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Case: Operations Strategy of Zara

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by

Charles Samson

on 14 May 2014

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Transcript of Case: Operations Strategy of Zara

Operations management
Summary
Question 1
Zara has a very responsive supply chain.

(a) Does it offer a competitive advantage?

(b) How does this affect supply chain design and performance?
Case: Operations Strategy of Zara
Carla Kunz
Charles Samson
Hazel Chan
Michael Cropper
Question 2
Zara chooses both in-house and outsourced manufacturing.

What are the reasons for choosing both strategies?
Question 3
Compare Zara's possible supply chain disruptions with that of Hewlett-Packard using the assessment matrix of Exhibit 2.4.
Zara Stylish Low-Cost Fashion
Competitive Advantage?
So can we conclude a Competitive Advantage out of this Core Focus and Supply Chain Operations Management Diagram?
So we know:
- Zara Focuses on Quality Cost and Service level
With main Focus on Competitive Price and Coping with Changes in Demand
Design
Agile / responsive Supply Chain

Very flexible and quick in adjusting Fashion

Fast communication within different stages of supply

Constant observation and quality management

Supply Chain Design: Very effective

A
Competitive advantage Yes or No?

1st: define the market: Segment of Middle – Class

2nd: Order winner /Order qualifiers in order to define the business focus
Even though we know that Zara has an extremely good supply Chain and Operations Management, we know to little about its competitors to determine a Competitive Advantage. But we know that Zara has the Cost Leadership so in this regard they have a Competitive Advantage. For the rest, further research is required
Performance
-Cost Leadership

High quality management to ensure performance constantly

Supply Chain Performance: very efficient

B
How does this affect supply chain design and performance?
Risk Management
Risk Management Framework
1. Identify the sources of potential disruptions

2. Assess the potential impact of the risk

3. Develop plans to mitigate the risk
Hewlett Packard
ZARA
Risk & Zara:
- Keep their production at a quick turnover compared to competitors

Zara treats clothes like a perishable commodity that goes bad quickly.

1. Quick fashion turnover: Never let the clothes go stale

2. Get scarce: Lower quantity makes clothes go faster

3. Offer choices: Diversity increases the chance of appealing to a customer’s taste.

CAD facilitates Zara’s responsive manufacturing process

Investment in technology to aid information flow


Information Systems
Zara applies continuous improvement to their supply chain processes

Zara invests heavily in employees with a focus on motivation

Total Quality Management

60% production in-house

-quick response for seasonal demand
Outsource
-labor intensive
-reduce cost

~Zara become a competitive brand, productive factory and consistent in cost leading.
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