Week 4 – Zara Case – Option 2:
This week we once again look at the apparel industry, this time the Zara case (see Course Notes). Please answer one of the questions below. Also, please check out the other posts and comment on one of them. If you’re first, please come back later!
In your view, what is the key reason for Zara’s success? (Please explain why. If you use technical terms from the case, please ‘translate’ them into plain language)
A reminder about deadlines
Your blog comments are due at 12.00 on the day of the class (Mondays). The case mini-analysis assignment is due at the start of your tutorial. The Week 4 assignment is also about Zara – check Blackboard later today. The blog discussion should help you with the assignment, but the questions are different.
The key reason for Zara’s success for me is the inventory optimization. The saying: inventory = death in the garment industry illustrates that it is important to avoid the much more inventory in this industry for the changes happens very fast. And Zara adopt the right IS to make it feasible and flexible in this changing-fast industry.
ReplyDeleteOne of Zara’s strategy is to gather the customer’s feedback, and the data gathered will be used to analyse the preference and taste of the local customer. The staff in store use the personal digital assistants (PDAs) to gather customer input, and linked the store’s point-of-sale (POS) system, the updates can be sent in very short time to improve the performance of design planning team.
Another way for Zara’s inventory optimization is the just-in-time manufacturing. Compared with rivals’ several months’ design and planning, the Spain-centric company Zara, which can make most of its own fabric and purchase most of its dyes from its own subsidiary in, can quickly get the material and make their product in 15 days. And most of the products are manufactured for a limited production run, so that it can encourage to customer to visit their store often and buy the limited product, even in the full price.
The quick shipment make Zara can change the product on the shelves twice a week, getting to the market quickly, which means that Zara have to pay a lot of money to achieve the fast shipment. Even though there are some disadvantages of the quick shipment, such as high fuel and some other limitations, Zara can make a high price for their product to make up the cost of transformation.
The key reason for Zara’s success I believe was the quick response based on customers desires which make it hard for rivals to replicate. Zara offered unique products twelve times faster in comparison to competitors. This was achieved by data gathering.
ReplyDeleteStaffs used handheld personal digital assistants (PDAs) to gather customer input and collect beneficial feedback on what the customers would like to see more of. These PDAs were linked to store’s point-of scale (POS) system that showed how garments are ranked by sales so the designers had clear understanding of what customers would like to see. This helped improve the frequency and quality of the design and planning teams making it a fast fashioned system. Zara considered on what item needed to be produced which was visible through customer demands in the data gathering process. No risk was taken doing guess work. Therefore, high stocked inventory was eliminated reducing costs.
Zara provided quick response to customers desired products and made them available on shelves within 15 days which made them successful.
I mostly agree with the above - Zara's key reason for their success was their ability to gather the right information - taking a bottom-up approach to understanding their customer's needs. Having reliable data gives Zara the ability to manufacture and stock just-in-time while constantly building an awareness of current customer needs and potential fashion trends.
ReplyDeleteZara uses technology to speed up the relationship between themselves and the customer and instead creating their own design Zara steps forward from retailers to costumers and finds out the costumer needs by using information and brings those needs faster than other competitors.
ReplyDeleteI found this question to be harder than the first one because to me Zara's strategy cannot be pinned down to just one key reason. I think it is all of their improvements acting in unison that has resulted in their success.
ReplyDeleteIn my opinion the key to Zaras success is their successful integration of information system technology into their business strategy. They have used it to become leaders in both remaining constantly up to date with fashion trends and providing customer satisfaction. Their use of vertically integrated suppliers with just in time technology enables them to be more responsive then their competitors to changing and new trends. An example is given where they were able to produce a copy of an outfit worn by Madonna for the first concert in time for people to wear to her last concert. By asking customers what they want an taking note of it and using their point-of-sale system which looks at sales they are able to give customers what they want rather than rely on guesswork like their competitors. This constant updating of stock keeps their stores looking new and interesting to customers.
ReplyDeleteAn interesting part of Zara's success is their limited-run system. Keeping stock low while not replenishing exhausted stock gives Zara stores an interesting feeling. It gives the customer the sense that they will miss out on a product if they do not get it now, while making the store more interesting as there are always new designs on offer. The average Zara customer visits their stores 17 times a year, far exceeding their competitors, this really shows the system is working.
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