Case study: ZARA
- What is Zara's philosophy
- Vertical integration
- Agile supply chain
- Trends hunter design
- Just in time
One of the main traits of ZARA's business model is its vertical integration.
This strategic decision to limit the outsourcing and integrate every stage of the supply chain process, from the design to the sell in their own managed stores, helps ZARA to cut costs and optimize performance.
[...] Which allows them to reduce the cost of production. In 2007 in order to answer the critics ZARA publically committed to respect work equity and engage with suppliers who are doing the same. However ZARA focus on short deliveries pushes them to contract suppliers who are not always able to respect work equity standards. Difficulty to control and corruption within local suppliers is one of the biggest challenges which ZARA and other retailers are facing. Communication ZARA manage to gain strong brand awareness with minimal advertisement investment. [...]
[...] It's hard to always remain on top of the competition but by emotionally engaging their customers ZARA may guarantee their loyalty even in times of crises and stiff competition. The lack of corporate social responsibility and non-respect of work equity promise big problems for ZARA if not solved. This is bad advertising but moreover may result in clashes with local, international reglementation and fines. Conclusion Nowadays we are more and more aware of the limited resources and the damages for the environment. In that sense it's dangerous for ZARA to run a one way supply chain without taking into account the social and environmental consequences. [...]