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AGENDA
Industry Overview
Zara Overview
Zara Supply Chain Zara Challenges
Recommendations
INDUSTRY OVERVIEW
High Demand Uncertainty Push vs. Pull Method 30% of world production exported from developing countries Geographic Differences Per capita spending and preferences different in any given market
Production
Production Lead Times Net Margins
Outsourced
Outsourced
In-House
High
High
High
Low
-.06%
9.6%
7.05%
10.47%
Fashion +
Price -
ZARA OVERVIEW
Zara vs. 5 other Inditex Chains (2001 exchange rate: 1.15 Euro=$1)
Manufacturing
System is designed for short production cycles, quick response (QR) to demand, and reduced number of markdowns Distribution
DISTRIBUTION CENTER
Design
INDITEX MANAGEMENT / DESIGNERS
Determine apparel designs and manufacturing locations
Sale
STORES
Decentralized store management supplements QR Managers determine products to sell and return
IN-HOUSE (40%)
High QR High Cost
Returns from stores either rerouted or disposed of in local stores near dist. center
IT SYSTEMS
Provides accurate demand information to determine manufacturing locations and production levels
ZARA CHALLENGES
RECOMMENDATIONS
Focus on Italy (63 Billion Euro Market) Implement Oil Stain expansion method
Establish operations in North America North American Distribution Center (Mexico) Initially focus on coastal cities Implement Oil Stain expansion method
Q&A