Question

• The case study for this term requires that, give detail information about the Zara company. After that, give an answer to the following question
• Identify the competitive strategy of Zara company, justify your answer?
• Based on your supply chain knowledge, suggest a distribution network for Zara company, justify your answer?
• In what aspect the Zara company has become leading in the supply chain. Discuss in detail these aspects.
• Explain how the Zara company benefited the information technology to achieve excellence in the supply chain.
• What was the supply chain management process adopted by Zara company? Discuss, how far was the effect of that approach to reach a competitive edge.

Answer 1

Identify the competitive strategy of Zara company, justify your answer?

Zara uses a marketing pull strategy to attract their customer.Zara uses a customer centric approach and delivers the value based product to the customers.

Competitive Strategy of Zara

1.Customer Centric: Zara focuses on the choice of the customer. It creates and designs new products for all customer segments including males and females.Zara provides a variety of clothing ranges designed according to the customer needs.

2. ZARA's service and price to the customer: Zara provides high class updated service to the customer. It focuses on quality, design, unique texture along with very great competitive prices. ZARA's product can be easily affordable by the average middle class individual

3. Use of Technology: Zara uses highly updated technology. It develops a system under which customers can try the product virtually by using the Zara app or website application.

3.Value creation: In addition to providing designer products to the customer Zara focuses on creating the value according to the customer.

4. Introduction to new clothes: Zara introduces new clothes in a very short span of time to attract their customers. Zara introduces new clothes within the time gap of 2 week. Zara becomes the fashion house for the customers who seek new designs and by capturing the needs of the customers and their choices Zara designs their product accordingly without maintaining much stock in the inventory because the choice of customers is changing day by day.

5.Global store and fashion chain: Zara has expanded its clothing chain globally including Malaysia, India,China. Zara has stores all around the globe. It has more than 4300 stores in the globe as well as serves customers online.

6.Brand image: The unique design,quality,price of Zara clothing always attracts the customer and makes them loyal towards the brand.

Based on your supply chain knowledge, suggest a distribution network for Zara company, justify your answer?

ZARA uses corporate vertical marketing integration strategy and hence gains control over its distribution network and uses this distribution strategy as one of their major competitive benefits. Zara gains control over its manufacturing units and the supply chain network.It has their own retail stores and hence gain control over the retail segment. It owns its own supply chain and hence doesn't depend on outsiders for supply and thus provides speedy delivery to the customers.

In what aspect the Zara company has become leading in the supply chain. Discuss in detail these aspects.

Zara uses a Corporate vertical marketing integration strategy to maintain and manage its supply chain. This strategy provides a competitive benefit to the company. Zara focuses on just in time inventory management and production. Zara produces a new range of varieties to the customers within a time span of two weeks, therefore they do not hold a large number of inventory and catch the customer segment by providing new and fancy designs. Zara uses an in- house production management system for producing and designing the product range. Zara uses a futuristic approach as its supply chain system. Zara uses an omni distribution supply chain management system which is a synchronized and integrated supply chain system through which retailers present the design with the help of catalogue to the production team and team converts that virtual design into a physical design according to the customers need and hence able to provide new varieties to customers within 2 weeks.

The leading competitive advantage that Zara gets due to its supply chain management is that it has its own retail stores and also serves customers through online service. The brand loyalty of customers, on time delivery of Zara products to the customers,frequent availability of new designs to customers and the extremely updated technology through which customers can try the products online provides ZARA competitive edge.

Explain how the Zara company benefited the information technology to achieve excellence in the supply chain.

Zara integrates its data from customers with the technology to enhance its supply chain system. Zara not only provides physical service to customers through its retail store but it also provides online service for delivering products. Zara team frequently conduct the surveys to analyse the choice or the need of the customer and then it develops the innovative product according to the choice of the customers. It is only the use of technology that enhances the supply chain system of Zara through which the company understands what customers want and then convert their need into the innovative product and present it to the customer quickly and efficiently as compared to other competitors at most competitive and benefited price.

What was the supply chain management process adopted by Zara company? Discuss, how far was the effect of that approach to reach a competitive edge.

As it is explained in the section about aspects of the Zara company to become leading in the supply chain and distribution network for Zara company.Zara uses an Omni supply chain management process which integrates and synchronizes all the units of ZARA distribution network. Zara uses corporate vertical market integration under which it has its own retail stores around the globe without providing franchising to others and has an in-house production system. By owning its own supply chain network Zara by eliminating the system of wholesalers and retailers for delivering the product to the customer. Zara creates integration between the retailers,production unit and all other suppliers for the raw material to produce high quality and new designs to the customers.

This supply chain approach provides a high competitive advantage to Zara and makes it a more successful brand as compared to its competitors. ZARA 's introduction of new designs to the customer makes it successful. Zara supply chain also enables them to provide on time and speedy delivery to the customers helps to gain competitive advantage to ZARA