Zaras Fast Fashion Essay Example for Free

Zaras troubled Fashion EssayAbsrtactThis paper was written for the purpose of researching and illustrating unfaltering means strategies which include strategic integrated contribute chain, manufacturing and sourcing methods. Fast fashion is explained as a system that involves much than mince everyplace operations and customer strategic behavior by employ the combined benefits of both the active response yield capabilities or short production and dispersion jot times, which minimizes headway items by finding much reasonable balances between supply and demand, and the deepen product flesh capabilities or super fashionable product designs, which plays homage to customer values. This paper to a fault analyzes methods used by unshakable fashion take uper, the Spanish, Inditex owned Zara. A closer look at Zaras supply chain, market responsiveness, tractability, technology, pricing and cost strategies and methods be examined and compared to other fast fashion reta il merchants that can appropriately be deemed as competition for Zara. Also, globalisation and other operational strategies are discussed that altogether come together to show the remarkable success of the Spanish company.When thinking of the term fast fashion, one may think of the change in fashion trends and how quickly certain styles can be deemed as in, and the next second, those same styles are no longer looked at as having any resemblance of being fashionable. That would be the definition of a trend or madness in itself an intense but short-lived fashion craze (Dictionary.com 2012) . However, the phrase fast fashion refers to low-cost clothing collections that mimic current luxury fashion trends (Joy, Sherry, Venkatesh, Wang, Chan, 2012) . It is a system that enables young, trendy customers to quickly cause and keep up with the ever changing a la mode(p) fashions and trends from the runway, celebrity styles and other trendy inspirations for reasonable termss.Fast fashio n is a system that involves more see over customer strategic behavior by using the combined benefits of both the quick response production capabilities or short production and distribution lead times, which minimizes clearance items by finding more reasonable balances between supply and demand, and the enhanced product design capabilities or highly fashionable product designs, which plays homage to customer values, which in-turn persuades customers to purchase broad priced items rather than shopping around or waiting for items to go on-sale (Cachon Swinney, 2011, p. 778) .Globalization, Manufacturing and Sourcing Strategies for Fast Fashion FirmsAccording to Mihm (2010) , supply chain, market responsiveness, flexibility, technology, pricing and mash be are all(prenominal) agents in globalisation and manufacturing and sourcing strategies. For instance, firms that are principally have-to doe with with pop outsourcing and other third parties have less(prenominal) overlook of their supply chain and hands control to those third parties. On the other hand, firms that predominantly sell their own brands and designs are by and large more vertically integrated and have minimal involvement with third parties. These firms can have control over all aspects of their supply chain and are also capable of controlling their sourcing. Fast fashion firms are generally vertically integrated. Mihm (2010) also avers that fast fashion and market responsiveness seem to be inseparable and stresses the vastness of supplying correct quantities in order to support demand for severally individual butt in. In name of fast fashion, market responsiveness refers to the zip of responding to consumer demand and accurately distributing and supplying appropriate quantities and styles in each store at the right times (p. 56) .Firms can achieve this by research and development (R D), technology, and forecasting. R D normally is in charge of coming up with new products and tri ggers and an alternative to research is fictitious or copying outside products and ideas (Meredith Shafer, 2010) . The imitations dodge is one that mirrors the strategies of fast fashion firms in that ideas and designs for new deal often come from runway designs, celebrity fashions and customer input and ideas. Furthermore, fast fashion firms often chuck up the sponge individual stores and locations to have control over store merchandise by using a institutionalise system rather than a push system. The pull system uses the just-in-time (JIT) concept mentioned by Meredith Shafer (2010) . The JIT system lowers lead times and merchandise orders by allowing quick and instant deliveries of exact order quantities, which eradicates having over stock and the make for safety stocks (p. 258) .With many fast fashion firms implementing major globalization initiatives, technology is a hear factor in communication, efficient logistics, and note success. Information technology (IT) system s provide the ability to collect and share authorised information, such as trends, orders, production and shipping data, using constant transfer and communication passim the entire supply chain. IT systems help mitigate real-time communication from consumers to store farers to market specialists and designers, to suppliers and to manufacturing and production facilities, then(prenominal) to distributors, and back to stores and the customers (Mihm, 2010, p. 56) . Moreover, IT systems product lifecycle management (PLM) software, and sourcing programs can keep track of all sourcing and development activities and are intentional to react to and handle change and conflict, which helps with flexible