Good Report On Supply Chain Network Of Zara

Introduction

Zara is a Spanish owned fashion brand that has expanded throughout Europe and beyond. Zara is retail fashion brand that concerns itself with the provision of trendy brands of attires that target high-traffic shops, within which they are sold. Zara targets young consumers and the fashion trends change quickly and it focuses on selling high volumes of its products. Zara makes an average sale of £5.6 billion each year and this is expected to increase as the brand undertakes further expansions into new markets like China and the Middle East.
The purpose of this report is to examine elements and aspects of supply chain and operations management in order to identify the features of value and profitability related to these processes. To this end, the paper will critique some details elements and aspects of Zara and deduce the features of vital concepts of supply and operations that relate to them.

Figure 1: Supply Chain Network of Zara

Map

Flow of Tangible Fabric and Clothes
Flow of Information
Zara’s supply chain network can be documented verbally as follows:
Zara acquires fabric in 4 different colours from suppliers who are close to their manufacturing plants and are connected to them by computer;

The products are cut, and sewn in the manufacturing plants according to new fashion trends;

Clothes are ironed and price and security tags are integrated into them;
Overnight trucks are used to transfer the clothes to different sales outlets;
Clothes are sold in stores and sales outlets which are normally in city-centres and other places where demand is at the highest;

Customers gain access to the products.

Zara seeks to cut down on cost by maintaining shorter lead times and taking in optimal stocks as and when they are needed. This is done through the use of a just-in-time system in which there is a process through which Zara’s supply chain and logistics managers are electronically connected to the suppliers who have contracts with them. Therefore, in the process of production, the suppliers have real-time access to information about the volumes of products that are in stock in Zara. When the stocks of any of the four different fabrics fall to a certain mandatory level known as reorder level, the suppliers will automatically restock the products of Zara’s manufacturing units.
The use of a just-in-time system allows Zara to cut down on the cost of inventory which includes a lock up of cost and the assumption of risk on large volumes of fabric that also comes with holding costs which are high. Therefore, they are able to get stocks as and when they need it without having to wait and have lead times.

Operations Process of Zara

Figure 2: Operations System and Cycle of Zara
Map

Direct Operational Relationship

Indirect Operational Relationship
Information Oriented Relationship
The Information Technology unit is fundamentally related to the entire production process of Zara’s operation management. This includes the connection with the procurement system and procurement unit of the firm. The information system also gathers information and data about inventory management in order to transmit it to the procurement unit.
Zara’s IT unit is directly involved and connected with production because it provides important information about the products that are created and how they are carried out. This is done through the provision of 3D and CAD images that are used for the formation of various basic structures for the entire design processesThe IT unit is involved in coordinating affairs of all units and conveying information to the different managers of the vital units and activities.
It is remarkable to note that Zara produces over 10,000 designs of products and different versions of products that are manufactured and made available to consumers around the world. This includes the various products and services approved by the authorities and managers that are sewn in a give season.

Actual Production Activities in Zara Production Plants (Illustration of 3)

Figure 3: Production Process of Zara Plants (Completion times taken from Zara – Spain)
In every Zara plant, the fabrics are take in and when they are received by the plant manager, they are put through the cutting unit where the a unit pushes it through a system whereby the machine cuts the fabric to the most basic shapes. These basic shapes are generally straightforward and they are broad. Thus, for a batch of 30,000 units, the machine takes about 12 hours to cut all the fabrics into the basic and fundamental units.
After that, there is the joining of the units into the basic forms. Therefore, for a women’s dress, there is the joinery of the front and the back in order to provide the broad shape of the dress. This is the shortest period in the cycle and it takes just a few minutes. After the preliminary sewing, there is the detailed sewing and joining of the different parts of the clothes in the line. This culminates in the shaping of rough edges, provision of buttons and other elements that makes it a complete dress
The completion of Zara’s products is ended with the final stage where the products, now almost complete, are labelled and given the final touches as per the relevant brand of the product. This stage takes no more than 12 hours. And after this, the product in question is ready to be sent for inspection. The inspection takes a few hours before it is cleared for distribution and onward presentation to shops and other units of the markets for sales to be done.

Zara’s Operations Management for Organic Cotton Products

Zara’s organic cotton is made out of high quality organic cotton that is grown from fields that are protected from chemicals and other forms of unethical practices. This includes heavy investments to these organic fields that yield cotton which is grown naturally without any pesticides. Bleaches are also excluded from the entire process of processing organic cotton clothes produced by Zara.
The concept fundamentally borders around the need to ensure that Zara produces environmentally-friendly products that most consumers are now interested in having in lieu of other mass-produced products. This includes going beyond just producing products that are sourced from independent suppliers. Organic cotton revolves around the hiring of the best and the most dedicated farmers who are ready to go into agreements relating to the growing of cotton under certain terms and conditions. This allows the suppliers to provide important forms of raw materials that meet the key standards and targets.
The process goes beyond sourcing from environmentally sensitive suppliers. It involves the use of natural products and ethical services to process the organic cotton clothes in Zara. Zara ensures that some chemicals and unacceptable techniques like animal-tested products are excluded from the entire process of processing these organic cotton products. Finally, the packaging is don with the proper labels to separate the organic cotton products from mainstream products in Zara shops. This ensures that consumers who need organic cotton products can find them easily and purchase them.

