Zara Case Analysis for Supply Chain Issues and Operations - Sample

Question: Discuss about the Zara Case Analysis for Supply Chain Issues and Operations. Answer: Introduction The main aim of this assignment is to solve the case of Zara by presenting the case analysis based on the supply chain operations by highlighting the issues faced by the company. The case analysis is presenting importance of supply chain, logistics management along with the flows of supply chain. The analysis for the company is done by using the Melnyks Model where influence of technological integrated system is analyzed. The analysis is presenting the overall insight of the situation faced by Zara Company on domestic and Global level in the operations of supply chain. Companys Review Zara is the retailing store dealing in clothing segment, the company is leading on global level where it is also facing the global issues in competition. The store was started in Spain as a small store not it is leading on the global level as the largest clothing retail company. The founder of the company is Amancio Ortega who is counted on 4th number in the world among the richest people. Zara adapted slow expansion process at the beginning of the business and by the year 1990 stored expanded to whole Europe and now company is having 6500 retailing stores in 88 countries in the world. Although the company is gaining competitive edge and has created a strong position in market by offering fast changing fashion trends (Sorescu et al., 2011). The demand and supply relations are also playing significant role where company is handling the operations of supply chain. Zara Company faced issues to meet the customers expectation due to which the demand decreased and supply increased which created the surplus. The supply of clothes in the regions of the world was done by Zara without having the information and knowledge about the customers preferences. The year 2009 was proved to be a financial year for the Zara where its growth rate turned 9% in exchange rate. The sales and gross profit margins were increased by 7% and around more than 60 million Euros; up till then the company is leading in the market with sustainability. The expansion strategy adapted by the company based on the idea of making people aware of good fashion sense. So far company is satisfying the customer needs and also gaining interest towards the environmental sustainability by adapting lean or green production procedures (Sull and Turconi, 2008). Zara is pro viding the trendy clothes in short quantity of time where in one season Zara introduces multiple fashion trends so customers have the flow of products they are using (Ghemawat, Nueno and Dailey, 2003). Issues Faced by the Company Zara is dealing in the supply chain as a retail store with the division of two segments; men and women clothing the same market is full of the products and brands with luxury brands in rest of Europe where completion seems strong as company is operating in perfect competition. Zara adapted different marketing strategies to cover the needs of targeted segments on global level whereas; the company faced issues related to maintaining the inventory and supply of the fashion appraisals in the market in different countries (Tokatli, 2008).Zara Company faced issues to meet the customers expectation due to which the demand decreased and supply increased which created the surplus. The supply of clothes in the regions of the world was done by Zara without having the information and knowledge about the customers preferences. As competitors were dealing with the innovative and technological equipment to support the supply chain operations Zara was lacking some criteria of logistics management wh ere supply in few regions of the world became slow (Dawson, Larke and Mukoyama, 2006). Zara was offering the same clothing trends in all over the world where it faces the issues related to the supply surplus due to the reduction of demand in Indian markets and in South Asia where people having different lifestyles and clothing sense (Colla and Dupuis, 2002). Zara sales decreased due to the situation where supply of manufactured clothes were not meeting the demands of customers. On the other hand, the fast changing trend in the market Spain and Europe were threatening the sales and market position of Zara where Zara tried to reduce the intervention of third parties. Customer logistics are the main aspect where in most of the regions Zara is having slow supply due to the lack of strategic logistics management operations. The manufactured goods inventory in the warehouses are giving the holding cost as well which is also effecting the financial values of the company (Burt and Davies, 2010). Factors Associated with Supply Chain Operations: Customers Demand Based Supply As per the analysis of Christopher, Lowson and Peck (2004), it has been found that Zara Company faced issues to meet the customers expectation due to which the demand decreased and supply increased which created the surplus. The supply of clothes in the regions of the world was done by Zara without having the information and knowledge about the customers preferences. In most of the regions like South Asia people had entirely different taste of fashion which was quite threatening for Zara to sustain in that market during the expansion period whereas; Colla and Dupuis (2002) stated that customer demand based supply is the part of a production where company required to supply the products that are demanded and needed by the customers. However, the push strategy is supply chain also indicated and navigates that manufacturing companies required to estimate demand by understanding the customer preferences and then design or offer the products with push strategy. Material Costing by Inventory Management In the views of to Koh, Kim and Kim (2006), it has been analyzed that material costing and inventory management are the two main component in the production and distribution procedures. Zara faced issues in the beginning where company faced increasing holding cost over the manufactured products in the warehouses whereas; the company was lacking with the automated warehousing and autonomous cars where management were failing to reach and supply the clothes in international markets. The manufactured inventory kept in warehouses were increasing the cost and seasonal changes were bringing the change in demand of customers Importance of Strategic Logistics Management According to Bowersox, Closs and Cooper (2002), it has been evaluated that meeting customer demand is the main concept and aim of logistics management. The operations and activities of strategic logistics management helps the business companies to meet the customer demand on time by delivering the products on it targeted destination. As stated by Stock and Lambert (2001), logistics management plays and important role in satisfying customers need on time as reaching the customer customers need requires