Zara has a very strong distribution network. Its logistics, which is backed up by very strong IT systems are carried out from distribution centres located in Spain.
Zara uses Hybrid Model Information. Information from stores to headquarters relies from combined human intelligence input and from information technology, such as their PDA devices. Store managers input the requested order of what the store needs and in return another group of “commercials” decide whether to allocate the inventory on that particular store or send it to retails where there’s a greater movement of goods. Such decisions are based on calculations from an application that tracks “theoretical inventory” of each SKU available. Their distribution centers, use a lot automation …show more content…
From there, approximately 200 kilometers of underground tracks move merchandise from Zara’s manufacturing plants to the 400 over chutes that ensure each order reaches its right destination based on their individual requirements and needs of that specific location. This competitive distribution network enables Zara to enhance its operational efficiencies and thus increase its customer satisfaction.
Currently this large scale logistic department employs more than 5,000 people and distributed 697 million garments, in the financial year of 2008.
What this means for Zara is that they are able to deliver goods within 24 hours of the receipt of order at its European stores, and within 40 hours to its American and Asian outlets. Also, they can get a product out from concept to store in just 15 days, instead of the 6 months industrial norm. Not only is Zara fast, they are accurate too, compared to similar companies in the industry, their shipments are almost flawless – 98.9 percent accurate with less than 0.5% shrinkage.
Small Batch …show more content…
Due to the small batch sizes, these customers know that each fashion apparel will only be there for 1 or 2 weeks, which results in an environment of shortage and opportunity.
This allows Zara to sell more apparel at non-discounted price because of the sense of scarcity and exclusiveness the company exudes, hence they sell up to 90% of their stock, compared to the 83% industrial average. Zara’s total cost is minimized because apparel that is marked down is reduced dramatically, only 15%, as compared to the industrial norm of 30%- 40%.
Zara understands that fashion is ever changing and therefore commits only 50% of its clothes production during pre-season. Meaning that the other 50% of its clothes are designed and manufactured smack in the middle of the season. This way, if a certain fashion trend suddenly becomes popular, they can react quickly, designs new styles, and gets them into stores while the trend is still peaking. They always keeps spare capacity on hand to react to these sudden changes in demand. They normally operates 4.5 days per week, around the clock on full capacity. Extra shifts and temporary personnel are added only added when
Zara uses Hybrid Model Information. Information from stores to headquarters relies from combined human intelligence input and from information technology, such as their PDA devices. Store managers input the requested order of what the store needs and in return another group of “commercials” decide whether to allocate the inventory on that particular store or send it to retails where there’s a greater movement of goods. Such decisions are based on calculations from an application that tracks “theoretical inventory” of each SKU available. Their distribution centers, use a lot automation …show more content…
From there, approximately 200 kilometers of underground tracks move merchandise from Zara’s manufacturing plants to the 400 over chutes that ensure each order reaches its right destination based on their individual requirements and needs of that specific location. This competitive distribution network enables Zara to enhance its operational efficiencies and thus increase its customer satisfaction.
Currently this large scale logistic department employs more than 5,000 people and distributed 697 million garments, in the financial year of 2008.
What this means for Zara is that they are able to deliver goods within 24 hours of the receipt of order at its European stores, and within 40 hours to its American and Asian outlets. Also, they can get a product out from concept to store in just 15 days, instead of the 6 months industrial norm. Not only is Zara fast, they are accurate too, compared to similar companies in the industry, their shipments are almost flawless – 98.9 percent accurate with less than 0.5% shrinkage.
Small Batch …show more content…
Due to the small batch sizes, these customers know that each fashion apparel will only be there for 1 or 2 weeks, which results in an environment of shortage and opportunity.
This allows Zara to sell more apparel at non-discounted price because of the sense of scarcity and exclusiveness the company exudes, hence they sell up to 90% of their stock, compared to the 83% industrial average. Zara’s total cost is minimized because apparel that is marked down is reduced dramatically, only 15%, as compared to the industrial norm of 30%- 40%.
Zara understands that fashion is ever changing and therefore commits only 50% of its clothes production during pre-season. Meaning that the other 50% of its clothes are designed and manufactured smack in the middle of the season. This way, if a certain fashion trend suddenly becomes popular, they can react quickly, designs new styles, and gets them into stores while the trend is still peaking. They always keeps spare capacity on hand to react to these sudden changes in demand. They normally operates 4.5 days per week, around the clock on full capacity. Extra shifts and temporary personnel are added only added when