Reasons of Zaras Success Driving Essay Example | Topics and Well Written Essays - 3500 words

Reasons of Zaras Success Driving - Essay ExampleZaras success is mainly the result of their supply range of a function innovation, which means that unlike their competitors who often have to forecast the seasons shape trends and then wait another five months to sell them, Zara can hark back new styles and fashions in three to six weeks.This supply chain innovation was essential as the industry was prone to risks in mismatches of supply and demand, and this would result in disruption, longer waiting times and smaller margins of error (Kleindorfer 2004). To negate these effects Zara produces 50% of its products in-house, instead of outsourcing all manufacturing and production related processes. This has largely been made manageable by Zaras background, as Zara started life as a manufacturer. When Zara, as a manufacturer decided to compete in the retail sector, they became a retail merchant with manufacturing capacity (AI 2004). Instead of getting rid of this capacity, Zara identif ied this as an opportunity. This capacity also means that Zara is in possession of 18 manufacturing plants that are responsible for producing their fashion garments (AI 2004). Whilst other retailers are outsourcing to Asia and the Far East, Zara has integrated their manufacturing and retail aspects to minimise the uncertainties associated with long lead times, and predicting fashion trends months in advance. By outsourcing to outside the European continent or their home countries, Zaras competitors are also introducing delays and errors in their business, as incorrect fashion predictions, could result in a massive loss of profits by means of dozens of unsold clothing. Clothing also needs to be introduced, and as their competitors store large quantities, they have to store them in warehouses which add additional be on the organisation. The risks of storing clothes in warehouses were recently highlighted by two separate cases in the media. In one case, fire gutted a warehouse used to store clothing for Primark and other retailers, and in another separate case, the European Union (EU) had placed quotas on clothing coming from China, which is were most retailers had outsourced their manufacturing and production.