to reach the retail stores at time by handling the distribution. The advance transportation management system (TMS) is the part of strategic logistics management where business companies are using fast manufacturing procedures and then TMS helping them to distribute the products to the end users in the retail stores. Customer traffic in retail stores in seasonal sales initiates the visible role and position of logistics management. In the views of Christopher (2016), it has been found that successful business companies are using logistics management and gaining competitive edge where it requires them to reach the customers need right on time. The shipments of the products on global level where business companies need to cater the global demand is done by the logistics by cargoes. Fawcett, Ellram and Ogden (2014) described that logistics management implementations helps the company to control the finished goods inventor by delivering it in the automated warehouses through autonomous cars and then distribute it further with AFVs to the retail stores. Flows of Supply Chain: Integration In the views of Stadtler (2015), it has been identified that effective supply chain operation requires the consistency in integration where an integrated system should be consisting; Suppliers, manufacturers, distributors, warehouses, logistics and retailers. An integration in supply chain operations aims to reach the customer from the point of purchase. The companies having their own retail stores having pressures to support and cover the demand of customer on global level whereas; Silvestro and Lustrato (2014) stated that system integration is helpful where most of the companies are now using technological support as automated warehousing and autonomous cars to support the integrated and interlinked operations of supply chain. Technological Support According to Monczka et al. (2015), it has been found that technological support to the supply chain system is important where business companies lacking in the adaptation and investment in technological support facing issues and losing the customers. The technological support to the system integration in supply chain helps the companies to cover the demand on extensive level whereas; manufacturing and distribution procedures are the two main components where managers requires to consider the technological support by bringing innovation in operations. Technological support like automatic bar code system which is used in retail stores helps to indicate and analyze the inventory left in stores to sell so company can control and manage the production and distribution procedures at the back end. Logistics Operations In the views of Gilmour (2013), it has been found that the advance transportation management system (TMS) is the part of strategic logistics management where business companies are using fast manufacturing procedures and then TMS helping them to distribute the products to the end users in the retail stores. Customer traffic in retail stores in seasonal sales initiates the visible role and position of logistics management. Logistics management implementations will help Zara Company to control the finished goods inventor by delivering it in the automated warehouses through autonomous cars and then distribute it further with AFVs to the retail stores. System Integration and Role of Logistics in Zaras Case As per the analysis of Varley (2014), it has been found that the Zara was lacking with the automated warehousing and autonomous cars where management were failing to reach and supply the clothes in international markets. The manufactured inventory kept in warehouses were increasing the cost and seasonal changes were bringing the change in demand of customers whereas; it requires the company to consider the logistics operation where they need to implement the technological support whereas; Christopher, Lowson and Peck (2004) stated that integration in supply chain operations aims to reach the customer from the point of purchase. The companies having their own retail stores having pressures to support and cover the demand of customer on global level whereas; system integration is helpful where most of the companies are now using technological support as automated warehousing and autonomous cars to support the integrated and interlinked operations of supply chain. In the views of Tokatli, (2008), it has been found that the supply of clothes in the regions of the world was done by Zara without having the information and knowledge about the customers preferences. In most of the regions like South Asia people had entirely different taste of fashion which was quite threatening for Zara to sustain in that market during the expansion period whereas; Monczka et al. (2015) stated that advance transportation management system (TMS) is the part of strategic logistics management where business companies are using fast manufacturing procedures and then TMS helping them to distribute the products to the end users in the retail stores. Melnyks Model Analysis of Melnyks Model for Technological Integrated System for Zara; Impact Comments Sustainability Neutral The integrated system of the company is sustainable which is quite balanced. The company is operating its supply chain operations by using a sustainable integrated system that is equipped with the technological support and management intervention. Resilience Neutral Technological support to the integrated system is balanced where company is sustained in market so far with productivity and effectiveness Innovation Positive The use of automated warehousing and 3PL channels will be helpful for the company where a company is needing the strategic implementation of innovation. Security Positive The security is the positive aspect of integrated supply chain system where a company has secured it internal and external operations by considering the security aspects. Costs Negative The cost is exceeding due to the slow adaptation of technology and innovation to support the integrated system where most of the operations are handled through manual integration. Responsiveness Neutral. The responsiveness towards technologically integrated system is quite slow where a company is showing balanced behavior towards the adaptation of technological equipment and system. Analysis of Melnyks Model for Autonomous cars and Automated Warehousing; Impact Comments Sustainability Positive The use of autonomous cars can be effective for the company as it will help to reduce the time of performance in the supply chain operations of Zara Company. Resilience Neutral The adaptability is slow where a company is most of the regions are not sustaining with resilience due to the absence of autonomous cars and automated warehousing. Innovation Neutral The use of automated warehousing and autonomous cars will be helpful for the company where a company is needing the strategic implementation of autonomous cars in supply chain operations. Security