Essay on Analyzing Zara, S Supply Chain

3401 Words Jul 3rd, 2011 14 Pages
QUESTION 1
As completely as possible, sketch the supply chain for Zara from raw materials to consumer purchase.

ANSWER
ZARA’S SUPPLY CHAIN

Description
Zara makes about 40% of their raw material (fabric). The remaining 60% is outsourced from within Spain, mostly from the La Curuna. Designing of clothes at Zara is done by creative teams of over 300 professionals at the headquarters in La Curuna, Spain. They act on the information fed to them from the stores managers.

The first stage in Zara’s production system is cutting of fabric. The design is then sent for sewing by one of several hundred local cooperatives. After sewing, the clothes are returned to Zara’s facilities for ironing by an assembly line of workers. After this, the
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• Territory encroachment. There has been tremendous upsurge in the number of retail outlets in the past couple of years. The 2009 annual reports of Inditex, the parent company showed over 1400 Zara stores in over 80 countries across Europe, Africa, Asia, and America. This shows the increasing squeeze that is being put on the fashion market in those countries and the possible cause for conflicts between Zara’s retail stores and those of other competitors. • Price cutting. With the use of state-of-the-art technology and highly efficient management, production and distribution systems, Zara is able to sell ‘stylish designs that resemble those of big-name fashion houses’ at moderate prices. This has a tendency of creating price competition forcing retailers of competitors to cut down prices to maintain their market shares at the expense of profits.

Suggestions for mitigating conflicts
Though conflicts in Zara’s distribution system cannot be completely avoided, the following measures suggested by Homa (2010) can help mitigate channel conflicts. • Channel players must refrain from short-termism view of increasing profits at the expense of long-term channel relationships. • Channel players must show mutual respect for one another with the understanding that each player needs to earn fair returns to stay motivated. • Channel members must display openness and fairness in their competition.

QUESTION 3
What type of

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