Zara is a chain store of Inditex Group owned by Spanish tycoon Amancio Ortega. Zara is claimed to require only two weeks to develop a new product and distributed these products to the various outlets worldwide, where the industry standard is about six-month. Being in the fashion industry, Zara not only aims to offer good quality merchandise, it also tries to provide good customer service by understanding what its customers want. Zara has developed a supply chain that enables the brand to provide fashionable clothing at affordable prices. A supply chain includes all activities and information flow within an organization, transformation of goods and services from the raw material stage to selling the finished products to the end user.
One of Zara’s key advantage lies in its process that allows Zara to operate efficiently. Zara employs subcontractors for all sewing operations, which allow the company to stay focus on its core competencies - designing, distribution and retailing of its products. Zara also exploits advance technology and knowledge, by developing customized system to operate its distribution center and creating a hand-held device to manage its ordering system scheduling and inventory management from the different outlets. These strategies have allowed Zara to operate at minimal cost as staying focus, enable Zara to continuously improve on its system to operate even more efficiently. Moreover, technology used in the organization, a huge investment, has minimize the need for paper work and reduce the unnecessary interactions between parties along the supply chain.
Being in the fashion industry, Zara also understand the efficiently in terms of both cost and time pressure, it cannot depend only on a single or small number of suppliers. Therefore, Zara has about 260 suppliers, which reduce its dependency on any single supplier. It allows Zara to order in small quantity too and enable these suppliers to respond quickly to Zara orders. In other words, suppliers have no bargaining power over Zara. Zara, in contrast, may compare prices and quality of the materials to ensure that garments produced are of acceptable or high quality. Zara has in-house team designers, which allow Zara to respond quickly to current trend in the market and the requirement of its customers. This has also allowed Zara to maintain a consistent fashionable look in the market place.
Zara had many “keys” to open and being successful in the global market. Being an established brand all over the world, Zara has successfully maintained its image that is easily identifiable by its customers from all across the world. From its store locations to its store layouts, Zara has a consistent image. At the same time, Zara mix its products together to encourage customers to buy combined outfits. This strategy help to boost Zara€sales, as customers are exposed to a variety of items at the same time and also to assist customers to mix and match garments. Zara outlets all over the world are always stocked with new products every two weeks, which encourage its customers to return to its outlets more frequently. This is especially important as Zara spend very little on advertising and rely on word-of-mouth and invested on its locations to retain existing and attract new customers. Zara’s advantage also lie in its ability to control the product quality. Zara spare no expense to manage its product quality from the first step of