Zara Supply Chain Management Essay

In today’s highly competitive fashion industry where companies operate in a very dynamic and turbulent environment, retailers need to adapt to shifts in customer behaviour and respond to competition. For these reasons, it is important for them to be agile and innovative, so as to gain competitive advantage and stay ahead of their rivals. In order to achieve this, they have to follow a strategy that will differentiate them from the rest of the industry.

Zara is the flagship chain store of the spanish international group Inditex, founded by Amancio Ortega and his then-wife Rosalia Mera. Headquartered in the town Arteixo, Zara opened its first store in 1975. Since then, the company has witnessed an unprecedented growth. Going from a little known, Spanish company, it

Given that distribution is done through its Spanish-based warehouses, middle-tier management has developed a dynamic inventory allocation model in collaboration with the UCLA. Its effectiveness increased sales by 3-4%. Stores windows and their effect on consumer behavior are important for Zara’s marketing strategy. Hence, stores are centrally designed by company’s architecture team.

Managers at Zara stores are responsible for operational planning which includes activities like ordering and stocking inventory. They provide daily feedback to the designers regarding customers’ preferences. Since stores are critical for brand’s marketing strategy, store managers are also responsible for developing a promotional advertisement to increase the sales through the frequent update of their shop window display taking into consideration the profile of local customers.

These activities performed in all levels of management, when combined together form a value chain (Porter, 1985). Based on Porter’s model, the value chain analysis of Zara presented below, examines the company’s key activities and evaluates their