Supply Chain and Operational Management - Case Study Example

Executive Summary

Supply chain and operational management is a very important concept in the management of any business enterprise. This analysis seeks to examine the operational management of Zara Company as a case study and use the insights provided herein to reflect what happens in other companies. The work will depend on ethical analysis by depending on the theories that support integrity in the business management in relation to the management of resources and the people. Importantly, this work will depend on the secondary sources from various scholars that has conducted research and provided the findings concerning different corporate behaviours and the way these behaviours lead to positive and negative effects in the overall operations.

Introduction

Zara is an excellent company that deals with the manufacture of fashion clothes, which has gained the global outlook and acceptance. Zara has achieved a lot in the production market among them is the vehement transition from a retail stockist to a global supplier of standard fashion designs. In fact, it has a very powerful and outstanding business model that propels its business activities. In addition, Zara has managed to deal with the competitive environment by ensuring that it uses strategies that scales it a head of its peers in the market. Moreover, it has done well in attracting and retaining the customers who have always turned positive in responding to the consumption of its products. Furthermore, it is worth recognising that every company lives in a competitive environment of the business operations, and only the strongest company in the market would attain the promise of growth and survival. Therefore, the company must have robust skills and strategies in competing effectively for skilful, talented and creative employees. In addition, the company must ensure that it is making its games at the highest heights above the competitors in order to realise the most interests and preferences of the market. In doing so, the policies and strategies must remain smart and must get along with its objectives and goals, thereby remaining at the peak of its operations.

The Company Profile

Besides, operational management is fundamental in making the company to realise the better scale of performance. Zara Company has been smart in structuring the three domains of business activity, which include market performance, employee performance and production performance. In realising this, Zara focused attention in reaching to the oversee markets in order to make it reach many people with its products. In fact, the company has been very aggressive in reaching its products far beyond the borders with an aim of making the clients served to continue performing as mediums of product promotion. Furthermore, the company has used different platforms to make its products known in the market. For example, most of the time it advertises its products in the internet as a modern way of using technology to support enterprise activities. Therefore, it remains an embodiment of reason for the companies to do the best in operation management for effective development.

Literature Review and Case study

Many scholars have underscored the benefits of good operation management in an organisation. In doing this, it is imperative to identify the best method of reaching the goods in the market. That is the reason why effective chain management is essential in the structuring of this understanding. According to the work done by Fitzsimmons and Fitzsimmons (2013), the two agree that only the companies that use the best method of managing the market and products supply in the market would realize the development and growth of business activities. In their standpoint, the twenty first century has seen a very different and unique paradigm in the realm of business activities, and with the use of technology, the trait of doing business has shown to take a different turn. Therefore, operation management becomes a very crucial area to look into for an effective operation. In supporting the same, Christopher (2016), believed that there must be a meaningful trail of the companies in their endeavor to make the best performance in the area of their service dispensation. Furthermore, he is categorical in recognising the fact that every company lives in a competitive environment of the business operations, and only the strongest company in the market would attain the promise of growth and survival. Consequently, the company must have robust skills and strategies in competing effectively for skilful, talented and creative employees.

Besides, Stadtler (2015) believes in an effective planning, which according to him would the only way to realize the achievements outlined in the company’s objectives. He adds that corporate social responsibility obligates the companies and employers to remain true to their services and ensure that whatever they do during their actions does not create harm to the environment and the people around them. Actually, many companies have not been effective in caring for the people that interact with their services. Therefore, the understanding in this work has a lot of promise in this realm.

Operations management success factors

Many authors have conducted research on the most successful companies in the world and have tried to come up with an explanation of the success factors for these organizations. The wording is different by they all come up with the same ideas on the success factors in the operations of any organization. The success factors are dependent on the organization, its identity, its products and its operations in the business world. According to the Stevenson, 2011, organizations need to understand their needs in order to survive in the competitive business environment, which will consequently lead to an understanding of the operations management success factors.

Five factors that any organization needs in order to survive in the competitive environment are the people, a purpose, resources, process and the customers.

People

This refers to the shareholders of the organization who are the people that make up the organization. In this case we have the top management level people who are in charge of the management of the organizations business processes. The top management makes strategic decision concerning the operations of the business and ensures that the goals and objectives set are achieved at all levels in the organization (Slack, and Alistair, 2013). Therefore, the top management people are the decision makers in the organization. Zara, company ensure that its top management is competent to make strategic decision that will not only increase the sales of the company but will also lead to the overall success of the organization in its operations. The top management decides on the strategies the company is going to undertake based on the results the company achieves previously.

