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SCM of Zara

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SCM of Zara
Customer Offer
Fresh and Fast:

Quality:

• Fast production and delivery on leading styles
• Limited quantities for each style
(scarcity)

• Medium raw material, poor knit, grand look • Highly fashionable items at low price

Offers
Cost:

Flexibility

• Low monetary cost
• Low time cost

• Limited variety and choices
• Customer’s participation in determining the next batch

ZARA’S PRODUCT LIFE CYCLE

TYPICAL PRODUCT LIFE CYCLE
• Sales decreases as the product moves over the timeline ZARA PRODUCT LIFE CYCLE
• High fashion industry with latest designs and trends
 5-6 weeks life cycle
• The life cycle curves is shown as the graph above

ZARA’S KEY FACTORS
SHORT LEAD TIME

LOWER QUANTITIES

MORE STYLES

• Keep up with the newest fashion trends
 more fashionable clothes • Zara only needs about
30 days to identify new trend and have the product available in stores • Artificial scarcity  more desirable products
• Minimize products disposal during end-ofseason sale
• Only about 18% of total products would be discounted • More choices in current trends • Around 12,000 styles/yr
• There are always new styles waiting to take up the space

ZARA’S LOGISTICS AND SUPPLY CHAIN

Supercharged Product Development (Designing
Process)
• 1000 new styles per month designed by about
200 people
• Each styles is only produced to 200k-300k retail sales
• The high cost of product design and development is compensated by higher margins Ownership and Control of Production (Sourcing &
Manufacturing)

• 80% of Zara’s production is carried out in
Europe  nearer to its HQ
• Flexibility: easy to control production and keep up with fast changing fashion styles
- shorter distance from design to production
- information can be passed on faster

React Rather than Predict (Sourcing & Manufacturing)

• Zara swiftly react to its business rather than spend too much resources on forecasting
•
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