The operations management at Zara, excelling at rapid customization and yet at an affordable price.

1. Aparna Surendran
Harini S
Hari Teji
Muthuraman P
Arkadip Gupta
THE WONDERS OF SUPPLY CHAIN MANAGEMENT

2. PRODUCT CATALOGUE
Zara stores have men's clothing and
women's clothing, each of these
subdivided in Lower Garment, Upper
Garment, Shoes, Cosmetics and
Complements, as well as children's
clothing (Zara Kids).
50% of the products Zara sells are
manufactured in Spain, 26% in the rest
of Europe, and 24% in Asian and
African countries and the rest of the
world.
Zara can offer considerably more
products than similar companies. It
produces about 11,000 distinct items
annually compared with 2,000 to 4,000

3. WHAT MAKES ZARA STAND OUT
 The worlds largest apparel retailer based out of
Spain
 It is the flagship chainstore of the Inditex group
 There are a total of 1770 Zara stores in 41
countries and 166 Kiddy's Class stores
 The producer of most variety of clothing range and
even in the shortest production cycle

4. ACHIEVABLE SUPPLY CHAIN FEATS OF ZARA
 Shortening the product life cycle to four to five weeks.
 Zara also promised to make information about its suppliers
discharging of toxins publicly available.
 Zara relies on sophisticated information technology to
monitor customers' fickle fashion changes.
 Zara’s most unusual strategy is its policy of zero
advertising.
 Zara is a vertically integrated retailer.

5. ZARA BUSINESS MODEL

6. DESGIN AND PLANNING
 Design starts one year in advance of the season
 In-house design team of 200 designers at Zara
HQ
 Experimenting new designs with a commercial
orientation
 Hand sketches -> CAD drawings + Feedback
from store managers
 To successfully react to consumer demands,
design decisions are delayed as long as
possible
 Approximately 40,000 new designs annually,
from which 10,000 are selected for production

7. PRODUCTION SOURCING
In-house
22 factories in Spain
Mid season, stylish apparels
Flexible production
Quick response to changing demands
External Sourcing
Europe and Asia
Beginning of season, basic apparel
Cost or quality advantage
Strong relationship with contractors
and suppliers

8. PRODUCTION PROCESS
Fabric
• Raw, uncoloured fabric
• External and Internal (Comditel at Barcelona)
Cutting
• Layout prepared by skilled workers
• Using the layout, automated machines cut the fabric
• Cut fabrics are marked and bundled
Sewing
• Sub-contracted to 400 smaller firms in close proximity
• Cheap labour advantage
• Twice a week delivery

9. DISTRIBUTION
 Centralized Distribution Center at Arteixo –
500000 square meter
 211 km of tracks from factories to the
distribution center
 Shipments made twice a week
 No inventory held

10. RETAILING
 Final Allocations made centrally also
considering Store Managers’ request
 Fresh assortments – Fashion Forward
Merchandise
 Average Customer shopped 17 times a year
as compared to the industry standard of 3-4
 15-20% End of Season Clearance Sale
 0.3 % of Sales spent on Advertising

11. THE STORES
1) Zara stores were uniform including as to lighting
fixtures and window display, as well as the
arrangements of targeted floor space of 1200 square
meters.
2) The model store located at Zara head quarters
(Arteixo, Spain) was kept up-to-date in terms of
current product selection.
3) Store locations were upscale in prime high street
areas.
4) The uncluttered arrangement of goods in uncrowded
spaces coordinated by color made the experience of
shopping more like that in high end luxury stores and
quite different from that offered by “value” marketers.

13. PRICING STRATEGY
 Zara contrasted its pricing strategy to many others in its
business which set price equal to cost plus a target
margin.
 During its long expansion through 2001 zara printed
price tags for multiple jurisdictions showing on the single
tag all of its different prices by country. This simplified the
tagging procedure and also permitted goods to be
moved from store to store with out retagging. And also
permitted goods to be transhipped between one country
to another with out retagging.
 However at the beginning of 2002, zara switched to a
system of local price marketing in the stores using a
device that read the bar code and printed the appropriate
local price.

14. GROWTH STRATEGY
 Zara's growth had been outward from its base in Spain,
with the locations for new stores chosen selectively to
stake out sequentially new territories that could be
supported within the Zara model.
 Most of the stores were company owned although in
some markets Zara had opened a small number of
stores through franchises and in some markets Zara had
opened stores through alliances.
 Zara did not establish local distribution centers and
warehouses when it entered a market or engaged in
store opening promotions.

15. VIDEO

16. CURRENT ISSUES FACED BY ZARA
 Alleged slave like condition of its workers in Aug,2011
 Shop staff abuse in March,2012
 Toxicity issues as highlighted by Greenpeace in Nov,2012