OPER1027: Operations Mngt: Proc/Value Ch
Case Study 1
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Today Zara can replenish existing stock in little as two weeks. The company spends very little on advertising and use those funds to support higher cost of producing in Spain as its more costly effective to produce than Asia. This ensures the company they avoid inventory backlogs, allowing the company to product what the customers want and allowing themselves to being able to respond quickly to any market need. Lower inventory cost is key for Zara because as it enables Zara to manufacture and sell its products at cheaper prices.
One of Zara’s distinctive success contributors is there valuable and planned logistics and supply chain managements it operates which allows them to develop and deliver competitive marketing mix. Where customers expect to find latest trends which are still in fashion Zara for an example the ultimate company of how to make it possible because it usually could take up to six months in the textile industry for an idea to be transformed into a product and reach the stores. However if you were reduce the lead times through channel management Zara has developed a vertical integrated business model which allows them as said before lets them change some parts of their inventory in only a couple of weeks. This strategy they use is known as the quick response. As part of its vertical integration, Zara maintains a very high control of its supply networks as a strategy in achieving fast response. It supplies products to