suppliers and positively effects production.These technologies speeds up production time, placing communication and processes in real time and allows an ease to the supply chain (Speer, 2006) . Mihm (2010) states that firms in the fashion industry use a technology known as computer-aided d esign (CAD), which includes laser cutting machines and automated sewing machines that ultimately eliminates lazy fabric and cuts production time allowing companies to be more efficient by saving time and money. another(prenominal) way fast fashion firms make use of flexibility also includes changes in the construction and food colour processes used to make garments. For example, garments are often dyed after they are constructed thus allowing the manufacturer to puddle the best selling colors quickly (Mihm, 2010, p. 56) . Furthermore, improved logistical programs including air freight and expedited customs clearance for imports also fall within the technology factor.Many fast fashion companies are leaning towards globalization and have highly vertically integrated supply chains and therefore provide their own public-wide souring, and manage their own design, manufacturing, and logistics models. solely of these influences have dramatically changed the way the apparel business op erates in the age of globalization, reservation the fashion industry appear borderless (Mihm, 2010, p. 56) . Mihm (2010) states that lower labor movement cost are a major contribute factor to fast fashion since cutting, sewing and fitting are labor intensive, and are integral split in constructing need high levels of education and therefore do not require salary or high wages. For example, in China, labor rates are unaccompanied around 60 cents per hour. Additionally, capital equipment costs are very low, making it easy to open an apparel plant almost anywhere (p. 56) . on with lower labor costs, it is also important to manage labor times to further minimize labor costs and increase efficiency and profitability (Desai, Nasar, Chertow, 2012, pp. 71- 72) .Lastly, a major factor influencing fast fashion and fast fashion retail strategies has to do with keeping merchandise prices at least moderately low. Mihm (2010) mentions that a key factor in keeping prices low is by maintaini ng low labor costs (p. 56) . Additionally, Desai et al. (2012) discusses the impacts and importance of maintaining control over all costs including production, materials, labor, transportation, manufacturing and overhead and other costs. Maintaining control over all costs is internal to efficiency, maintaining low product costs and business success. However, many items that may be considered basic and require less production costs, and labor costs and time may still be sold for premium price points do to customer perceived value and brand value (pp. 64-72) .All astir(predicate) ZaraZara, the Spanish fast-fashion retailer belonging to Inditex, one of the worlds largest distribution groups, is one of the leading international fashion companies in the world (Zara, 2012). In 1975, Chairman and founder of Inditex, Amancio Ortega, opened the first Zara shop in Spain and he came up with a philosophy for business success which states, you need to have five dollar bill fingers touching th e factory and five touching the customer (Ferdows, Lewis, Machuca, 2004, p. 106). The philosophy can be said to be the basis for Zaras business model and retail strategy that success beaty runs a fully vertically integrated supply chain by vertically integrating all features of the sourcing and manufacturing process (Mihm, 2010) including, design, production, distribution and sales. By providing constant information about consumers demands and desires, customer actions and feedback are the soul of the Zara model (Inditex, 2012), which ultimately allows the company to maintain control of its products from the design stage until the customer purchase stage. Zara has taken retail globalization by storm and now has 1,721 stores all in prime locations in great cities spread across eighty-s level(p) countries.A Closer olfactory modality into the Zara ModelBecause Zara has full control over its supply chain, their sourcing strategy differs from the strategies normally used by companies i n the industry (Mihm, 2010). For instance, Zara purchases many of its fabrics and other supplies from Inditex owned companies. The company also owns its own manufacturing and production facilities, which allows the majority of cyberspace stay within Zara and the Inditex group it also boosts overall company flexibility and allows the full control over the supply chain system that would otherwise be unattainable if the firm did not embody the fast fashion method and mainly outsourced to third parties (Ferdows, 2004, p. 109) .Moreover, only basic items like T-shirts and common woolens are out sourced to, or bought from, manufactures in low- cost areas like Asia, Africa and Eastern Europe (Capell, 2008) the rest of Zaras products, which are more fashion sensitive, are designed by the 300 in-house designers and are manufactured in Zara manufacturing facilities. All immaculate products pass through the five-story, 500,000-square-meter distribution center in La Corufia, which ships appr oximately 2.5 million items per week (Ferdows, 2004, p. 109). Furthermore, Zara production facilities maintain stock piles of neutral fabrics that can be dyed, printed on, or altered for the purpose of speed and convenience to help mitigate design and production times (Mihm, 2010).In terms of production and labor times and costs, Zara has the ability to easily adjust production to the change in demand. The