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Zara - Value Chain

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Alexander Goerss

on 31 March 2011

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Transcript of Zara - Value Chain

The Value Chain Primary Activities Supporting activities Product Design Marketing Operations Logistics Service Equipment Firm infrastructure Human Resources Systems Design live collection adapting to customer fleeting tasts through tracking of market events, fashion trends and customer preferences
How ?
300 designers design more than 11000 items per year compare to 2000 to 4000 by rivals
ideas from store managers
spotters fogus on events, e.g. campus at university and night clubs Sourcing/Operations

Suppliers and Headquaters are linked together, so that supply coordination with Zara's projections is possible

Postponement of finalizing design (Gray) in order to update new design quickly during a season

Pull strategy in order to quickly satisfy canging customers demand

most time and fashion sensitive products are produced internally
Production in fully owned factories near Zaras headquater in Spain
Factories are fully automized, specialized by garnment type and focus capital intensive parts of production process
Just in time system
Compensating of higher labour cost by minimizing advertising, inventory expenses Logistic

Distribution centers (Hub: La Coruna; Spoke: Brazil & Mexico)
equipped with mobile tracking system
fast handling of garments
twice weekly delivery to every Zara store possible
Distribution center interconnection: real time inventory data results into fast moving merchandising Digital interconnective work has dropped inventory to 7 %
of annual revenues compare with 15 to 19 % of its rivals

minimizing marketing spending (less than 1% compared to the rivals with 3-4%)

word of mouth
Armani at moderate prices Store operations

two primary purposes of stores
represent Zaras face to the world
functioning as grass roots marketing research agents
stores in high profile slots
window dressers and interior designers visit each store every three weeks to make sure the store conveys the targeted message
Store team is interconnectively integrated in finding the latest trends and customers tasts Firm infrastructure/ HR/Systems/Equipment

HR: Employment of 14000 workers in Zaras fully owned factories near La Coruna
Infrastructure of firm supports the idea of freshness of its offerings; creation of a sense of exclusiveness; attractive in-store ambience; positive word of mouth
rapid product turnover ( customers will visit the store more frequently due to rapidly chaning design
prime locations to project image
customers understand that if they want something they have to buy it now
Mangers coordinate the overlapping activiets amongst its designers, workers salepeople and plants
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