ASSIGNMENT 1 CASE STUDY 50 MARKS

Read the supply chain case study on Zara Clothing Company below to answer follow up questions.

Zara is a fashion label and fashion chain store established in 1975 by the Spanish group Inditex owned by Amancio Ortega. Zara tripled its profit and stores during the last two decades and ranked the third biggest retailer worldwide (Zhang, 2008). It has 3000 in-house designers located in its headquarters in the region of A Corua, Spain, which design over 40 000 items per year, among which only 10 000 are selected for production (Li, 2009). Opposite its competitors, more than 50% of its production is in Europe and not in Asia or South America (Bruce and Daly, 2006). According to Sull and Turconi (2008), the average markdown ratio is approximately 50 percent; for comparison, Zara sold only 15 percent on sale. These facts allow Zara to expand its sales and profits by over 20 percent per year. By September 2010, Inditex group owns 4907 stores in 77 countries worldwide (38 in Europe and 39 outside Europe). Zara gets the credit for being a pioneer in Agile Supply Chain , and most researchers explain its success with its efficient ASC (Dutta, 2002; Tiplady, 2006; Sull and Turconi, 2008; Zhang, 2008). Zhang (2008) suggests that "the whole process of the supply chain in Zara could be divided into four parts: product organization and design; purchase and production; product distribution; sales and feedback". Next to its unique models, most of Zara's items are an imitation of high-end brands. According to Zhang (2008), "the main duty of ZARA's designers is not for product innovation, but for reorganizing the existing products' fashion elements on their purpose, transferring them into new kinds of products. Instead of creating fashion, they work to interpret it," he says. The samples are collected from various sources, like pret-a-porters, haut couture (Dutta, 2002), moulded by culture, for example, what is happening on the street, in clubs, lifestyle hotspots , and fashion "flash points," and not from a mood board or a trend prediction agency 12 months in advance of a selling season (Barnes and Greenwood, 2006). Over the last decades, Zara introduced an agile supply chain (ASC) in the fast fashion industry and positioned itself third in the world retailers ranking. This came from close communication between customers and its designers and the ability to ship the desired items in a week catching the sales moment. All of these prove that ASC is an aspect enhancing competition among organizations. TUTORIAL LETTER SEMESTER 1/2023 GLOBAL LOGISTICS AND SUPPLY CHAIN MANAGEMENT GSM712S 9 Another lesson is that an efficient production organization with a good balance between in-house and outsourcing tasks leads to minimum lead times and an increase in market share for Zara. The supply chain is not on an isolated agile process of Zara, but indeed the whole organization is agile and working very efficiently. By using quick response, Zara aims to reduce both excess stock holding in the supply chain and the risk associated with forecasting, as product specifications are not finalized until closer to delivery (Bruce and Daly, 2006). What could be concluded from Zara's success from the perspective of speed is that several benefits such as improved customer satisfaction, increased market opportunity, decreased overall risks, and reduced total costs can be simultaneously achieved through being fast (Li, 2009). Source: Zhelyazkov, (2009)

QUESTION 1 (30 MARKS)

Do you believe that Zara's success is attributed to its supply chain agility? Justify your by discussing the dimensions of supply chain agility on Zaras context.

QUESTION 2 (15 MARKS)

Demonstrate how Zara uses/ or can use the 3 v's of the supply chain?

QUESTION 3 (5 MARKS)

Referencing (according to the APA Style) and coherent flow of the report.