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Zaras Supply Chain Management Practices Case Solution

Solution Id Length Case Author Case Publisher
2298 918 Words (4 Pages) Vivek Gupta, Indu Perepu IBS Center for Management Research : 606-021-1
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Zara’s supply chain is intelligently designed to achieve both efficiency and innovation. Zara has vertically integrated supply chain. Inditex owned more than 100 companies which are performing many processes for zara from fabric procurement to processing. Zara does not rely on external suppliers only. In fact it has limited the role of external suppliers where it can. It has realized that to make its strategy successful of reducing the lead time and churning out new designs frequently it needed strategic commitment from its suppliers also.

Case Study Questions Answers

Zara has an integrated supply chain to achieve unmatched efficiency in filling its stores with new designs twice a week. All supply chain partners are linked with accurate and timely information. The information flow from customer front to supplier end is timely and seamless. The information system adopted for transferring the information about customer’s preferences to central office is very effective.

The decision to outsource and where to outsource labor intensive processes is strategically very important. Zara decided to keep labor intensive processes (stitching) near its central office. The good thing is that Zara is very clear about its priorities and requirements. So instead of following the herd mentality of outsourcing or offshoring the stitching processes to Asia for cost saving Zara made the strategy that suits its business model. Most companies outsourced its operations to Asia for cost saving only.

The cost and regulations to keep labor in developed countries is high and pain staking. So by outsourcing Zara chose to keep out of this hassle and yet get the work done close to its central office. 

Zara makes products (garments) in batches. Zara has an excellent command over transforming ideas into new design in short time. The system employed is such that it compliments each and every step in development of new design. The customers here are used as resource. Zara has capable designer’s team to spot the emerging trends and roll out new designs in stores twice a week. It’s worth noting that customers here are used as resource rather than restricting them as end user only. The industry of which Zara is now a powerful player is very volatile, fashions have short life span and likes and dislikes of customers matter. Zara identified the potential and gives its customers the front role and use them as resource in generation of new designs. The infrastructure implemented for capturing customer knowledge is very efficient. As the employees in Zara send information to head office about customers’ preferences, queries and any new design that customer is wearing every day. Zara has invested heavily in making its infrastructure up to the mark to support its daily operations. It’s also evident that Zara has made considerable efforts in infrastructure area to leave no communication gap between the central office and its employees in stores.

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