Supply Chain Management in Zara - Case Study Example

Supply Chain Management- Zara Summary Supply chain involves all process from Production of goods, products and services, through the networks in the business and the final relay of the products. This is only practical when a firm constructs logical supply chains that are effective in the market. In recent times, many firms are reverting to technology and other sophisticated methods in the supply of products goods and services to the market. Many companies, including Zara, have concentrated on customer interface as a way of increasing customer satisfaction. In such a drill, firms look forward into establishing a larger market share for its products and services. This is done by initiating Supply chains that are manageable with a manageable number of middlemen. Similarly, opening more production points in the market increases the aptness in supply of products in the market. Therefore, the best practice in approach in supply chain management is use of short supply chains, technological control and advancement, bulk transit of products, effective supply chain management, development of new production plants and investment in new markets. Introduction The core point in establishing a firm is to give a constant supply of goods, products and services. Therefore, a firm should strategise on making an effective and efficient supply of its products and services to the people that are in need. In many instances, firms that have apt supply strategies end up making a plausible outcome in their supply. For instance, a structure that ensures there is constant supply of the products attracts a larger demand due to its reliability. Though some factors could affect the supply of products and goods, a firm should ensure that it has a developed supply chain. With such a preparation, it is hard to disappoint the people that need these products by failing to give the goods they need. This shows that the most successful firms have to ensure they have an integrated supply strategy. This makes it appealing to the customers, which is reflected in the results that are recorded in any transaction calendar (Canzer, 2006:12). Following suit in such an approach is an entirely vital aspect that should be used by prospecting firms that need to succeed. Analysis and Discussion Supply chain management denotes the processes that are involved from the production of goods, products and services, through networks and the final relay of the products and services to the demands. It therefore closely involves procurement, manufacturing and distribution. In procurement, the manufacturing firm has to plan on all the materials that are required for production. They then have to acquire these materials and make them available. After this, the manufacturing process begins, where the stated products are produced. This is followed by distribution of the manufactured goods into the trade regions. However, the decision making has to involve logistics and global decision making. Therefore, this is a process that involves other minor processes, which involves many networks that are interconnected. The control of the supply of products does not depend on a single person, as it is at times complicated. As such, there is need to have apt control over the supply chain (Jordan, 2010:32). This will be a move to ensure the supply chain is giving adorable results. In many cases, the supply chain involves provision of packaged products and goods, movement of these goods and products from one place to another till the final consumption of the products and goods. Similarly, services have to pass through this chain to record a complete chain of supply (Zuckerman, 2002:23). Therefore, it is in the best interests of a firm to ensure the chain of supply is effective in delivering the services, products and goods to the demand. If this is not done, the firm will not be making an economic sense in producing the goods for the demand. While working in Zara, it is an admissible fact that the retailer has created the demand for its products. The retailer has been increasing its demand volume all over the world since it was developed in mid 1970’s. Therefore, the retailer only needs to embark on the supply chain to increase its supply all over the world (Ross, 2003:9). It is declared that the retailer has developed to a greater level in that it only needs two weeks to develop a product and introduce it. This shows that the retailer has developed avenues of production which are fast and convenient, as compared to other firms (Omedo, 2007:19). Apparently, other firms will need an average of six months to develop a product and introduce its supply. In comparing the two types of traders, it is openly seen that Zara in on the verge of making a greater improvement. This can only be achieved by initiating a concrete supply chain management. Zara has been a performer, with over 10, 000 designs supplied in its marketplace. In making this a success, the retailer has focused on supply chain management which focuses on high demand for its products. In this approach, the company has studied the prevalence of world trade localities and their trends. In these trends, the retailer has noted demands that are considered to be in low cost areas (Mangan, Lalwani and Butcher, 2008:51). Therefore, the costs incurred in such countries are minimal, which reflects a minimal expenditure on the retailer. In this approach, the retailer has decided to make fast production designs and supply such designs into low cost areas. This is a supply practice that has improved Zara’s performance. In this drill, the