U01A1 Zara Rapid Fire Fullfilment
U01a1 Zara Rapid-Fire Fulfillment Steven A. Shapiro Capella University European clothing retailer Zara has been highlighted in several publications as a model for its supply chain management. This retail chain exists as a subsidiary of “Spain’s largest apparel manufacturer and retailer” (Chopra & Meindl, 2012, p. 14). The most telling account of Zara’s success is detailed in an article for Harvard Business Review entitled, ‘Rapid-Fire Fulfillment’. Here, authors Ferdows, Lewis and Machuca (2004) describe three key principles that Zara relies on to maintain its success… * Close the communication loop Stick to a rhythm across the entire chain * Leverage your capital assets to increase supply chain flexibility (Ferdows, et al. , 2004) The first of these principles, ‘Close the communication loop’, outlines the processes by which information is transferred quickly between its valuable customer base and the designers. This open and nimble communication allows Zara to have a better understanding of the pulse of its customers; which in turn, allows the company to stock its stores with clothing the customer wants when they want it.
The next principle, ‘Stick to a rhythm across the entire chain’ is outlined by Ferdows, et al. (2007) when they wrote, “at Zara, rapid timing and synchronicity are paramount” (p. 107). The authors go on to highlight the rigidness by which Zara holds its retail stores to time-bound deadlines for things like product ordering. Missing a deadline is highly frowned upon and can result in a retail store losing that opportunity to obtain additional products.
The third principle, ‘Leverage your capital assets to increase supply chain flexibility’ is fairly self-explanatory. The concept is that Zara funds the supply chain not only to run at an efficient manner with their in-house processes, but it outsources the easier parts of the processes as well. The authors of the article write, “[Zara] produces complicated products in-house and outsources simple ones” (Ferdows, et al. , 2004, p. 107). These guiding principles allow Zara’s supply chain to drive the company’s growth and success versus its less agile competitors.
One example of this is given in the text, Supply Chain Management, by Chopra and Meindl (2012), these authors demonstrate this, saying, “Whereas design-to-sales cycle times in the apparel industry have traditionally averaged more than six months, Zara has achieved cycle times of four to six weeks” (p. 14). That difference is significant and is what allows Zara to take action based on the communication they receive above and rapidly react to customer demand in a way their competitors cannot.
The most unique aspect of Zara’s supply chain model is its level of control over all aspects of its business; far more than its competitors. The authors of the HBR piece build on this point, stating, “Instead of relying on outside partners, the company manages all design, warehousing, distribution, and logistics functions itself. Even many of its day-to-day operational procedures differ from the norm” (Ferdows, et al. , 2004, p. 106). Another component of Zara’s success, beyond just its maniacal control, is its belief in ensuring its processes and departments are funded for success.
This is especially true for the information technology department. A fact which Chopra and Meindl (2012) conveyed when they wrote, “Zara has also invested heavily in information technology to ensure that the latest sales data are available to drive replenishment and production decisions” (p. 14) In conclusion, though Zara has been highly praised for its innovative supply chain management techniques, this praise is well deserved. It is clear from reading these two disparate accounts of Zara’s practices that they have truly developed a successful and unique supply chain to enhance their business.
The three principles that are at the core of the Zara philosophy serve to enhance their customer’s experience and continue to deliver value for their customer where competitors cannot. References Chopra, S. , & Meindl, P. (2012). Supply chain management (5th ed. ) [Electronic]. Indianapolis, IN: Prentice Hall. Ferdows, K. , Lewis, M. A. , & Machuca, J. D. (2004). Rapid-Fire Fulfillment. Harvard Business Review, 82(11), 104-110.
