Vertical integration outsourcing 
Zara Case: Vertical integration and outsourcing
1. How is Zara organized with respect to its vertical integration and outsourcing decisions? What governance structure does it appear to follow? Support your conclusions with reference to details of the Zara case and the Ferdows reading.
Answer:
Very well organized to facilitate its strategic competency: speed and flexibility. Decentralized governance structure fully supports the company core competency.
The above supply chain mapping shows the vertical integration and outsourcing structures of Zara. Top parents company , Inditex, owns every critical steps of Zara’s supply chain, including raw material, fabric and dyestuff supply company, clothes design and manufacture factory, distribution center and Zara chain stores all over the world. Half of Zara’s production is made in house. Only simple and classic colors clothes were made by subcontractors in Europea, North African and Asian. Local subcontractors, which are small workshops, were used for simple process, like sewing. These local subcontractors’ primary customer is Zara which guarantee high flexibility.
Decentralized governance structure can be found everywhere in Zara, especially communication flow.
Hard data and anecdotal info transfers fast, directly and easily from shoppers to designer to production floor. The following operations are designed to support the goal:
a. designers can quickly check sketches with colleagues; market specialists constantly in touch with store mangers to collect quick feedback of the new design. Cross function teams can examine prototypes in the hall and commit resources in a few costs.
b. Separate design , sales and procurement and production planning teams are dedicated to each clothing line. Three separate lines , woman, man and children’s product, are under Zara’s chain.
2. How does Zara’s situation support, or not support, its supply chain strategy? Refer to specific details of
Zara’s operations, and
1. How is Zara organized with respect to its vertical integration and outsourcing decisions? What governance structure does it appear to follow? Support your conclusions with reference to details of the Zara case and the Ferdows reading.
Answer:
Very well organized to facilitate its strategic competency: speed and flexibility. Decentralized governance structure fully supports the company core competency.
The above supply chain mapping shows the vertical integration and outsourcing structures of Zara. Top parents company , Inditex, owns every critical steps of Zara’s supply chain, including raw material, fabric and dyestuff supply company, clothes design and manufacture factory, distribution center and Zara chain stores all over the world. Half of Zara’s production is made in house. Only simple and classic colors clothes were made by subcontractors in Europea, North African and Asian. Local subcontractors, which are small workshops, were used for simple process, like sewing. These local subcontractors’ primary customer is Zara which guarantee high flexibility.
Decentralized governance structure can be found everywhere in Zara, especially communication flow.
Hard data and anecdotal info transfers fast, directly and easily from shoppers to designer to production floor. The following operations are designed to support the goal:
a. designers can quickly check sketches with colleagues; market specialists constantly in touch with store mangers to collect quick feedback of the new design. Cross function teams can examine prototypes in the hall and commit resources in a few costs.
b. Separate design , sales and procurement and production planning teams are dedicated to each clothing line. Three separate lines , woman, man and children’s product, are under Zara’s chain.
2. How does Zara’s situation support, or not support, its supply chain strategy? Refer to specific details of
Zara’s operations, and