Another group of people in this case is the middle level management whose main purpose is the implementation of the decisions made by the top level management. the management at this level is involved in the implementation of strategies that will ensure the business is steered in the right direction. They receive instructions from the top management and they have the responsibility of ensuring the instructions are carried out. Further, this level of management has the duty of delegating duties and responsibilities to the junior level employees. They therefore ensure that the right persons are given the right tasks thus ensuring the success of the organization. The middle level of management for Zara Company is involved in delegation of duties and acts a link between the top-level management and the middle level management. This has ensure that the strategies developed in the company are achieved thus a success factor for the organization.

The final group of people is the operational level, which is the level where the people are in charge of implementing decisions and strategies made by the top-level management. This group is concern with the operations of the company. They ensure the goals and strategies are achieved through the various operations of the company. This level has little or no decision making responsibilities and are usually expected to follow the instructions given to them by the middle level management (Slack, and Alistair, 2013). However, it has become imperative that the operations level of any organization needs to be involved in the decision making for an organization to be successful. Thus, Zara Company has ensured that the employees in the operations levels are involved in the decision-making activities. This has been a key success factor since it has reduced resistance form the employees and ensure that all people work together to achieve the goals of the organization. The company has come up with team building activities, which increases effectiveness of the relationships of employees in the company. This has trickled down to the company thus leading to effective teamwork and achievement of organizational goals.

Purpose

An organization needs to have a reason for its existence for it to be success in the competitive business world. This is therefore, the reason why a business exists and what is plans to offer to the world. However, having a purpose is not enough for the organization, there needs to be more for an organization to be successful (Slack, and Alistair, 2013). Organizations have to come up with a strategic focus, which is in line with the rapid changes in the world today. The world has become very dynamic and organizations have to ensure they do their best in order to keep up with the ever-changing world. This means that the leaders of the organization have to constantly research on the opportunities available keeping in mind that they change every day. The research will help them focus the resources on the most profitable opportunities created within the scope of the business.

Organizations have to come to terms with the reality that changes can occur overnight where the major customers of the organization can change overtime and the income generating sources can go out of business. Therefore, a business has to come up with the strategies that will ensure the business achieves its goals and objectives while at the same time remain relevant in the market. Zara Company has a great understanding of the changes in the market, which may make the organization go out of business or change its target markets within a short time. The company has therefore ensured they have the best team for research and development, which ensure the company remains relevant. Further, the company ensures that the operations of the company ensure that value engineering and value addition are given a priority thus ensuring the success of the organization. This ensures the company remains relevant in the market and thus successful in their businesses. The leaders of Zara Company ensure they align all the success factors for optimum performance within the organization.

Resources

The success of any organization is dependent on the availability of resources. The resources in an organization are mainly the finances, facilities and the equipment required to perform various operations within the organization. organizations have to ensure they have the capital that is required to start or sustain a business (Slack, and Alistair, 2013). Without the capital the organization cannot manage to sustain its operations. The biggest challenge for any organization lies in it ability to ensure the equipment and facilities available are enough for the employees to work in in addition to being in good working conditions. Therefore, management of the cash flow within an organization is the key factor for the success of the organization. Further, organizations have to ensure they maintain the balance between the acquisition of nice facilities and equipment and the availability of finances to finance the acquisition.

Zara Company has managed to be success in its operation by ensuring the cash flow of the organization is well managed to avoid lack of funds to finance the operations of the business. This has been made possible by the “no credit” policy of the company which ensure that goods can only be given to customers ones thy have fully paid for them. This is because the company fully understands the importance of a good cash flow since no matter how much money the customers owe you, the lack of funds to finance the business operations will lead to failure. In addition, the company has managed to provide its employees with good working conditions through the acquisition of proper facilities and equipment. The facilities and equipment allow the company to ensure the employees remain motivated due to the good working conditions.

Processes

This refers to the operations of the company, which are meant to ensure the organization creates value for the customers and ensure the organization earns income. The strategies of the organization can only be successful is the operations of the company are managed well (Slack, and Alistair, 2013). When the operations of the company are efficient then the company is able to deliver value to the customers. this value to customers is basically the five Rs of quality which are the right quality, the right quantity, at the right time, at the right place and at the right price. Therefore, the operations management of any organization focuses on the production cycle of its products. this focuses on three key areas which are the production cycle time, quality control and the cost control of the products in an organization. the operations and the strategies are interrelated and they need to sync in order for the company to be successful.

