Zara Postponement Strategy
The case of Zara – The Postponement strategy
I) Introduction
In order to compete in the world of rising globalization and shortening of product life cycle nowadays, firms have to deal with the demand for increasing product variety to meet the diverse needs of customers. Mass customization has become a requirement for many businesses especially in the dynamic, fast-changing industries. However, the more product varieties, the more difficult it is to forecast demand, control inventory and manufacture. Therefore, some innovative companies have integrated “postponement” strategies with their supply chain operations to gain control of product variety proliferation.
Zara is one of the most successful fast-fashion chains in the world, which is famous for its ability to keep itself up to date with fashion trends and the incredibly short time to introduce new products. In order to react quickly to fashion changes and consumer demand, Zara maintains extremely efficient supply chain operations. By properly designing the product structure and the manufacturing and supply chain process, Zara can delay the point in which the final products assume their specific characteristics, thus raising the flexibility to handle the changing demand for the multiple products. This is known as the “postponement” approach.
In this paper, we will analyze how Zara achieves mass customization through “postponement”, with a particular focus on the supply chain structure, relationship and enabling activities supporting postponement strategy across the supply chain.
II) Analysis
1) The Postponement strategy
Besides the supply chain efficiencies and marketing philosophies, one of the key factors for Zara’s success is its postponement strategy.
Postponement is defined as “a strategy to intentionally delay activities, rather than starting them with incomplete information about the actual market demands” (Yang, Burns, & Backhouse, 2005).
There are various models on postponement covering
I) Introduction
In order to compete in the world of rising globalization and shortening of product life cycle nowadays, firms have to deal with the demand for increasing product variety to meet the diverse needs of customers. Mass customization has become a requirement for many businesses especially in the dynamic, fast-changing industries. However, the more product varieties, the more difficult it is to forecast demand, control inventory and manufacture. Therefore, some innovative companies have integrated “postponement” strategies with their supply chain operations to gain control of product variety proliferation.
Zara is one of the most successful fast-fashion chains in the world, which is famous for its ability to keep itself up to date with fashion trends and the incredibly short time to introduce new products. In order to react quickly to fashion changes and consumer demand, Zara maintains extremely efficient supply chain operations. By properly designing the product structure and the manufacturing and supply chain process, Zara can delay the point in which the final products assume their specific characteristics, thus raising the flexibility to handle the changing demand for the multiple products. This is known as the “postponement” approach.
In this paper, we will analyze how Zara achieves mass customization through “postponement”, with a particular focus on the supply chain structure, relationship and enabling activities supporting postponement strategy across the supply chain.
II) Analysis
1) The Postponement strategy
Besides the supply chain efficiencies and marketing philosophies, one of the key factors for Zara’s success is its postponement strategy.
Postponement is defined as “a strategy to intentionally delay activities, rather than starting them with incomplete information about the actual market demands” (Yang, Burns, & Backhouse, 2005).
There are various models on postponement covering