The case of target store Zara
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Zara is chosen as our target store in our case study. On 31 October 2017, our group conducted our store visit at the branch in Hong Kong Pacific Place, with the store manager Yan Wong. We learnt from her about the actual practice of their RFID operation in store. The implementation of RFID technology on each garment tag has begun since 2014. RFID chips can store information about whatever item they are attached to and, when prompted, emit that data via radio signals to a scanner.
It is an innovation that allows the ‘fast fashion’ chain to reuse them after the tags are removed at checkout. The security tag’s plastic case would protect the chip, allowing for reuse, and it would be removed at checkout.
During the store visit, we learnt the actual strategic flow of RFID in Zara, from the designer, the supplier, the manufacturer, the distribution, the logistics center, the hubs, to the retail stores.
The RFID application starts from the logistics center to use RFID tag when all the manufactured clothes are shipped back to Spain. Theytag and programme each garment with hang by RFID tag and it can help to stock allocation.
Items are then distributed in different countries and hubs are based on individual requirements and needs of the particular locality.It can also help to trace thereal-time delivery status around the world.
Hubs will distribute the productsto several retail stores that require location. It can make agile replenishment, fulfill customer requirement(Barat, 2011) and make sure the retail shops receive their products ordered.
Furthermore, RFID can work in every single retail store for stock check and floor check. It can provide the real-time data inventory control and out of stock control
Zara is a major brand in the apparel industry and its unique supply chain strategies contributes a lot in its growing profit. Since the implementation of RFID, Zara has raised their net income and maintained a standing of being a fashionable and affordable brand, by following the principles below.
RFID has been deployed to improve supplier relationship managementsuch as enabling trends analysis for better forecasting and planning visibility, more strategic supplier’s relationship and reducing supply costs with stable and accurate demand.
Moreover, it can also improve customer relationship management such as ability to provide better service using real time information about produce, better security control, effective stock reallocation and distribution to different regions (high inventory visibility), quick replenishment less storage (higher demand visibility)
A pull model is adopted by Zara inventory and supply chain management. Up to 1000 designs are created based on store sales and current trends monthly. Types of designs being consumed and customers’ spending in the store are analyzed and understood, which actually provides a base for Zara’s next designs.
Zara has high turnover rate. Small batch production quantities are made for every product, which provides a great chance to understand which designs are popular in the fast-paced fashion world. New designs can be explored and acceptance by the market can also be known. Moreover, the risk of producing excessive quantities of less popular products can also be reduced. Zara optimizes the production of good assorted designs by using the same material in various ways.
Zara’s strong IT systems can support its distribution. All the clothes are sent back to Spain, the central distribution centre. From there, they are distributed to different countries and stores according to individual requirements and needs of the particular places.