Topic: Strategic Supply Chain Management Course Name: Lecturer: Submitted by Name: Student number: Tutor: Tutorial Number: Date: Executive Summary The discussion entails on the strategic supply chain management of Zara Clothing Company. The company has its roots in Spain. It deals with manufacturing of clothes as well as repairing. The paper discusses the elements that strengthen the Zara’s supply chain management. Some of the elements include the collaboration of the partners to ensure consumers’ needs are met, effective communication, integration, and developing management to the chain of supply management. The discussion critically evaluates the major components that have built the Zara’s outstanding in the textile industry. They involve plan, source, make, deliver, and return. In addition, the models that that enabled the company to thrive has genuinely given priority. However, the paper also presents and discusses some problems that emanate from the application of the supply chain system the discussion is wrapped with a comprehensive conclusion outlining the way forward for Zara Clothing Company. Table of content Executive Summary………………………………………………….2 Introduction………… ………………………………………………4 Component of Zara Supply Chain Management……………………..4 Elements of Zara Supply Chain Management……………….……….5 Zara Strategic Supply Chain Management……………………………6 Models of Zara Strategic Supply Chain Management………………..10 Conclusion…………………………………………………………….11 References….…………………………………………………………12 Introduction Supply chain management refers to the efficient flow of goods and services. The process involves the storage and shipment of raw materials to the company, and finished products from the industry to the point of consumption or market. Zara Clothing Company was founded in mid-1975 with a purpose of understanding the world market for making clothing fashion merchandise. The company’s roots are based in Spain and have expanded to around a hundred countries worldwide having jointly two thousand stores (Billington, 2014). The company has a significant production rate of four hundred and fifty million items per year. The production volume attracts an efficient supply chain that will sufficiently distribute to all of its stores. Zara Company makes an overall decision regarding the supply chain reflecting the corporate strategy. The company has managed to interconnect and interlink systems, networks, and other bulge businesses combined in the provision of products needed by their customers in a supply chain. Zara’s Supply chain management useful designed, planned, execute, manage, and monitoring of supply chain activities with the goals of creating new value (Jarousse, 2011). The company has managed to build a competitive infrastructure, leveraging logistics across their store globally, harmonizing supply with demand and assessing performance worldwide. Components of Zara Supply Chain Management a) Plan Zara Clothing Company has distinguished strategic plan on the ways to manage the resources in for the company to achieve the needs of customers demand. The Zara’s supply chain management has developed the approaches to monitoring the supply process so that it has to deliver high qualities and values to clients (Bogataj, et al., 2016). b) Source Zara Clothing Company has developed super suppliers to deliver their items to the market whenever they are needed. The management has maintained the need to improve a set costing and systems of delivery in the supply chain process. The company has also ensured means for controlling their products inventory are effectively in place (Krstov & Vodopivec, 2012). c) Make In the manufacturing and production, the company’s supply chain management has scheduled the critical activities required for the production, packaging, testing and preparation for efficient delivery of products. Production and measure levels are the central portions of the supply chain process. d) Deliver Zara uses this part to impact logistics by a chain of supply management. The clothing company integrates receipts of products orders, choose carriers to get items to customers and create a system of warehouses (Development., 2012). e) Return Zara Clothing Firm is ready for any problem that can originate from their products as far as the supply chain is concerned. Hence, the management planners ensure the company has a flexible and accountable network for receiving any products flaw and the excess clothing items from the consumer (Qrunfleh, et al., 2012). Elements of supply chain management of Zara Company The process of supply chain corporate the management by harmonizing supply and demand. The method comprises of the planning and management of activities in sourcing and procuring, converting and in logistics of the company. It also entails the collaboration of other partners’ channels suppliers and service benefactors. The elements of the supply process in Zara include; a) Demand management It refers to the crucial component in the entire supply chain process focusing firms and other related partners on delivering the needs of the customers away from the manufacturing process. Zara Clothing Company has been a leading company in supply process hence fulfilling partners’ awareness of clients’ needs. The company, therefore, feels encouraged to add component and supply quality to products to the market. The Zara Company has improved its competitiveness of the whole supply chain process and enhancing the business prospect for all partners following creating awareness and mutual collaboration (Storer, 2014). b) Communication in supply chain process Excellent communication supports the overall supply chain to develop the efficacy and productivity of its operations by creating a favorable environment for all partners to distribute the same demand and operational information. Zara has regularly impacted communication as a tool of information to all partners on development that touch their input to the supply chain, allowing them to immediately change their operations in line with changing demand requirements. Zara Company has enabled the partners to quickly respond to the new fashions produced, increasingly distributing levels due to successful marketing strategies (Brumnik & Balantič, 2008). c) Incorporation and integration