The Four Vs and Organic Cotton in Zara

The four Vs is a tool used to analyse the processes of creating input-output relationships through a production system or process. Volume refers to the quantity of products produced within a system whilst variety is about the different products produced through a firm. Variation refers to the changes in demand for the product whilst visibility is about how exposed a product is to the consumers and potential consumers of the product or service.
Basically, the Zara brand does not produce only organic cotton and its related products. Rather, they produce in relation to the small market and the small niche of producers who demand and desire organic products as opposed to mainstream mass produced clothes. Organic cotton products are usually just 3% of the products that are produced in Zara. This is because there is a small section of the consumers who want these products. And due to the facts that these are expensive, they are able to attract a group of environmentally-conscious consumers.
There are t-shirts and a few women’s clothes that are available to consumers who want to purchase for organic cotton products from Zara that are produced from organic cotton. In terms of variation, there is expected to be a continuous and steady growth in the demand for organic cotton. This is going to significantly change the operations of Zara and give motivation for the creation of organic cotton clothes.
Finally, the organic cotton of Zara has a small market and a small group of people who use these organic cotton products. They include people who value environmentally-friendly products. And as such, Zara’s organic cotton must pursue a single end, that is to improve and enhance the visibility in order to increase sales.

Potential Waste in Zara’s System and Methods of Elimination

Muda refers to the situation whereby there is the waste of resources in the production process that do not add up to the production process or make economic sense. Muda therefore has to do with the main problems and challenges relating to the loss of resources and opportunities due to the way a firm’s operations system is managed and ran.
Zara’s processes and systems come with some problems and matters that relates to their ability to design the products in a way and manner that achieves the best results and is based on a purely emergent strategy. This is because there are many circumstances and situations that can add up to waste and cause a given production system to be flawed.
In the Zara situation, there is a risk of uneven production volumes that go through the production system or cycle at any point in time. This leads to the chance that there will be an uneven breakdown of work. The result is that there is the risk of leadtime as some machines are going to be put into a more intensive use than others. Therefore, it is not advisable for the status quo to be encouraged. Instead, there must be a system of continuous evaluation of the volumes of work that can be taken at all levels of the production cycle and the production system.
Figure 3: Production Volume Instability in Zara
The diagram above shows the signs and elements of inconsistent production volumes in Zara. This is because in the first unit, the volume of production is not the same as what it is throughout the production cycle. It fluctuates and does not get to meet the targets throughout the process. This means there are areas in the production system that might be less consistent and those that might be of higher volumes. This leads to lower levels at some points and higher levels at other points. It is therefore risk and there could be delays down the line and excess capacity in the process from time to time. The best option is to streamline the production process and system and maintain consistent flow of production in order to eliminate blockages and idle times in periods of machine breakdowns.
For some specialised products like the organic cotton, there is the need to keep a touch of these products because they are expensive and cannot be treated as ordinary and without issues. Therefore, there is an inevitable need to buy these cotton products that are grown organically and keep them in a special storage process. This contributes to a lock up of working capital in the activities of Muda.
There could also be leakages in the area of the value of information. Zara’s IT unit works for 4.5 times each week. This means there are high-risk times in which it will be far reaching if anything happens to the computerised systems. This is because the whole organisation and its activities are centralised and they are linked to the information that is available to them. And from the facts of this case, it is apparent that Zara’s IT unit could potentially be problematic and this could lead to major problems and risks if there are no backup systems and processes.
Finally, it must be pointed out that Zara’s production line system is not flexible. It contains rigid processes that are not reviewed in order to integrate new ideas. This could lead to waste in profitability if there is little or no effort on the part of management to find ways of integrating flexibility in the entire process.
The evidence of total quality management and six sigma or similar activities in Zara is non-existent. This is because they tend to focus on a quality system that is bespoke and they believe it is going to work in all situations and circumstances. When new challenges evolve, Zara is likely to be incapable of dealing with them.

Conclusion

Zara utilises system of mass production in which they are able to take large volumes of fabric from the external environment and process it in order to provide a large number of garments for consumers around the world. They keep production lean by eliminating stocks and using a just-in-time process to complete their productions. Zara’s organic cotton dresses are healthy oriented products that are gaining grounds in the production system and process. They are produced without any chemicals or negative materials or unethical practices. This is becoming common and popular with consumers around the world. The main cause of waste in the Zara system include the process design and the lack of consistency in the production volumes absorbed by the systems.

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