low cost countries appreciate the designs that have been supplied by one of the high-end retailers in the world. As such, the demand for these products is escalated (Hugos 2003:32). This makes the product to be in high demand, which is reflected on the effectiveness of the supply chain that is inducted by the retailer. Many firms have tried to use such a manoeuvre but they end up making losses. Therefore, Zara is one of the many retailers that have introduced a supply chain that is successful in its new and introduced marketplaces. As one of the best practice in Zara, the company has concentrated on the customer interface process. In this aspect, there is an approach where the customer is a vital subject in transactions. This has been done by increasing the need for the products. As such, the retailer has opened many retail centres in many parts of the world. This has been boosted by the provision of different products and services. As such, most of the customers find it an easy task to get the products and services they need from the retailer (Douglas, 2010:12). According to supply management schedules, it is a positive accrual when the customers are getting what they need at the right time. This gives the trader an added advantage over other suppliers that do not have such a large demand for their products. This is the same approach that has been used by Zara in making a positive approach to the people that demand their products (Dave 2008:71). For instance, supplying the products overseas makes it a large retailer that has supremacy in the supply of products. Though supply chain only reflects on supply of products and goods in a market, it also revolves around storing goods in a most safe place. Therefore, firms have to maintain safe places where their goods will be kept. For instance, they have to make warehouses that are considered safe for the products. This will assist in reducing the frequency of transporting products from one place to another. Similarly, banking on customer satisfaction is one of the best practices that have been initiated by Zara. The retailer ensures that the customers have the best services and these services are supreme to the competitors. As such, it gives the people in demand the urge to continue using the products. In such a position, the firm records a constant demand for its products (Wang, Heng and Chau, 2007:31). However, this should not be the highest point of a firm. It should look forward into establishing a larger share of demand for its products and services. For instance, increasing the supply of products and services to other parts of the world is still an appropriate manoeuvre. These new trade regions will increase the profitability of the firm, which will increase its standing point. Zara has also initiated logistics in the operation of its dealing across the globe. In one of its logical approach to the industry, the retailer decided that it should use all its investments in opening up other stores across the globe. This is an approach where most of the trade links are opened in new places. As such, the order for the goods is increased in the mean time. This creates a production that is constantly improving and making an increase in its sales volume (Blanchard, 2010:22). For instance, when the retailer opens a new store in Spain, the demand for the products of the retailer will increase. This reflects the same effect on the sale of products of the company. In this criterion, the supply chain of the trade is also seen to increase. The supply chain has to create a greater network to achieve a constant supply. This will weed out any chances of delays where customers will go without the products of the retailer for a period. There are many recommendations that can be done to improve on the supply of products and services in reflection to Zara. This is a retailer that has been in trade for over three decades, therefore it has established a brand name for its products (Clemmer, 2009:41). These brands are known by a large chunk of the prospects that are in existence. Therefore, relying on some of the widely known brands is an approach where the sales of the retailer will increase. For instance, there are some firms that bank on a singular brand that makes excellent sales in any region. Some of these brands take time before they are completely known. Therefore, Zara should bank on reliance of some of the widely known and adored brands, and introduce them to the supply chain. Supplying such brands in the different sorts of trade areas will ensure they are recognized as brands that are in high demand (Mohammed, 2002:44). In such a position, the demand for the products will increase steadily. For instance, some people will demand the products or brands of the retailer since some people in a different country are having the same brand. This will increase the productivity of the retailer in many parts of the world. Low cost pricing is one aspect that has been incepted by many distributors and firms that need to increase their market share. For instance, some firms have an entry price which is lower than other goods and products in the market. Therefore, many people will appreciate the products due to their pricing. This should be the same approach that should be used by Zara. Consumers appreciate goods that are in low prices. Therefore, giving the market quality goods with low pricing will increase their market concentration. Similarly, Zara should have an everlasting number of strategies. This is to mean that the business will practice different methods of appealing to the market. In such a manoeuvre, the firm will outwit