What advantage does Zara gain against the competition by having a very responsive supply chain?
Zara is a number 1 brand of apparel and it is owned by Inditex worlds largest apparel manufacturer and retailer. The first advantages that Zara gain against the competitors by having a very responsive supply chain is Zara are highly responsive to the changing trends and provide them in affordable prices and the second one is that speed to introduce new design Zara introduce new product design every week it means shorter the life cycle to introduce new product creates a high demands in the market.
Zara sell their product at full price in its stores as compared to competition. And most important thing why customers attracted towards this brands because of display product they shows their display product according to the customer preference thats why customers now a days are more attracted towards Zara.
Why has Inditex chosen to have both in house manufacturing and outsourced manufacturing? Why has Inditex maintained manufacturing capacity in Europe even though manufacturing in Asia is much cheaper?
In-house manufacturing is used as part of a responsive pull supply chain strategy and also as the final leg of its manufacturing process.
After the sales season has started Inditex begins to use in-house manufacturing as a way of quickly responding to trends. It either makes new products or turns incomplete products made from its outsourced manufacturers and turns them into specific finished-goods in response to market demands. Outsourced manufacturing is used to create non-specialised products that can be produced in bulk.
Why does Zara source products with uncertain demand from local manufactures and products with predictable demands from Asian manufactures?
Products with uncertain demand will most likely be produced at a lower volume to products with a certain demand and therefore sourcing from local manufacturers provides Zara the speed it needs to test and deliver these products before they become obsolete and have to be sold at a discount. It is part of a responsive pull strategy. Predictable demand products are made in Asia due to low labour costs and high volume of products needed. It is more cost effective to manufacture in bulk due to the fact that predictable demand products have a larger window with which to deliver products without becoming obsolete. It also means that they can be made before the season starts as part of a push strategy.
What advantage does Zara gain from replenishing its stores multiple times a week compared to a less frequent schedule? How does the frequency of replenishment affect the design of distribution system?
This makes sure that store inventory is always up to date and that new designs can be introduced often to meet trends. It also means that products can be replenished if demand is high and c3. It can be taken away if demand is low. Furthermore, it is responsive to the fickle nature of the fashion market if a new trend comes into fashion Zara need to be able to adapt their quickly and change their in store merchandise to meet customer demand. This replenishment is one of the Zara inventory management strategy where all stores are well managed. With this effective strategy brought greater customer satisfaction and gains more market share globally.
Do you think Zaras responsive replenishment infrastructure is better suited for online sales or retail sales?
Whilst its quick distribution system allows Zara to respond to trends very quickly its lack of de centralized distribution means that it is better suited to retail as online sales tend to have more a diverse product demand and customers expect quicker delivery times. Companies such as amazon are able to respond quicker to online sales due to the fact that they have distribution centers all around the world and can offer same day delivery. Zara 24 hour delivery times from Spain to outlets all around the world may not be as efficient with online sales as it is with retail sales.