iz Yourself 2. When supply chain members that buy and sell to one of the followi
ID: 329532 • Letter: I
Question
iz Yourself 2. When supply chain members that buy and sell to one of the following are by a supply chain in except another are not in agreement about their goals, channel conflict can occur a. vertical o the retailer b. the retailer educates the c. competitive d. horizontal e. administered ut product features, and delivers and installs the stove c. the product design team develops initial drawings for a new product officring d. the stove maker turns the components into the stove. (Answers to these two questions can be found in the Quiz e. the components manufacturer helps the stove manu facturer by supplying parts and materials apter Case Study a connect ZARA DELIVERS FAST FASHION30 In the fast fashion retail business strategy, supply chain management processes serve to introduce fashionable merchandise rapidly so that stores can respond immediately to cus- tomer demand for merchandise. This was pioneered by Zara, a global specialty apparel chain located in La Coruna, Spain, but it also has been adopted by other retailers, including H&M; (headquartered in Sweden), TopShop (UK), and Forever 21 (United States). The approach is particularly effective for specialty apparel retailers that target fash ion-conscious consumers who simply must have the latest looks-but they want to do so on a very limited budget. These shoppers load up on new fast fashions every few weeks instead of purchasing a few higher-priced basics every few months. To fit with such short cycles and meet customers' demands, the fast fashion process starts with the receipt of timely information from store managers. At Zara, store managers always have their reporting devices literally in hand. These handheld devices, which are linked directly to the company's corporate office in Spain, enable daily reports on what customers are buying (or not) and what they are asking for but not finding For example, customers might want a purple version of a pink shirt that they see on the shop floor. Managers immediately pass the information on to the designers in Spain. Those designers then communicate electronically with the factory that produces fabric for shirts This factory starts up its automated equipment, which is run by assemblers who live in close proximity to the factory. (The undyed fabric comes from Asia, where Zara finds in- expensive sources, and then bulk fabric ships to Spain and Portugal to be manufactured into apparel.) The robots in the company's 23 highly automated factories start cutting out shirts and mixing purple dye. For final construction, a network of 300 or so small assem- blers, located near the factories in Galicia, Spain, and northern Portugal, takes responsibil- ity for making the final product. Finally, to ensure timely delivery, the shirts get shipped by truck to stores in Europe and by air express to stores in the rest of the world. The Benefits of Fast Fashion for Zara Zara's main advantage over its competitors. such as The Gap. Ahercrombie & Fitch, and American Eagle Outfitters, has resulted from its highly responsive and tightly organized supply chain. Unlike these competitors, Zara selects factory locations that are in close geographic proximity to the company's headquar- ters in Spain. Although this approach increases labor costs, compared with outsourced production in lower-cost countries in Asia, it also improves communication, reduces ship- ping costs and time, and reduces the time before new fashions appear in stores. It also givesExplanation / Answer
1. Zara’s product offering is innovative. It manages its supply chain by being innovative and making its supply chain as Service focused and responsive. It targets those customers who are hungry for trends and don’t hesitate to pay a slightly higher price to pay for it. It is positioned as a brand known for being HIGH on fashion trends and MEDIUM on price. It is not seen as a brand not known for highly durable products, but highly trendy and highly customer-responsive.
It makes its products available in its stores within 2-3 weeks of launch. It is able to do so quickly by being following its supply chain strategy as laid down below:
2. Zara creates values for its customers in following ways:
a. Co-creation: Zara consolidates data from all the stores around the world to co-create designs and apparels which customers are looking for, not just what customers can buy. If a lot of female customers are looking for a pink scarf in stores across and it is not available at the moment, that feedback is taken by the store owner and passed onto the design team which co-creates along with the customer and store owners about the touch and feel that customers have described in their willingness to buy the aspirational product.
b. Frequent designs: Trendy customers get to buy many designs so frequently that they don’t have to travel from store to store and brand to brand to buy the type of apparel that they want.
c. Variety: Customers are able to get all the variety within the same brand store and that too so frequently.
d. Reasonable Pricing: Customers are able to get so varied trendy designs at reasonable prices, which are not dirt cheap, but are not even sky high like luxury apparel brands.
3. Zara’s supply chain efficiency strategy created a lot of challenges:
a. Disappointed Customers: Since, Zara produced limited quantity of a particular variety of product, its customers often had to go home empty handed. Due to frequent stocks, there were a lot of disappointed customers initially and the brand faced this as a challenge during the brand building phase.
b. Irregular Ordering: Due to frequent stockouts, sales managers ordered irregularly as per their whims and fancies which didn’t match the replenishment system that was setup. This resulted in a lot of inventory, leading to high inventory, storage and even transportation costs.
c. High Production and Distribution Costs: Due to irregular ordering, few stores received excess inventory and few others received less. Due to the bullwhip effect created from large orders being placed by many stores, production used to be increased with additional costs due to production orders and schedules being irregular and hence high production and distribution costs in terms of overheads, overtime, transportation and improper allocation of inventory to stores.
Almost all such systems usually face such growing pains when handled manually and when grown rapidly. However, if you setup proper inventory rules and policies, such problems can be minimized, however, not avoided.
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