Supply Chain Management Essay Example | Topics and Well Written Essays - 1500 words - 3

Supply Chain Management - Essay Example Zara contributes a total of 2/3rd  of the total Inditex Group. With a turnover of more than $150 million, the success mantra for Zara is to offer the best quality at shortest time span possible and cheapest prices. 2.0 Supply Chain management at Zara With a rapid change in the market conditions, like every other sector, the fashion industry has been under immense pressure to efficiently manage its supply chains. It has become important for the companies to increase their capacities and better manage its operations in order to save costs and also remain competitive. Supply Chain Management has a very important role to play in the success of Zara fashions. The creation of the final product a d its final delivery to the customer involved the art and technology of Supply Chain Management (SCM) working to streamline the operational functions and styles of doing work. The Zara managers have clearly defined the role of SCM as a blend of a variety of procedures that begin from the prelimin ary stage of the product till the completed utilization of the same creation by the customer. It is a procedure which entails the development, execution, of these plans, and scheming of the product construct with the purpose of providing absolute fulfillment to the customer with regards to the quality of the product, (Abernathy, Dunlop, Hammond, and Weil, 2000/1). Subsequently, by the application of better management capabilities, Zara supply chain fashion has achieved the following: Greater operational flexibility Ability to expand geographically Focus on core competencies Ease of achieving economies of scale Sourcing Strategies of Zara and its Supply chain configuration As compared to its competitors, the fashion brand – Zara follows quite a different business strategy with regards to the sourcing and its chain structure. Unlike most of its competitors, Zara has not resorted to or given the slightest inclination towards outsourcing. Normally, most of the major fashion brand s, have outsourced more than 90% of the operations to cheaper economies like India and China. More than 80% of the material is manufactured at the in-house facilities controlled by Zara in Europe. Although the cost of manufacture is 20% higher in Europe than in Asia, Zara still possesses a competitive advantage over its competitors with relation to its operations. With the help of its business and strategic partners based in Europe, the company easily has a product throughput time of 3-4 weeks from the initial conception phase to the final distribution to stores. In order to achieve this time target of 3-4 weeks, as compared to 3-4 months by its competitors, Zara designs and cuts the cloth at its in-house design centers and colors the fabric in just four colors to keep the costs low. The process of dying and design printing is kept waiting till the fabric finally enters the manufacturing phase, thereby minimizing the waste and inventories. This allows Zara to adapt to the latest mar ket trends and customer requirements in minimal time. On the other hand, the competitors of Zara, who outsource their work to Asia, are not able to take advantage of this aspect – they are not able to offer flexibility to change orders as per ; attests trends and fashion requirements. The orders with these competitors are placed for the whole season in bulk and are kept as inventories in distribution facilities for much larger periods of time as compared to Zara.