Case Study Write-up- Zara
27 March 2013
Zara strategic model began to evolve as they expanded to overseas markets, they began to invest in their manufacturing logistics, and IT, which included a JIT manufacturing system, a 130,000 square-meter warehouse close to the corporate headquarters, and an advanced communication system to connect headquarters and supply, production and sale locations. Zara created a vertically integrated system that minimized distance and time between design, sourcing/ manufacturing, distribution, retailing, and finally back to design. This decrease in lead-times is made possible because the company manages all of its design, warehousing, distribution, and logistics. This highly integrated system allowed Zara to follow the trends and sell garments that people wanted at that moment, without the use of advertisements. Zara allowed its employees to have a lot of control and autonomy over their work. They were the ones who designed and decided what clothes should be in stores.
Zara developed a business model where speed and decentralized decision making was essential. This practice, led to shorter lead times and introduction of more fashion styles. The implementation of the information and communications technologies helped facilitate the business processes at Zara. At the heart of most modern infrastructures is the IT technology. The advantage of this system is that it put Zara on the forefront of the fashion industry. Their lead-time from design to retail outlet was about 3 months compared to an industry average of 9 months or more. Due to ownership and control over their production, they ensured timely deliveries and service. A disadvantage here is that most of their stores ran out of stock, meaning they have low dependability in terms of product availability, however another perspective of dependability in terms of keeping to date with fashion was achieved. Because Zara was so highly integrated they had to make...
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