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Transcript of Case Zara
Sourcing Strategy for Component
Fisher’s framework focuses on finished goods and the demand side.
Kraljic ‘s framework foces on supply side.
Combine Fisher’s and Kraljic’s framework to derive sourcing strategy.
Procurement and Outsourcing Strategies
Andrea, Malcolm, Salpi, Steven
Prof. Peter Jackson
March 13, 2014
Introduction of Zara
Zara-Flagship store of Inditex group
Company Overview: Inditex- Parent Company
Overview of Industry
Analysis Zara’s Current Supply Chain concepts & Strategies
Main Focus: Impact of new strategies for Zara
Recommendations and Conclusion
Inditex: Founded by Amancio Ortega Gaona in 1963
First created housecoats/ First Zara store in 1975
14 years-82 stores in Spain alone
Global Expansion- Europe, Portugal, Paris & New York
Brands created under Inditex Umbrella
Pull & Bear
Stradivarius and Oysho
1. Production Sourcing and Scheduling
2. In season production
What does it means?
6 months in advanced:
Beginning of the season:
In season response:
End of the season sale:
This slide is like a comparative chart
Expenditure for retail advertising:
The Zara Challenge
Zara is the most innovative and creative retailer in the world.
It has a unique agile supply chain (ASC).
Outsourcing have increase progressively over recent years.
Fashion Industry – design and Marketing in particular.
There are Questions and issues regarding Outsourcing.
What are the risk involved?Viasv Zara.
What kind of innovations is available to you? Visav Zara.
9.1 Outsourcing an Option
Economics of Scale
Aggregating of demand.
Demand uncertain transfer to supplier.
Supplier reduce uncertainty through the risk pooling effect.
9.2 Outsourcing Benefits and Risks
Reducing Capital Investing
If you transfer some of your responsibilities to your suppliers.
Supplier higher investment shared between customers
Outsourcing Benefit and Risks
Focus on core competence and capabilities.
Buyer can focus on its strengths
Allow buyer to differentiate from its competitors.
Outsourcing Benefits and Risks
The ability to read changes in customer demand
The ability to use the supplier’s technial knowledge to accelerate product development cycle time.
The ability to gain access to knew technologies and innovation.
Outsourcing – Benefits and Risks
How can the firm decide on which component to manufacture and which to outsource.
Focus on the core competences.
How can a firm identify what is core and what is outside the core?
9.3 Framework for Make/Buy Decision
Capacity And Knowledge
Dependency on capacity
Dependency on knowledge
Two main reason for outsourcing
This dealing with products off the shelves. E.g. Computer configurable product.
Component are tightly related
Designed as top down approach
A framework for Make/Buy Decisions
Factors to consider
If the product(has competitive value) is extremely important to the customer it does not make sénse to outsource.
If it changes very quickly – No.
If it has a competitive- No you have to guard it
If you have lots of suppliers take advantage of competition for business
How Modular or Integral dictate your judgment.
A good procurement System –Kraljic Matrix
Firm’s supply strategy should depend on two dimensions
Volume purchased-percentage of total purchases cost impact on product quality or business growth.
Availability-number of suppliers.-competitive demand-make-or- buy opportunities –storage risk-substitution opportunities.
Fisher’s functional vs Innovative Products
Component forecast accuracy
Component supply risk
Component financial impact
Thanks for Watching
Introduction to E-Procurement
E-procurement is the business-to-business or business-to-consumer or business-to-government purchase and sale of supplies, work, and services through the Internet as well as other information and networking systems, such as electronic data interchange and enterprise resource planning.
Relationships with Long-Term Suppliers
Well known suppliers may resist to sell their product and services to e-markets, because they may not feel comfortable competing on price alone.
Pros & Cons
offered to buyers
Serving as an intermediary between buyers and suppliers
Identifying saving opportunities
Increasing the number of suppliers involved in the bidding event
Identifying, qualifying, and supporting suppliers.
Conducting the bidding event.
offered to Sellers
Reducing marketing and sales costs
Increasing ability to compete on price
Allows suppliers to better utilize their available capacities and inventories
software vendor licenses its software so that the company can automate the access to the marketplace
marketplace charges a membership fee
Fee depends on the size of the company, the number of employees who use the system, and the number of purchase orders
Four Types of E-Markets
1. Value-Added Independent Public e-Markets
2. Private e-markets
3. Consortia-Based e-markets
4. Content-Based e-markets