Integrating and incorporating supply chain systems helps each partner to minimize its inventory costs which are first successful chain management. Zara Company’s suppliers share the new information on demand and take them to warehouses. The warehouses pave the way for shipment of products for storage with minimum inventory time. The process cut down costs, hence help the company to offer clients extremely competitive pricing. For Zara to achieve this, it needs to develop one main information system that will feed all members to share supply and demand information. The networks may include internet protocol (Näslud & Hulthen, 2012). d) Collaboration Cooperation in the supply chain strengthens the association between partners, improving coordination and supporting all members increase productivity. Zara runs business improvement and training programs to improve supply chain partners’ marketplace and product information. The company also commenced collective new goods development programs with members providing specialist knowledge of elements and materials (Gunasekaran, 2012). Zara strategic supply chain management Zara Clothing Company applies the supply chain management in three broad categories: strategic, tactical, and operational. At the strategic level, Zara Clothing Company, make high-level strategic supply chain decisions relevant to the whole company. The company makes decisions concerning supply chain management that reflect the holistic business strategy followed by the firm. The process that the Zara company management has to decide must cover broad perspective on the supplying products to all stores (Trkman, et al., 2010). The strategic supply chain management includes product improvement, customers, production/manufacturing, vendors, and logistics. i) Product improvement Zara management has ensured strategic direction towards considering the textile products that the company produces and equally feed their customers. The company’s management makes strategic decisions to improve and familiarize new product into the market, justify the current product offering, and to improve new range of goods. For example, the company’s agents have a tendency of scouting out new fashion trends at social meetings as well as clubs. The clothing product is priced based on customer demand, rather than company’s cost. The company’s decision may involve the need to get the similar sale over another company (Trkman, et al., 2011). Nonetheless, the Zara Company ensures strategic decisions touches the whole objectives of the company as the determining factor. ii) Production and supply chain operations. Zara Company has increased production quickly, thus increasing inventory in the supply chain. The company has advanced manufacturing to a significant percentage. The company keeps on upgrading on fashion trends. Zara Company has put the strategic level at the high notch. The production decisions describe the manufacturing structure and the advanced technology that will need by the company. Regarding on based high level predicting and sales approximations, Zara Clothing Company’s managers has streamlined on ways to manufacture their products. The company has moved their goods to international market which means the decision leaned towards using third party logistics (Simchi-Levi, et al., 2014). Another factor that has favored production is the environment matters that have influenced company policy to a greater degree. The company has accelerated product designs for supply, manufacturing, and maintainability to boost profit innovation. For the Zara Company to be successful, the production must be done with affordable price. The decision made concerning the development of product must make the product. Right designs must be enhanced for supply and manufacturability and accompanied with an accurate price. Zara Company has managed to get, customers’ information, people, processes, and decision concerning a product. The tools have impacted on the company to achieve big bonuses and market control (Mangan & Lalwani, 2016). iii) Customers The Zara Clothing Company, at a strategic level, has identified the clients for its products. The company evaluated the primary clients' segments where they majorly marketed and advertised to reach their target. iv) Reducing Inventory The company has used just-in-time production which has been a game changer. The model has proven methodology which has provided Zara with the necessary framework to minimize inventory in the chain supply. The company depends on refined fabric sourcing, cutting and sewing facilities closer to the manufacturing place. It does this by using state-of-the-art technology to analyze regularly sales configurations. The Zara gathers information without engaging the customers hence enable them to supply items ranges just before they demand them. The action eliminates problem of the lower supply chain (Ladeira, et al., 2011). To the company, it spends a little money on storage of products. Zara also allows their customers to return their clothing which does not fit them in exchange the company convert them to other meaningful clothing. The process also cut down bottlenecks in the supply chain distribution department (Christopher, 2016). v) Collaboration between business and operation strategy Zara’s supply chain strategy is gaining a lot of growth through applying diversified integrations. The Zara Company has implemented couture designs, manufactures, distributes, and wholesales clothes within the period of two weeks of the original design first appearing on stages. The company owns the chain of supply and competes on the increasing speed to market, by embracing fast fashion. vi) Observed the heed of industry trends. Zara has established its demand drivers, company standards, and the protocols of supply chain management. The changes need time and advance over the time. The company has not configured its customer needs and responded to them, through passing technology management. When more consumers begin to demand a particular type of information or probably to change to just in time approach, or suppliers coalescing, the company has shifted to suit the supply chain strategy. The action helps the company to absorb the changes when it is new. Zara has not hesitated