company is able to do this because many of their facilities are highly innovated and specialized, and normally run one single shift per day (Ferdows, 2004, p.109) . It seems that Zara operates its manufacturing facilities using a combination of transformation systems to maximize efficiency. For instance, job shops would be used for smaller facilities that produce more basic and/or custom items. Cellular production systems, that also utilizes JIT, would largely be used for a fast fashion firm like Zara because the system allows the facility to crop production time and costs, reduc e labor time and costs and increase flexibility and market responsiveness and minimizes waste and excess stock. For instance, Meredith Shafer (2010) state that the advantages of cellular production include reduced setup times, increased equipment capacity that results in lower equipment and tending costs, and increased floor space. The system also allows increased efficiency to produce small batches of varieties, which ultimately increases flexibility to respond to customer demand, reduces over stock and excess inventory that can take up space, and minimizes lead times and increases throughput times, which improves forecasting and market responsiveness and enhances revenues.Other advantages include greater operational control, lower overall costs and an exclusivity value sense from customers that discourages purchase postponement (pp. 71-72) . Furthermore, like other fast fashion firms, Zara utilizes innovation and IT systems to communicate information through every part of the or ganization. These IT communication systems are especially important to Zara because their products go from the design stage to store shelves in as little as two weeks. To make this happen, store managers record selling trends, determine customer desires and quickly sends the information to the design headquarters where ideas, innovations and designs for new fashions are created and more appropriate forecasting can be made. The speed and this system automatically gives Zara a warlike advantage (Capell, 2008) .Competition and Competitive AdvantageThe term competitive advantage refers to any factor that provide give a firm a lead on its competitors. This can mean anything ranging from new innovations, ideas and products, costs and pricing, locations and market share, to marketing and operational strategies, and so on. Zara is recognized as being a leader in the fast fashion retail industry and has steam rolled ahead of competitors such as Gap, Express, Uniqlo, and H M. Compared to i ts competitors, Zara is completely vertically integrated and uses sophisticated IT communication systems for constant and speedy communication, whereas competitors are less involved in ease of communication and still heavily outsource to third parties, which significantly reduces their control over process, time and quality (Desai, 2012 ). This is where Zara gains their biggest competitive advantages, which are speed, quality and customer value. Customer value is a massive advantage for Zara wherein the receive customer support, repeat, satisfied customers, and increase revenue.The fact that Zara often produces trends at super speeds, even before they show up in luxury shops, induces Zara as an innovative firm which further attracts aboriginal adopters who desire the freshest looks and dont mind paying higher prices for items that they may value as liquid ecstasy (Meredith Shafer, 2010, pp. 14-15). Additionally, Inditex and Zara factory workers are paid more that the industry av erage (Capell, 2008) . Also, with the smaller quantities of vast varieties of the freshest trends, Zara gains 85% of the full ticket price on its retail clothing, while the industry average is 60% to 70%. Because of this, Zara is also able to gain higher net margins on sales than its competitors. For instance, in 2001, Inditexs net margin was 10.5%, Benettons was only 7%, HMs was 9.5%, and Gaps near zero (Ferdows, 2004, p. 106) .Conclusion and RecommendationsOverall, Zara is the perfect example for fast fashion retailing. The company rattling has taken a step forward in strategies for successful operations, management, globalization and supplying and selling the latest trends at lightning fast speeds with minimal costs and wastes. The only negative that I find with Zara is with their pricing strategy in nations outside of Spain. According to Kumar Linguri (2006) , Zara is considered a low-cost retailer, whereas in countries such as the US, Japan and Mexico, Zara is considered more of a luxury retailer due to pricing differences (p. 82) . Even though pricing differences are establish on individual country economics, there still should not be such a difference in pricing and perceived value between countries. One final suggestion is for Inditex to consider drop in opening distribution centers and/or manufacturing facilities in other market areas to continue the speed in supply chain and lead times in all markets throughout the world.ReferencesCapell, K. (2008). Zara Thrives By Breaking All the Rules. courseweek, (4104), 066. Cachon, G. P., Swinney, R. (2011). The Value of Fast FashionQuick Response, Enhanced Design, and Strategic Consumer Behavior. Management Science, 57(4), 778-795. Desai, A., Nassar, N., Chertow, M. (2012). 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Apparel Magazine , 47(12), 32-35. Retrieved from http//ezproxy.limcollege.edu2357/ehost/ incident?sid=4b23db26-6002-4704-9709-23540fa18525%40sessionmgr111vid=1hid=127bdata=JnNpdGU9ZWhvc3QtbGl2ZSZzY29wZT1zaXRldb=bthAN=22112593 Zara. (2012). I nvestors. Retrieved from http//www.zara.com