its competitors by practicing different strategies. With the emergent technology, many firms are inducted with technology to help in logistics and control of the supply chains. For instance, there is the development of the supply chain management software, which is used to control and initiate supply of products and goods. This is a reliable form of conducting business where most of the people that need the services are served at the most appropriate time. Apparently, the use of technology ensures there is no backlog of supply or any pending order. As such, the firm will achieve efficiency and effectiveness in supply of products and services. Initiating the same criterion in Zara would be an achievement. The supply of products and services will be an easy task which takes a short time. Supply chains are considered manageable with a manageable number of middlemen. This is to mean that short supply chains have a lesser expenses than long chains that pass through different middlemen (Mentzer, 2000:21). The only thing that makes long supply chains expensive is the fact that all the middlemen have to benefit from the supply chain. Therefore, with each change of hands, the middlemen have to increase the pricing. This is also explained from the increase in expenses when middlemen change hands on goods. Therefore, it is in the best interests of Zara retailer to bank on using short supply chains. When using short supply chains, the retailer will incur fewer costs when moving the goods from one point to another (Donald and Waters, 2007:59). For instance, the goods will only be directed by a single person from one point to the destination point. In such an event, the retailer will only cater for the expenses that are incurred by the single person that is in control of the shipment. Similarly, the retailer will have reduced the labour costs and transport costs that are incurred when it has to cater for different people on the same shipment. In addition to this, the retailer could design ways of making larger supply chains in a single area. For instance, providing a single wholesale chain in a convenient place would reduce the costs that are incurred when transporting the products to these areas. Short supply chains ensure a retailer enjoys the benefits of transporting in bulkiness. For instance, the retailer will only have a single shipment when transporting products to one place (Kulkarni, 2004:29). This will give an advantage of economies of scale, where the overall costs are reduced and contained at lower levels. The accrued accounts could be used to increase the production of products in large bulks. Similarly, this could be a way of improving the profitability of the retailer. Opening more production points increases the aptness in supply of products. Since this is a retailer that has enough resources, it is easier to develop other production points in areas that have high demand for these products (Mentzer, 2004:37). For instance, if an area has a large demand for products and the demand is steadily increasing, the retailer could use a different approach in making an industry sprout. In such a situation, the retailer could make a production plant in the area. This production points will produce the same products that are produced in the main production plant. As such, the products will resemble each other in quality and make. In this approach, the retailer will have reduced the costs that are incurred in transporting finished goods from the main point of production. Since these are finished goods, they are delicate. First, they will need well conditioned places of transport (Waters, 2009:10). For instance, they need furbished places with air conditioning. Lack of this could destroy the materials and the products. Secondly, they need delicate handling as they could be torn. Thirdly, they could take ample space while in transit, as they cannot be piled all together. With all these conditions, it is obvious that the transport of finished goods will be expensive (Waters, 2003:11). However, developing a new manufacturing plant relieves the retailer from all the expenses that are mentioned above. In fact, the retailer could get the materials that are used in production in these areas. This will further reduce the costs that are directed towards supplying the products. Conclusion In conclusion, Zara is a successful retailer, with various points of marketing. However, the retailer has a greater opportunity in making an improving record. This is an opportunity of increasing the supply chain and reaching to greater trade areas. This will increase the demand for the products of the retailer, which will also reflect the same in the profitability levels. This includes use of short supply chains, bulky transit of products, effective supply chain management, development of new production plants and investment in new and untapped trade areas. This will increase the need of the products and services of the retailer as it could double the demand for the products. References Blanchard, D. (2010) Supply chain management best practices, New York, John Wiley & Sons. Canzer, B. (2006) E-business: strategic thinking and practice, New York, Cengage Learning. Clemmer, J. (2009) Growing @ the speed of change: your inspir-actional how-to guide for leading yourself and others through constant change, London, Jim Clemmer. Dave, C. (2008) E-business and e-commerce management, New York, Pearson Education. Donald, C. & Waters, J. (2007) Global logistics: new directions in supply chain management, New York, Kogan Page Publishers. Douglas, E.F. 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