Zara Operation Strategy
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Zara is a Spanish fashion and accessories retailers that founded in 1975 by Amancio Ortega and Rosalia Mera (Ledesma, 2013). Zara designs, manufactures their apparel, footwear and accessories for men, women and sells up-to-minute “fashionabilty” at low prices throughout Europe, US and Asia Pacific (Bilsel, 2014) that clearly focused on one particular market ( Nigel Slack, Stuart Chambers, Robert Johnston, Alan Betts, 2006)
The basic business concept of Zara is to maintain its design process, production and distribution that will allow Zara to respond quickly to changes in consumer demand by shipping new products to over 600 chains of Zara’s retail stores worldwide every few days (Tinataja, 2011) Zara’s success is based on a business system that reaches a speed of response to market demand that is not without precedent in the sector of fast-pace fashion clothes trend. Zara cycle of design, production and distribution is significantly faster than any of its major competitors. For most fashion retailers have a period of six months between the completion of a new design and up to delivery at the retail store. Zara may have a new design from the drawing process to retail stores in as fast as three weeks (Grant, 2010).
For example, it takes less than 2 weeks for a skirt from Zara’s team in Spain to be made and delivered to Paris or Tokyo – as much as 12 times faster than any competitors (CAvQM, 2013). Also, with shorter time notice, Zara can send fewer pieces of their clothes but in a variety of styles, and more than often they can easily cancel the lines that couldn’t sell so well to avoid inventory backlogs (Ozkurt, 2010) The design process does not seem to stop and designers are constantly evaluating consumer preferences. The staff working in Zara stores is mostly youngsters, who are very fashion-conscious and serve as the key “trend-spotter” (Singh, 2011 ) Four Perspectives of Operation Strategy
Operation Strategy is a strategic function. Basically, operation strategies related to the transition of inputs to outputs. Therefore, this strategy provides the basis for decisions on the operational level. Several expression domains of strategic activities designed products (tangible and intangible), supplier selection, the appropriate choice for the transition of the input and output factors, planning production planning, etc. (Mondal, 2013)
Top-Down versus Bottom-Up Perspective
According to the “top-down” approach, the overall business strategy establishing the general direction of the organization, which is then interpreted by the different functional areas of the company in their strategic function. In contrast, the “Bottom-Up” strategy is to view decision making as a strategy to accumulate practical experience. After all, the organization will find it difficult to ‘invent’ overall strategy in a vacuum. Their idea was formed from their previous experience dealing with customers, suppliers and their own processes. This is the idea behind the strategy well. This is the idea that strategy appeared over time as an organization begin to understand the reality of their situation.
Zara’s innovation idea and quick changing fashion trends has successfully capture the preference of buyers. Many users re-visit Zara stores often because the clothes and accessories are “updated” once a while, to fulfilled the desire of the trendy users. Zara target middle to upper class buyers as they have more disposable income who can afford the price of their clothing.
Zara pushes their innovation process in a rapidly changing market by adjusting the perspective from the bottom-up strategy in its operations. This is an important driver of competitive advantage through continuous innovation to develop new-product gives customers’ new perceived benefits. Zara did not only depend on trends in the fashion industry, but leverage word-of-mouth information to create clothing that will appeal to customers. Also, another bottom-up strategy is the management; mangers of Zara’s outlets may report directly to Zara’s headquarter to feedback on the preferences of their customers. Through these means, the sales forecast is efficient and able to launch products quickly as Zara is equipped with the information needed to compete in the fast copying and launching products to suit with new trends in the fashion industry. The high flexibility allows Zara to do so.
Market Requirement versus Operations Resources
Market requirements perspective starts from the commonsense notion that any operational strategies should reflect what this organization is trying to do in their market. Companies compete in a variety of ways, some of which may compete primarily on cost, others on the excellence of the product or service they offer, others on high levels of customer service goods, others to customize products and services to the needs of their individual customers, and so on. To fulfill Market Requirement, an organization must be able to provide sufficient capabilities and at high quality standard
Market Requirement Perspective
Regardless of what operation strategy of an organization, it must somehow reflect the requirement of the organization’s market. The fashion market is a fast changing one characterized by quick shifts in consumer demands. Not only affected just by seasons, fashion industry is influenced from pop culture as well; that explains why somehow there is a huge and sudden demand for certain design and style fashion. With Zara’s flexibility and efficiency in bringing a idea from scratch to physical products, Zara is always way ahead of their competitors. True enough, Zara’s operational goal is to achieve short lead time, lower inventory and increase variety of styles/choices, along with a focus on creativity and quality is an important driver of advantages sustainable competitive that it enjoys in the industry today
Operation Resources Perspective
Zara’s production capacity is reflected in the backup storage functions of the company, where up to 400 employees can be drafted during high demand period (holiday, Christmas, Thanksgiving, etc.). Scheduled delivery of new stocks is regimented; customers know when new stock is arrived. As a result, companies can adjust their resources to meet the demand appropriately.. A small change in retail orders, for example, can lead to large fluctuations in the factory orders after it is transmitted through wholesalers and distributors. In an industry that traditionally allows retailers to change a maximum of 20 percent of their orders once the season has started, Zara lets them adjust 40 percent to 50 percent. In this way, Zara avoids costly production and subsequent sales and discounting prevalent in the industry.
The smooth operation strategy allows Zara to continue being one of the most successful clothing companies in the industry and always come about fresh idea and new trend fashion.
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