The wages of these European workers are higher than those of their developing-world counterparts, but the turnaround time is miraculous.
The company often relies heavily on sophisticated fabric sourcing, cutting, and sewing facilities nearer to its design headquarters in Spain. In-house production allows the organization to be flexible in the amount, frequency, and variety of new products to be launched. Zara’s success relies on keeping a significant amount of its production in-house and making sure that its own factories reserve 85 percent of their capacity for in-season adjustments. The retail giant delivers fashionable and trendy numbers catered for different tastes through a controlled and integrated process – Just in Time production. The company owns its supply chain and competes on its speed to market, literally embodying the idea of 'fast fashion'. This is in stark contrast to the average six months it takes to produces items in the fashion industry. It adapts couture designs, manufactures, distributes, and retails clothes within two weeks of the original design first appearing on catwalks. Zara’s overarching strategy is achieving growth through diversification with vertical integrations. Synergy between Zara’s business strategy and operational processes How can it stay so efficient with the sheer volume that passes through its supply chain? Regular, small-batch deliveries happen with clockwork precision twice a week to all of their stores around the world.Įnsuring all this runs smoothly is what Zara does best - controlling more of its manufacturing and supply chain than most of its competitive counterparts. Zara produces around 450 million items a year. What’s the secret to Zara’s competitive advantage? Their supply chain. In 2012, Inditex, Ortega’s parent company made up of Zara and other retail concepts and suppliers, reported total sales of US$20.7 billion, with Zara representing a powerful 66 percent, or US$13.6 billion, of that total. From that first store in Spain, Zara has since expanded to more than 2,200 stores in 96 countries around the world.
Want to manage your supply chain as efficiently as Zara? Try QuickBooks Commerce's inventory management system today!Īmancio Ortega founded Zara in 1975 as an attempt to better understand world markets for his fashion merchandise.
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