In the environment that we live in today, we have transitioned to instant gratification consumers. Long gone are the days where you had to get in the car to shop in store; most people do it from the comfort of their couch. With the increased shopping presence, retailers are under extreme pressure to deliver to the demands of their customers. Zara, an international apparel retailer, based out of Spain, has figured out a way to give their customers the ultimate advantage over competitors by a process called Rapid-Fire Fulfillment. Implementing this process has not only reduced their design to sales cycle in weeks compared to months from their competitors, but “Zara’s sales and net income have continued to grow at an annual rate of over 20%”
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This is a contrasting style to other manufactures that solely depend on Asian sources for manufacturing their goods. “Products with highly uncertain demand are sourced out of Europe, whereas products that are more predictable are sourced from its Asian locations” (Chopra, Meindl, 2013). Zara also manages their product lines well. They outsource simple non-expensive items, while keeping the complex and more costly items in-house. In addition to this, Zara doubles their finished good purchases and in-house production after the sales season starts compared to their competitors (40% to 20%). This allows them to have a better handle on forecasting trends, which in turn gives them the opportunity to focus on what products work best for their consumers.
What advantage does the company gain for replenishing stores twice a week?
Zara also continues the trend of fast-paced efficiency to their store orders, giving them two per week (Wednesday and Saturday) with a deadline by 6:00pm. If a manager misses the Wednesday deadline, the store has to wait until Saturday to place a new order. Since Zara likes to keep low amounts of inventory in their stores, they can gauge the demand of their products more efficiently than their competitors. If a product isn’t selling well, managers can replace it with better selling items, or new ones altogether. The order model also gives Zara a better opportunity to