to see worse policy applicable to their businesses. Instead, they have acted quickly to avoid disruption of the supply networks. Similarly, they have eliminated every technology gap by maintaining company standard which has supported in reducing the cost of long-term business strategy (Kremljak, et al., 2012). vii) Integrate risk management Zara has enabled to pinpoint the risks to ideal performance, both within and outside. It has allowed outlining approaches, action plans, look for alternate suppliers to outdo risks. The company has also used transportation resources, and designate workers for particular response in case of any breakdown in the supply chain process. The company has learned that to effect and implement the process of supply chain strategy invariably require supervision performance and change to favor improvement. The supply chain development procedure cut across both cross-functional hence attracting continuous controls. To the market and customers changes, the company has to implemented continuous development process which has maintained adoption and response of changes (Oliveira & McCormack, 2016 ). As a strategic decision on production locations, the company must effect logistics function as primary to the success of the supply chain process. Fulfillment of order should be the essential part of the supply chain and Zara management requirements to make calculated decisions on the logistics system. The scheme and operation of the scheme have a substantial influence on the performance of the supply chain (Hubert & Ikonnikova, 2011). However, strategic decisions are needed in Zara’s warehouses, delivery centers where transport modes should be appropriate. The planning will enhance and determine the overall direction of Zara’s supply processes. The strategic decisions should match with company’s objectives and not sidelined to any appropriate clothes fashion. The company has maneuvered to makes refine decisions to match specifications of the company which has enhanced both tactical and operational supply chain decisions (Doukidis, 2007). Zara Company has maintained its principal objective of the supply chain on ensuring the company delivers the products according to the customers’ specifications. The company spends little on this by lowering costs and enhancing performance hence proving supply chain process indeed augmented. By having an outstanding supply chain process, Zara has extra capacity to respond the customers’ demand as it increases and taking dynamics. The company has a legacy of operating all days leaving flexibility for extra shifts and temporary labor topped when the need arise. The company has a regular shipment, and this has attracted significant numbers of customers who have been visiting their stores, hence, creating space of shortage and opportunity at the same time. The strategy provides the company a golden chance to make sales more times at full price due to the sense of scarceness and exclusivity the company portray (Hul, 2010). The total company cost is reduced due to merchandise that marks down in comparison to their competitors who fails to score down theirs. Models of Zara Company’ Supply Chain Management The company uses Inventory optimization models which help to get the quantity that is needed by their retail warehouses through shipments that they make sure is consistent every week. The stock transportations are limited to ensure that every warehouse receives what they need. The process help to brand image through eschewing to build up the unpopular stock. On the other hand, the batch is small, making a load of unsold inventory to free them (Billington, 2014). Zara Clothing Company sticks to very centralized logistics. The company ensures that they make the decision in a coordinated manner. The company remains to a broad, forecast and optimistic toward a fast, consistent rhythm to fulfill order request to their stores. Zara warehouse and retail stores have particular days and time to send requests to various markets as per the demand. Transportation is ensured to reach concrete warehouses and stores at given times. In the process, all clothing materials are already labeled and price tagged upon arriving in stores. Also, Zara has a coherent supply chain, whereby, every employee involved right away from procurement, manufacturing transportation and retails departments, have a clear timeline on other stipulated responsibilities (Gunasekaran, 2012). The firm guarantees the company’s clients on exact time to visit stores for new materials and fresh fashions. The Zara Company has the best particular distribution system. The secure distribution system helps the company’s product reach the customers within the shortest time possible across their entire store globally. Zara has also benefited from applying just-in-time manufacturing method. The company meets an extremely and quick profit by producing in small quantities. The company ensures that new fashions reach the market within two weeks. Zara responds to its clients by sourcing what products they need, customers’ demand, hence ignoring less popular products. The model is highly underpinned by developing a predictable network (Näslud & Hulthen, 2012). The Zara managers gather sales information and prevalent trends o and forward to the central head office for underlying analysis breaching the market gaps. However, even if the Company has effectively maneuvered to use the supply chain process, it has several challenges that face it. The problem of managing the understanding on the resources. The resources are leading practical of the company. For any big company such as Zara, acquiring knowledge becomes a prerequisite to applying to the principal competitive factors and the most necessary strategic resource decisions (Jarousse, 2011). Another challenge of impacting supply chain management includes the need to articulate the integration of networks within the supply chain process. Zara has not had good terms with distributors and its supplier. The company needs to mobilize the networks to pave the way for the company to gather information regarding market demand, fend off their market rival, and integrate pricing and its policies (Gunasekaran, 2012). 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