Operations and Quality Management final presentation at Portland State University.

1. William Navarro • Jamie Nordby • Marvin Avilez • Brian Nelder • Michele Harman

2. Introduction
Agenda:
• Introduction to the company Zara
• Quick industry overview
• Zara’s unique approach to fashion
• Supply chain strategy
• Production & Distribution
• Questions

3. Company Overview
About Zara:
• Manufacturing & retailing
• Clothing & accessories
• Subsidiary of Intidex
• Founded in 1975 by
Amancia Ortega & Rosalia
Mera
• First store was in A
Coruña, Spain
• Controls the supply chain,
design, manufacturing,
and distribution of all
products, worldwide.
Size & Locations
• Zara has over 2,000 stores
strategically located in
leading cities across 88
countries.
• Produces approximately
450 million items each year
• Creative team of 200
designers produce around
18,000 different designs
each year
Mission & Vision
• “Through Zara’s business
model, we aim to
contribute to the
sustainable development
of society and that of the
environment with which
we interacts.”
• Focus on the variability
and uniqueness of the
products
• Eliminate waste by being
in the right place at the
right time

4. Zara vs. Industry
Conventional Business Model Zara’s Business Model
Supply Chain Reliant on outsourcing production. Highly responsive, vertically
integrated supply chain
Time to market High due to outsourcing. Industry avg. is 6
months.
Lead times and time for new product
launches are less. 2-4 weeks.
Marketing Ads primarily for publicizing the assortment Ads only for yearly sales & to
announce new stores.
Design Teams Design conceptualized by small elite team
common for all segments
Dedicated teams for different
segments.
Product Life Span Average new items per year 2000-4000
Classic collections
Short life span but more product
launches. Avg. 11K yearly
Sales Forecast It is done. Not done due to flexible factories
IT Spending 2% of revenue as IT applications are
outsourced to vendors.
0.5% of revenue due to in-house
applications developed

5. Supply Chain Strategy
Responsive Supply & Logistics
• Provide shipments globally within 24-48 hours
Vertical Integration
• Toyota helped Zara install JIT systems in Spain Factories
Communication
• High communication from stores to headquarters means lower inventories & correct
merchandising
Fast Inventory Turnover
• Small batches and can turnout product in as little as 2 weeks.

6. Production
“We find out what the customer wants and
then we make it” – Mercedes Domeq, Zara PR
• Zara’s production process is a key
component of the organization’s
competitive advantage.
• Responsiveness and speed are
prioritized over cost reduction.

7. Production
Consumer
Driven
Production
Process
Investment into
high-tech
equipment and
extra capacity
Commitment to
continuous
feedback and
improvement

8. Distribution
• Centralized distribution system located
in Arteixo, Spain.
• 150 million garments pass through the
distribution center a year
• Every item made in the local factories
are sent directly to the distribution center
via an automated underground monorail
that has 124 miles of track
• Basic items like t-shirts are ordered on a
traditional schedule
• Zara maintains strong relationships with
contractors and suppliers

9. Distribution
• Mobile tracing system directs items
along automated carousels to specific
areas for packaging and shipping
• IT integration from stores and distribution
centers ensures that short supply is
allocated to factories or redistributed
from other stores
• Automation and IT help ZARA schedule
shipments going out by time zone,
reducing time clothing spends a the
distribution center

10. Conclusion
• Unconventional approach to fashion supply chain strategies has been
Zara’s key competitive advantage
• Responsive supply and logistics, vertical integration, communication, & fast
inventory turnover are some of Zara’s most unique and effective strategies
• Having a centralized distribution and JIT Production schedule creates a
more efficient process
• High investment into technology enables Zara to operate the way they do.

11. Sources & Questions
“A Visit to Zara's Headquarters in Spain 2013 - FLARE." Flare. N.p., n.d. Web. 30 May 2014. <http://www.flare.com/fashion/a-visit-to-zaras-headquarters-in-spain/>.
Berfield, Susan, and Manuel Baigorri. "Zara's Fast-Fashion Edge." Bloomberg Business Week. Bloomberg, 14 Nov. 2013. Web. 28 May 2014.
"Flexible Manufacturing & IT Makes Zara the World’s Largest...." Tech Page One. N.p., n.d. Web. 1 June 2014.
Hansen, Suzy. "How Zara Grew Into the World’s Largest Fashion Retailer." The New York Times. The New York Times, 10 Nov. 2012. Web. 28 May 2014.
"Innovation Lessons from Fashion Leader, Zara | Destination Innovation." Destination Innovation. N.p., n.d. Web. 29 May 2014.
Petro, Greg. "The Future Of Fashion Retailing: The Zara Approach (Part 2 of 3)." Forbes. Forbes Magazine, 25 Oct. 2012. Web. 30 May 2014.
"Zara International, Inc." International Directory of Company Histories. Ed. Jay P. Pederson. Vol. 83. Detroit: St. James Press, 2007. Business Insights: Essentials. Web. 8 June
2014.
Ghemawat, Pankaj, and Jose Luis Nueno. "Zara: Fast Fashion." Harvard Business School, 21 Dec. 2006. Web. 8 June 2014.
<http://cc.sjtu.edu.cn/G2S/eWebEditor/uploadfile/20130316155348364.pdf>.
"Zara Annual Report 2012." Investor Relations. Grupo Inditex, 2012. Web. 9 June 2014. <http://www.inditex.com/en/investors/investors_relations/annual_report>.
Zara.com. Grupo Inditex, n.d. Web. 9 June 2014. <http://www.zara.com/us/en/company/our-mission-statement-c18001.html>.
Susan Berfield and Manuel Baigorri, Zara’s Fast-Fashion Edge, November 14, 2013, Web 20114, http://www.businessweek.com/articles/2013-11-14/2014-outlook-zaras-
fashion-supply-chain-edge
Ghemawat, Pankaj and Jose Luis Nueno, Harvard Business School, ZARA: Fast Fashion, December 21, 2006, Web 2014,
http://cc.sjtu.edu.cn/G2S/eWebEditor/uploadfile/20130316155348364.pdf