Zargistics Team:
Blake VanderBerg - 821278942
John Whelly - 820501401
Jessica Weingert - 820853059
Krisztina Virag - 821250982
Jenna Zucker - 820920437
Akwaugo Udenze - 821218781
• Zara is a Spanish clothing retailer
• 1700 stores
• 78 countries worldwide
• Zara practices fast fashion – trends moves from the runway to stores within
weeks, as opposed to months.
• Zara’s supply chain has undergone tremendous changes in order to sustain its
competitive advantage in today’s market
• Zara has continually maintained its mission to provide fast, affordable, and
fashionable items
Inventory Management
• Focus on reducing
response time
• Launched approximately
11,000 new items per
year, compared to 2,000 -
4,000 for H&M and Gap
Inventory Management
• Stock outs are not
uncommon
• Short shelf life attracts more
customers more often
• Zara holds 6 days worth of
inventory, while H&M holds
52 days, and Spanish retailer
Cortefiel holds 94 days of
inventory
Forecasting
Extensive market research
Quick input and output
response
Frequent new styles
• Near-term forecasts
• Short product life cycles to
reduce errors and improve
current products
• Customer feedback
Procurement
• Keeps approx. half of its production in-
house
• Separate procurement staff for each
clothing line
• Procures basic textiles from global suppliers
• Uncomplicated items are outsourced to
China
• Difficult items are produced in Zara factories
and by local subcontractors
• Most suppliers are located in close proximity
to its distribution centers
6
Production Planning
• Centralized Design & Production
Centre
• Constant flow of data throughout
the supply chain
• Zara allows its retailers to change
40%-50% of its orders
• Factories operate on a single-shift
mentality, and can change quickly
according to unforeseen demands
• Under produces products in order
to create scarcity value
7
Warehousing
• “High-velocity” shipping
• Merchandise is selected, sorted, and routed to the “lungs” of the
warehouse
• Merchandise is delivered, Retailers hold products in local
distribution centres or in retail store stockrooms
• “High-velocity” shipping relies on rapid information flows
Warehousing
• Stores are electronically linked to the company’s headquarters
• Logistics system is based on two core concepts: speed and
flexibility
• Currently building a new state-of-the-art warehouse and facility
complex in Zaragoza, Spain
Transportation
• Effective and efficient transportation
network
• Fast delivery time
• Coordinates with all aspects of logistics
• Quick response in supply chain
• Ability to distribute merchandise within
2 weeks
• Final step in order fulfillment
• Promotes service quality
Customer Service
• Founder: Amancio Ortega
• Customer Service
• Elements & Measures of Customer Service
• Product Availability
• Order Cycle Time
• Logistics Operations
• Response to Certain Events
• Stock-outs
• Extra Inventory
• Future outlook
Performance Measurement
• Dedicated to creating time to market
efficiency
• Order fulfillment and customer RESPONSIVE
satisfaction
• Tight linkages between demand and
supply EFFICIENCY
• Improve performance in accordance with
EFFECTIVENES
changes in demand S
• Customer loyalty and brand recognition
• Expansion into a global market
Technology
• Competition: 2% of revenue and 2.5% workforce in IT
• Zara: 0.5% of revenue and 0.5% workforce in IT
• In store:
• handheld PDA
bi-weekly order, communication with HQ, feedback from
customers, inventory.
• In Store: DOS=old, slow.
• Suggested: POS=speed, efficiency, connectivity.
• WWW: Online stores open now. Better late than never.
• iPad + Smart phone apps
• In house: 200km tracks=60,000 items/hour
13
• Short-term goals should see Zara expand into North American and Asian
markets as well as continued growth throughout Europe
• In the future, Zara should increase its production outsourcing to Asian
countries to reduce costs
• Overall, Zara seems to be heading in the right direction as the company is
growing at a tremendous rate and does not show any signs of slowing down