Positive The security is the positive aspect of integrated supply chain system where a company has secured it internal and external operations by considering the security aspects. Costs Negative Zara is not using AFVs to support its logistics where it is also increasing the cost due to the absence of autonomous cars in the integrated system of supply chain and logistics. Responsiveness Neutral The responsiveness towards adapting the automated system is quite slow where a company is showing balanced behavior towards the adaptation of technological equipment and system. Logistics Management Utilization for Zara 300 Customer demand based supply is the part of a production where company required to supply the products that are demanded and needed by the customers. However, the push strategy is supply chain also indicated and navigates that manufacturing companies required to estimate demand by understanding the customer preferences and then design or offer the products with push strategy (Monczka et al., 2015) The manufactured inventory requires the on time delivery and in the case of Zara the implementation of strategic logistics management with the support of autonomous cars and automated warehousing will be favorable for the company to reach the customer demand and supply the clothes on time in the season of requires fashion. The advance transportation management system (TMS) is the part of strategic logistics management where business companies are using fast manufacturing procedures and then TMS helping them to distribute the products to the end users in the retail stores. Customer traffic in retail stores in seasonal sales initiates the visible role and position of logistics management (Colla and Dupuis, 2002). Integrated system of Zaras supply chain should be considering the use of TMS as the part of strategic supply chain operations. The TMS will be helpful for the company to cover the customers demand on domestic level and international level well. The integrated system of the company is sustainable which is quite balanced. The company is operating its supply chain operations by using a sustainable integrated system that is equipped with the technological support and management intervention. The adaptability is slow where a company is most of the regions are not sustaining with resilience due to the absence of autonomous cars and automated warehousing. Logistics management implementations helps the company to control the finished goods inventor by delivering it in the automated warehouses through autonomous cars and then distribute it further with AFVs to the retail stores. Strategic Supply Chain Operations for Zara Strategic supply chain implementations help to the business companies to sustain in the market on the global level in long run. Companies are adapting strategic supply chain operations by adopting innovation and technology in their supply chain operations (Colla and Dupuis, 2002). Meeting customer demand is the main concept and aim of logistics management. The operations and activities of strategic logistics management helps the business companies to meet the customer demand on time by delivering the products on it targeted destination. Zara Company should be considering the strategic implementation with the support of integrated technological system of supply in the market. The main aspect for the implementation of strategic supply chain for Zara Company falls under the consideration of customer driven demand and meeting the demand by providing what customer needs. The manufactured inventory requires the on time delivery and in the case of Zara the implementation of strategic logist ics management with the support of autonomous cars and automated warehousing will be favorable for the company to reach the customer demand and supply the clothes on time in the season of requires fashion. Strategic supply chain operations requires technological support to the supply chain system is important where business companies lacking in the adaptation and investment in technological support facing issues and losing the customers. The technological support to the system integration in supply chain helps the companies to cover the demand on extensive level (Bowersox, Closs and Cooper, 2002). Integrated system of Zaras supply chain should be considering the use of TMS as the part of strategic supply chain operations. The TMS will be helpful for the company to cover the customers demand on domestic level and international level well. Logistics management implementations helps the company to control the finished goods inventor by delivering it in the automated warehouses through autonomous cars and then distribute it further with AFVs to the retail stores. Recommendations Zara should be investing in RD to understand the measures of the innovation and technology to support the supply chain operations. The adaptability towards integrated system with autonomous cars and logistics management is low where Zara needs to focus on investing on logistics management as to control the slow growth and expansions. Zara requires to use strategic supply chain operations; TMS will be helpful for the company to cover the customers demand on domestic level and international level well Conclusion The overall case analysis of showing the significance of logistics management operations and use of integrated technology in the supply chain operations whereas; it has been analyzed that that customer demand based supply is the part of a production where company required to supply the products that are demanded and needed by the customers. However, the push strategy is supply chain also indicated and navigates that manufacturing companies required to estimate demand by understanding the customer preferences and then design or offer the products with push strategy. Moreover, the case analysis done Melnyks Model is indicating that; integrated system of the company is sustainable which is quite balanced. Zara Company faced issues to meet the customers expectation due to which the demand decreased and supply increased which created the surplus. The supply of clothes in the regions of the world was done by Zara without having the information and knowledge about the customers preferences. In most of the regions like South Asia people had entirely different taste of fashion which was quite threatening for Zara to sustain in that market during the expansion period whereas; company is operating its supply chain operations by using a sustainable integrated system that is equipped with the technological support and management intervention. Logistics management implementations will help Zara Company to control the finished goods inventor by delivering it in the automated warehouses through autonomous cars and then distribute it further with AFVs to the retail stores. References Bowersox, D.J., Closs, D.J. and Cooper, M.B., (2002).Supply chain logistics management(Vol. 2). 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