Supply Chain for Zara
Supply chain of an organization is the most important aspect of marketing for products. Zara utilizes its delivery chain to counteract rivalry and decrease the outlay of operation. This had enabled the company to clinch to the top of the industry as the leading organization in selling of fashion clothing’s. The sales of fashion attires depend on the availability of knowledge about new designs and fashion. Thus, the company must keep an updated information system that facilitates the making of decision and creation of new designs for the market. This essay deals with Zara supply chain management in Kuwait industry market.
Supply chain for Zara
The supply chain involves several players who perform diverse activities as outlined below. Zara produces its clothing in northeast Spain and distribute to all its branches worldwide. Designs are presented by the corporation day after day. Thus, it is capable of facing rivalry. Raw materials are first sourced out in a competitive bidding process. The supplier who offers the lowest prices is chosen to supply raw materials to the company. When the raw materials get to the organization, it is cut into required designs and sent for fixing to various sewing station (Asia Dept, 2014). These clothings are afterward sent back to designated manufacturing premises for ironing and packaging ready for market.
Goods are distributed through roads and air transport for local and international markets respectively. Consumers will purchase and give feedback to various dealers who will communicate to the manufacturers on daily basis. This enables the organization to make the necessary changes to ensure that its products meet consumers’ taste and preferences. This supply chain ensures that the company saves on the cost of transportation because bulk goods are transported to various destinations. Centralization of the distribution channel ensures that the company maximizes on time as well as creates efficiency. Thus, the company is certain that goods will reach the destination within the stipulated period (Cruz Iglesias, 2013). When the stock replenishes, the company is able to reorder and manufacture goods. This is progress toward an effective delivery channel. Zara maximizes on the raw materials by minimizing wastage and goods returned for not meeting customer’s specifications. This is a positive move towards satisfaction.
Zara Fast Fashion Distribution System
There are several distribution challenges experienced by the fast fashion system imposed by the company. First, the organization makes almost half of the clothing’s that they sell in the globe. This raises the cost of production hence increases the prices of goods offered. In Kuwait, retailers are coming up with new models of doing businesses that relies upon historical and cultural values (Kelley, 2013). This ensures that the local people access clothing that portray their social and cultural values. It makes the company lose its local market in the industry as it generalizes the selling of particular product line. Most companies are concentrating on the volume of sales they are able to make within a short period.
Therefore, they move to china and subcontract their built-up activities. Goods brought from china are sold cheaply to the population hence attract demand. These companies are therefore able to fight competition in the best way possible. However, the challenges do not override the advantages that the company derives from single sourcing. Some of these advantages include: Customer loyalty that is essential for all businesses operating in a competitive industry (Martínez, Errasti and Rudberg, 2015). The reason behind this is that business continuity depends on customer loyalty especially in a competitive environment. The company focal point is on delivery of variety cloths to its faithful clientele hence able to make consistence sales of goods and services. This is why the company has been able to rule over the bazaar for holding on to the open souk. New brands are also developed to enhance diversity in terms of prices and taste and preferences (Ryan, 2013). Thus, the country makes sales to a wider population unlike in the past where it concentrated on customized garments.
Define Vertical and Horizontal Integration
Vertical integration refers to business expansion and acquiring of other organization on different levels in the industry. It may also refer to the act of gathering information from businesses at different levels. This information is applied in the production procedure to put together the clothes that congregate human being needs. The feedback system at Zara utilizes real time technologies which enables decision making to determine the level of demand prevalent in the market. It is also essential in ascertaining the quantity of goods to be supplied by the entity (Sealy, 2015). In situations where taste and preference change the organization adjusts itself immediately. This is one technique that is applied to avoid losses that may bring the organization down. A team of sales professionals is tasked with the gathering of information from various stores on daily basis. Store owners provide the information which is then transferred to manufacturer. The manufacturer calls these representatives who offer the data that is utilized in making critical decisions. Chances of committing errors are minimized by the ordeal. Horizontal integration involves acquisition of businesses on the same level or sourcing of information from competitors along the same line of business (Verdugo, 2010).
Designs are customized in regard to gathered information from different sources. Different designs come into live as a team of creative professionals amounting to three hundred works on various information provided. These activities Improve the competitive advantages of the organization in the following ways. First, the company is able to ascertain demand and integrate new designs into their product line. Second, new techniques are acquired through integration and combination of labor force. The company therefore operates at the lowest cost possible as it invests in diverse endeavor to woo the market to adopt its offering. New techniques and application of real time information system is possible with integration. Diversity also comes about as a result of integration adopted by the firm. Diversity is an essential component to the adoption of new technologies and production methods (Yanfang Huo et al., 2009). These methods are characterized by efficiency and low cost in terms of operation.
In conclusion, Zara have been able to penetrate Kuwait market due to its utilization of diverse marketing strategies. It usually gathers market data on a daily basis hence able to keep a record of critical information. This information is retrieved and applied in the improvement of services. Contrary, competitors are selling cheap clothing’s to the population which is focused at maximizing the market basket. The reason as to why the company is unable to offer cheap clothing is because it handles the manufacturing activities. Its rivals outsource their designs and production endeavor from china. Cheap labor in china makes production to go down. Prices are affected and they go down as well.
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