Zara is a Spanish clothing and accessories retailer, founded in 197 by Amancio Ortega. Zara has now became possibly the most innovative retailer in the world. By the end of the year 2011, Zara has reached 82 markets globally with a network of 1.830 stores.
Zara's secret of successful fast fashion business model is mostly about their responsive buyer driven supply chain. The customer plays an active role in the business model. Design and production activity begins with customer demand and retail stores. The trend informations and feedback from the customers are being sent almost instantly back to the headquarters, where the teams and designers use the real information to create new designs and pride points, made by the customers demands. Instead of taking the advantage of the economies of scale and outsourcing the production, to developing countries (where the cost of production would be cheaper), they leverage the proximity of production and they carry out a large part of production in factories, close to the corporate headquarters. Then products are shipped diretly from the central distribution centers to the stores twice a week, in small quantaties, with the intention of keeping the stores fresh.
Zara's fast working supply chain needs a good communication system. Instead of investing money in trends and forecasting sales, like other competitors are doing, Zara is more focuse on creating a higly responsive communication channels, where the business operates to meet the demand. Zara collects sales information from regular phone conversations (weekly) with store managers and the market specialists. They are using the lastest technology tools to exchange information quickly. Flat organizational sturcture is the reason for company's tight communicational loop.
Counter intuitive sourcing and distribution strategy is Zara's secret of its success. The company carries out all design, warehousing, distribution and logistics internally. There for, by having...
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