What Is Innovative About Zara?

What is innovative about ZARA?Very good

Zara is innovative because they have a reactive strategy which consists in preparing at the beginning of each season a portfolio of models and then adapting the products to the trends seen in the streets. They can launch from 12 to 16 collections per year, this represents at least 1 collection per month.

70% of the product range changes every two weeks, it involves to have an efficient and reactive supply chain to provide such diversity.

What are the major differences in ZARA's Supply Chain when compared to that of M&S?

In the Value Chain

The outsourceds element in Zara are just sewing cooperatives and consumers, which it's indicates that Zara still has the control over almost whole value chain compared to M&S which is more complex and they outsource almost half of their value chain which indicates that they don't have the entire control of their supply chain.

Zara own their stores even abroad while M&S own their stores in some countries but in others it is more about franchising and partnerships.

Merchandiser: M&S is constantly optimizing the stocks whereas at zara it's more about creating an interaction between the store window and the attraction of the consumer.

Suppliers: M&S have 15 suppliers which its represent 80% of its turnover, the supplier of M&S are also the manufacturer .77% of turnover was sourced from the UK. Compared to Zara's Supplier which it is based in Beijing (China), but the manufacturer is in Galicia (Spain), where product is cut and packed.

Logistics: M&S are very centralized in the UK, the supplier of the UK fulfill the warehouse and receive the item from overseas manufacturing facilities.

Zara has one of the largest and most automated worldwide , where raw materials, prototypes and product stocks.

Purchasing department: in M&S purchasing department there are too many people who take part in the negotiation they are divided into 4 groups: stylist design, select/product developers, merchandisers, technologists. ZARA benefits from the INDITEX buying center based in Beijing where they buy raw materials.

Product: The M&s Products are very different than Zara, because M&s use the forecast for replenishment of its shelves compare to Zara where they procured the product with by monthly collections.

What role does postponement play in ZARA's Supply chain?

One of the role of postponement in Zara's Supply chain is to benefit from economies of scale due to a better bargaining power as Zara's is buying its raw material as a common components (huge amounts) and will then customize the product at the very end of the production process. This strategy improves the reactivity and flexibility to the last trendssteps.

Postponement also implies a supply chain less complex and a kind of just in time strategy. In fact, Zara is able to launch new products in more or less a week from the final design to the stores .

Question 2

Why is it so difficult for M&S to start playing the « fashion » game? What do you think of the programs launched by Peter Salsbury in response to the troubles at M&S?

While Zara's Supply Chain is almost 100% vertically integrated, Marks and Spencer's Supply chain is composed of too many activities which are outsourced. This fragmentation of Supply Chain Ownershipmakes it more difficult to manage and coordinate effectively the latest to the same goal as each owner is seeking for its own interest. Besides, it tends to increase costs and store lead time while jeopardizing M&S's responsiveness ability since the information and good flows travel slower. The strategic fit is not achieved at M&S and difficult to do so since the retailer's Supply Chain is efficient not responsive. Due to this efficient supply chain structure, decisions are made 1 year before the clothes are sold in the stores, which reduces the ability to adapt to a changing market such as Fashion yes!. The fashion industry is indeed a series of short life cycles which requires fast decisions making, flexibility and especially postponement strategy set up, what miss to M&S. Whereas product variety should be increased and life cycle of clothes shorten and limited, the retailer launches only 2 collections a year which are usually based on traditional models yes!. M&S's suppliersproduce continuously in bulk but only the same SKUs