Zara

Group HAng Ruixian U096845Y

Chia Joo Leng Jasmine U097028B

Nah Zheng Xiang Philson

A0067379M

Tan Hong Chuan Julian A0067407A

Tan Jian Yue A0075054J

Wong Chih Yong A0075128E

Our Team

Introduction Competitors Updates Challenges Recommendations

Presentation Agenda

Introduction

About Zara

Founded by Amancio Ortega In 1975, the first Zara  store was  opened  in  La  Coruna, Spain

 Inditex  was  formed  as  the  holding  company  atop  of Zara, other  retail  chains  &  a  network  of  internally owned  suppliers (1985)

Focused  on  opening  stores in  prime  city  locations

Rapid response to market demandsOffer new clothing styles faster than its competitors 

Inditex has become one of the world's largest clothes makers in the fast fashion industry

1,671 branches in 78 countries worldwide

About Zara

Zara’s Supply Chain

Maintains control over its product design, manufacturing, distribution & retailing operations

1. Design

2. Production

3. Distribution

4. Retail

Consists of 4 Phases:

Competition

Closest competitorHennes and Maurtiz (H&M)

Founded on 1947, SwedenInnovating around design and distributionSupply Chain Phases

Design, Production, Distribution and Retail

Competitor

Production PhaseOutsource production process

60% in Asia, 40% in EuropeLow production cost to maximize profit at Asia

Implications to ZaraNo production outsourcing

Higher overall production cost

H&M’s Supply Chain

H&M’s Supply Chain

Distribution PhaseDistribution center(DC) located at every countryDaily replenishment to increase stock turnover rateAble to meet customer’s demand on time

Implications to Zara2 Large DCs located in Spain

Slower replenishment rateUnable to meet customer’s demand on time

Retail Phase40% lower product selling cost compared to most competitors

Implication to ZaraHigher product cost due to higher production cost

H&M’s Supply Chain

Competitors

Challenges Zara faced against H&M

Higher production costSlower replenishment rateSlower at meeting customer demand

Updates on Zara’s SCM

Retailer’s Work Process

Distribution Network and Centre

Inventory Management

Updates on Zara’s SCM

Shifted to third party logistics providers

Shifted to factories

Enhancements made to PDA

Retailer’s Work Process

Consolidated transportation across Zara’s different brands

DCs are equipped to handle small scale customer orders

Distribution Network and Centre

Implemented sophisticated inventory allocation model

Inventory Management

Challenges Faced

1. Limitation of company wide interconnectivity

2. Obsolescence and Limitation of Technologies used

Challenges

Challenge 1• Cannot determine order requirements

accurately• No comprehensive overview of the

overall inventory and sales information

POS Terminals used in store were not interconnected via any in-store network

• Slow transmission of data• Inaccurate data • Sales tallied and audits done manually

POS terminals/PDAs could not share information

• Inefficient store operations • Inaccurate stock information• Unhappy customers

Telephone to check whether a nearby store had a particular item

•Discrepancies between orders and sales data•More time and energy spent on administrative work

Challenge 2

• Any upgrades for existing machines rendered DOS-incompatible

• No guarantee from vendor• Core operations at risk

DOS outdated, no longer supported

• Zara disadvantage• Store managers need more functions• Business continuity at risk

Limited capabilities

•Unable to find vendor to supply or service hardware

•Hard to find developers for outdated platform •Limited capabilities

PDA becoming obsolete

Mobile Enterprise Applications

Run complete OS softwareUseful functions for SCM execution

Gradually Replace PDAs

Our Recommendation

Benefits

Timeliness and Correctness

Instant access and updatesImprove cycle time & efficiency

Employee Responsiveness 

Better “reachability”

Scalibility & Updates More functionalities

Challenges Addressed

Obsolescence of PDA Systems

Technical support issues

Limited Connectivity Information SharingData Discrepancy

Feasibility Evaluation

CostRequire customized apps

TimeTraining for personnel

Upgrade POS Terminals

Intuit-HP Retail SolutionHP’s POS SoftwareFull fledged Mouse & KeyboardIndustry-proven software

Gradual replacement of DOS systems 

Phased Approach

Our Recommendation

Benefits

Interconnectivity between stores

Merging of data into one system

Precise measurement of stocksGlobal trends and developments

Real-time information sharingReact faster to sales informationImprove decision making

Limitations of Existing NetworkAutomatically collect and process dataReduces need for calls & manual checks

Increasing obsolescence of DOSModern, widely supported OSReduce reliance on sole vendorFuture-proof their operations

Challenges Addressed

Feasibility Evaluation

Staff adaptability to changeNeed to ensure sufficient trainingEmpower staff to fully utilize system

Risks associated with changeUse phased implementation approachTest stability on pilot stores

Conclusion

ZARA’s competitor (H&M) The need to stay competitive

ZARA’s SCM updatesImportance of continual innovation

Challenges & Recommendations Innovations through cutting-edge technologies

Conclusion

Questions & Answers