Zara Summarasied

airfreight coats to Japan twice a week? Would you move unsold items out of your

shop afteronly two weeks? Would you run yourfactories justduring the day shift? Is this any way to run an efficientsupply chain? For Spanish clothier Zara it is. Not that any one of these tactics is especially effective in itself. Rather, they stem from a holistic approach to supply chain

management that optimizes the entire chain instead of focusing on individual parts. In the process, Zara defies most of the current conventional wisdom about how supply chains should be run. Unlike so many of its peers, which rush to outsource, Zara keeps almost half of

its production in-house. Far from pushing its factories to maximize output, the company focuses capital on building extra capacity. Rather than chase economies of scale, Zara manufactures and distributes products in small batches. Instead of outside partners, the company

manages all design, warehousing, distribution, and logistics functions itself. The result is a superresponsive supply chain exquisitely tailored to Zara's business model. Zara can design, produce, and deliver a new garment to its 600-plus stores worldwide in a mere 15 days. So in

Zara's shops, customers can always find new products--but in limited supply. Customers think, "This green shirt fits me, and there is one on the rack. If I don't buy it now, I'll lose my chance." That urgency translates into high profit margins and steady 20% yearly growth in a tough

economic climate.Some ofZara's specific practices may be directly applicable only in industries where productlife cycles are very short. But Zara'ssimplephilosophyofreapingbottom-lineprofitsthroughend-to-endcontrolofthesupplychaincanbeappliedtoanyindustry

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