Zara company has been able to ensure that the strategies formulated are in total sync with the operations of the company. the company ensure that the operations of the company are streamlined by the strategies thy formulate which consequently leads to the success of the organization. The quality control and cost control operations of the company ensure that customers get value for their money from the purchase of the company’s products while at the same time ensuring the operation costs of the company remain at the lowest level. Cost control also ensures that the products of the company are affordable to the customers by ensuring that the prices are reduced.

Customers

This is the most important success factor of any organization, which means that the organization must have customers for them to exist. The customers are the reason why organizations are in existence and without them, there is no profit for the organization. According to the Stevenson, 2011, the purpose for any business to be in existence is acquire customers and keep the customers it has already acquired. Therefore, the company has to ensure they market their products to make their customers aware of the products of the company. therefore, organization must ensure they have a good customer relations management program which will ensure the company remains successful when it comes to relating with their customers. this will involve providing the customers with their needs and delivering beyond their expectations rather than expecting the customers to buy what you have to offer.

Zara Company is success due to its ability to ensure proper customer relationship management. The company ensures they keep in touch with their customers both locally and internationally. The company is therefore able to ensure they create a better customer loyalty, which keeps their competitors. Further, the company tracks the actions of its competitors and tracks the changes in its environment thus manages to also maintain a competitive advantage.

Another key success facto for Zara is the speed and responsiveness of the company which it places first above everything else. The operations of the company are dependent on the speed and the quick responsiveness of the company and it is considered to be more important than even the cost. the company is well known for its ability to deliver new designs to stores quickly in small batches taking advantage of the changes in fashion trends. The company’s supply chain is another key factor that ensure the company is successful in its operations. The company owns and controls its own supply chain thus it manages to ensure it remains competitive by coordinating all its supply chain channels. The company also applies a just in time production strategy which increases the efficiency of the company in the operations by reducing inventory and reducing costs while increasing the supply chain efficiency.

Limitations and recommendations

However, despite the company being successful in its operations they have various limitation, which could lead to the failure of the business. Zara’s focuses mainly on the imitation of original products, which misleads the customers in the organization. This may deceive the customers who are in search of the original products and may later lead to problems for the company. Thus, the company should ensure they make their customers aware of the fact that their products are not original which will ensure all their customers are satisfied with the products. Further, the company should device a strategy that will ensure the company comes up with their original products, which will fetch higher value for the company.

Further, the supply chain of the company is a factor that makes the operations of the company quite difficult. All the channels in the supply chain are owned by the company which makes it difficult for the organization to expand its supply chain. The company finds it quite expensive to expand its supply chain thus they cannot target other markets in the world. The company should therefore, ensure they outsource some of their supply chain activities in order to come up with a more effective supply chain that is quite easy to maintain. This will allow the company to expand its supply chain without it becoming too expensive to maintain.

The logistics network of Zara is centralized, which has also contributed to the success of the company. They have a predictable and fast rhythm of their supply chain, which is based around the fulfillment of orders in their stores. This allows all the staff members to understand the timeline of each activity thus increasing their efficiency.

Conclusion

Zara is an expert in fast fashion, which means they have to act fast on the needs of the customers and their changes in the supply chain. However, thy have to work on their originality and ensure they outsource some factors of their supply chain to allow for its expansion.

Reference List

Christopher, M., 2016. Logistics & supply chain management. Pearson Higher Ed.

Fitzsimmons, J. and Fitzsimmons, M., 2013. Service management: Operations, strategy, information technology. McGraw-Hill Higher Education.

Bozarth, C.B. and Handfield, R.B., 2016. Introduction to operations and supply chain management. Pearson Higher Ed.

Stadtler, H., 2015. Supply chain management: An overview. In Supply chain management and advanced planning (pp. 3-28). Springer Berlin Heidelberg.

Rushton, A., Croucher, P. and Baker, P., 2014. The handbook of logistics and distribution management: Understanding the supply chain. Kogan Page Publishers.

Stevenson, W. ,2011. Operations Management: operations and Decision Series. New York: McGraw-Hill.

Slack, N. and Alistair, D., 2013. Operations Management . New York: Pearsons

Loeb, Walber. 2013. Zara secret to success: The New Science of retailing. Oct 14th, forbes.

Stevenson, S. 2012. Polka dots are in? Polka dots it is! How Zara Gets Fresh styles to Stores Insanely Fast. www.Slate.com

Devandshu, D., 2002. Learning from Zara: Case Study. Third eyesight.

Umitt, B. 2010. Supply Chain Operation Course handouts. DMEM.