Zara International's successful
business in fashion industry is driven by efficient operations
management, and supply chain management. There are several elements
of the classical management approaches are shown in Zara's
operations. The company internalizes design, production,
distribution, and retail sales for trendy items as much as possible.
As a result the turnaround time is speedy enough to satisfy the
customers who want the latest items instantly . Its in-house
production enables scalar chain principle during the entire process.
The clear communication and division within the company is the key
for efficient and speedy operations.
Zara also adopts contingency thinking.
For example, they make small production batches help the company
avoid the risk of over supply. It is considering situational demands
of every item. If some items are not selling well, they just put new
items twice a week. There is no replenishment,but creating scarcity
value,and new items. According to WSJ “The success of Inditex's
model is often attributed to a complex logistics system and heavy use
of information technology to track data on consumer tastes. The
company, whose brands also include Bershka and Pull & Bear, also
makes half of what it sells close to its headquarters, and delivers
new garments in small batches to all of its stores by plane or truck
twice a week.”
The store managers track sales data
constantly checking what is selling and what is not. Their analytics
promptly affect making the next products which will sell better.
Their heavy use of hand held computers, is a good example of how
management science and operations research are used in sales
strategy. According to Bloomberg BusinessWeek, Inditex group has
adopted online marketing a long time ago compared to its competitor
H&M. It states that “Inditex has long used purely promotional
websites to draw attention to its Zara product lineup as well as
other company-owned chains such as Bershka and Massimo Dutti. Its
Facebook page has nearly 10 million fans, and Inditex introduced a
smartphone app more than 18 months ago that allows consumers to
browse new clothing arrivals. However, selling goods online,
something the Gap (GPS)
has been doing for more than a decade, is only now becoming a key
part of its strategy to expand sales in the U.S. Inditex has about 50
Zara stores vs. the 200-odd outlets Swedish rival Hennes &
Mauritz (better known as H&M) has opened in the states so far.
“Zara’s move online in the U.S. is overdue—it’s the largest
online apparel market in the world,” says Sucharita Mulpuru, an
e-commerce shopping analyst at Forrester Research. The “Web is a
great strategy for them. It’s much cheaper with their nationally
recognized [Zara] brand to launch a Web store than to invest in real
estate in 50 more malls in the U.S.”
It seems that Zara international's
success is not a coincidence, but a strong business strategy based on
advantages of classical management and modern management. They are
not only savvy on tracking fashion trend around the world , but
Information technology that can optimize maximum productivity
overall.
http://www.businessweek.com/magazine/zara-plays-catchup-with-online-shoppers-08252011.html
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