Zara Supply Chain
A network and flow explanation to Zara’ success
Angel Díaz and Luis Solís
Instituto de Empresa, Maria de Molina 12, 5°, Madrid 28006, Spain E-mails: angel.diaz@ie.edu; luis.solis@ie.edu Abstract Zara is a Spanish fashion manufacturer and retailer that has known swift success. Spaniards have become used to visiting Zara frequently, as there is always a new product. Zara launches 100 different collections every year, with over 11000 models, none lasting more than five weeks in production and with an average lead-time (design to store delivery) of four weeks. Inditex, the group to which the brand Zara belongs owns five brands with over 1000 stores in more than 30 countries. Although its global sales are still one sixth those of Gap, its sales have increased at an average 30% per year over the last three years, with net benefits over sales of close to 12% in the same period. In this paper we examine Zara’ production and distribution systems, looking for clues to its mass-customization capabilities. We argue that the key to Zara’ success is its Supply Chain (network and flows) approach. The production network is made of a tightly integrated net of product specialized factories, intensive in capital and run under Toyota’s principles, and a secondary network of over 400 micro enterprises, tightly controlled by Inditex but independent. All these are located in the same small geographical area, Galicia (northwest Spain). The swift flow is facilitated through advanced automation and logistics systems, with emphasis on postponement. We compare these network and flow approaches to those of Benetton and Gap, and argue that the key to Zara’ success is this combination of a tightly integrated local network coupled to the most advanced flow systems. A final consideration is the sustainability of these orderwinners over time. Keywords: Key words: Zara, logistics network, flow, fashion
Introduction
Intense competition in the global marketplace is forcing organizations to
Angel Díaz and Luis Solís
Instituto de Empresa, Maria de Molina 12, 5°, Madrid 28006, Spain E-mails: angel.diaz@ie.edu; luis.solis@ie.edu Abstract Zara is a Spanish fashion manufacturer and retailer that has known swift success. Spaniards have become used to visiting Zara frequently, as there is always a new product. Zara launches 100 different collections every year, with over 11000 models, none lasting more than five weeks in production and with an average lead-time (design to store delivery) of four weeks. Inditex, the group to which the brand Zara belongs owns five brands with over 1000 stores in more than 30 countries. Although its global sales are still one sixth those of Gap, its sales have increased at an average 30% per year over the last three years, with net benefits over sales of close to 12% in the same period. In this paper we examine Zara’ production and distribution systems, looking for clues to its mass-customization capabilities. We argue that the key to Zara’ success is its Supply Chain (network and flows) approach. The production network is made of a tightly integrated net of product specialized factories, intensive in capital and run under Toyota’s principles, and a secondary network of over 400 micro enterprises, tightly controlled by Inditex but independent. All these are located in the same small geographical area, Galicia (northwest Spain). The swift flow is facilitated through advanced automation and logistics systems, with emphasis on postponement. We compare these network and flow approaches to those of Benetton and Gap, and argue that the key to Zara’ success is this combination of a tightly integrated local network coupled to the most advanced flow systems. A final consideration is the sustainability of these orderwinners over time. Keywords: Key words: Zara, logistics network, flow, fashion
Introduction
Intense competition in the global marketplace is forcing organizations to
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