Zara Case
The 2 1st-centur y Supply Chain
Spanish clothier Zara t urn s the rules o f supply chain management on thei r head. The result? A superresponsive network and p rofi t margins t ha t are the envy o fth e industry.
ire
Fiilflllment by K asr a
Michael A. Lewis, and
Jose A.D. Machuca
!04
W
hen a German w holesale r suddenly canceled L1 big lingerie order in 1975, Amancio Or-
tet;;a t hough t his fledgling clothing company might go b ankrupt . All his capittil was tied up in the order. There were no other buyers. In desperation, he opened a shop near his factory in La Coruna, in t h e far northwest corner of Spain, and sold t h e goods himself. He called t h e shop Zara.
Today,over 650 Zara stores in some 50 countries attract wellheeled c ustomers in luxury shoppin g districts a roun d t h e world, and Senor Ortega is arguably the richest man in Spain.
The clothing company he founded, called Inditex, has been growingever since he opened that first Zara shop. From 1991 to
200^, Inditex's sales - 70"-:. of which spring from Zara - grew more than 12-fold from € 7 million to € 6 billion, and net
36
4profits ballooned i4-ft)ld from € 1 million to € 7 million. In
3
44
May 2001, a particularly tough period for initial public offerings, Tnditex sold 25% of its shares t o t h e public for € 3 billion.
2.
While m anyo f its competitors have exhibited poor financial results over t h e last t hree years, Zara's sales and net income have continued to grow at an annual rate of over 2O'H..
IIAIWARD
The 2 1st-centur y Supply Chain
The lesson Ortega learned from his early scare was this: To be successful,
"you need to have five fingers touching the factory and Hve touching the customer." Translation: Control what happens to your product until t h e customer buys it. hi adhering to this philosophy,
Zara has developed a superresponsive supply chain. T'he company can design, produce, and deliver a new garment and put it on
Spanish clothier Zara t urn s the rules o f supply chain management on thei r head. The result? A superresponsive network and p rofi t margins t ha t are the envy o fth e industry.
ire
Fiilflllment by K asr a
Michael A. Lewis, and
Jose A.D. Machuca
!04
W
hen a German w holesale r suddenly canceled L1 big lingerie order in 1975, Amancio Or-
tet;;a t hough t his fledgling clothing company might go b ankrupt . All his capittil was tied up in the order. There were no other buyers. In desperation, he opened a shop near his factory in La Coruna, in t h e far northwest corner of Spain, and sold t h e goods himself. He called t h e shop Zara.
Today,over 650 Zara stores in some 50 countries attract wellheeled c ustomers in luxury shoppin g districts a roun d t h e world, and Senor Ortega is arguably the richest man in Spain.
The clothing company he founded, called Inditex, has been growingever since he opened that first Zara shop. From 1991 to
200^, Inditex's sales - 70"-:. of which spring from Zara - grew more than 12-fold from € 7 million to € 6 billion, and net
36
4profits ballooned i4-ft)ld from € 1 million to € 7 million. In
3
44
May 2001, a particularly tough period for initial public offerings, Tnditex sold 25% of its shares t o t h e public for € 3 billion.
2.
While m anyo f its competitors have exhibited poor financial results over t h e last t hree years, Zara's sales and net income have continued to grow at an annual rate of over 2O'H..
IIAIWARD
The 2 1st-centur y Supply Chain
The lesson Ortega learned from his early scare was this: To be successful,
"you need to have five fingers touching the factory and Hve touching the customer." Translation: Control what happens to your product until t h e customer buys it. hi adhering to this philosophy,
Zara has developed a superresponsive supply chain. T'he company can design, produce, and deliver a new garment and put it on