor

online

Hi there!
Would you like to get such a paper?
How about getting a customized one?