MIREIA SIMÒ & JULIA SOLER
The company
ZARA is the largest clothes company in Spain, founded in 1975. The secret to Zara’s competitive advantage is its SUPPLY CHAIN. No other competitor can copy its business model until it first copies its supply chain.
Manufacturing is centered in northwestern Spain (Arteixo, Galicia, Spain) where company headquarters and “the Cube” are located. This is the heart of the Company, a huge, highly automated distribution center (DC). But for their main distribution and logistics hub they chose a more centrally located facility, which is located in Zaragoza.
ZARA has a VERTICALLY INTEGRATED SUPPLY CHAIN where design, production, distribution and retailing were integrated:
- ZARA buys large quantities of only a few types of fabric (raw materials) (just four or five types) from suppliers in Italy, Spain, Portugal and Greece. These fabrics are supplied to Zara’s manufacturing centre within 5 days
- ZARA does the garment design and cut the fabrics in-house.
- The 11 owned factories, which are within a 16 km radius of the Cube, are connected to the Cube by underground tunnels with high speed monorails. The monorail system is used to move cut fabric, dyeing fabrics, assembly into clothing items to each factories.
- The factories also use the monorail system to return finished products to the Cube. Then, they are transported to the ZARA logistics hub in Zaragoza
- All raw materials pass through the cube and all finished goods also pass through on their way to stores.
ZARA can deliver garments to stores worldwide in just a few days:
- China – 48 hrs;
- Europe – 24 hrs;
- Japan – 72 hrs;
- United States – 48 hrs. It uses trucks to deliver to stores in Europe and uses air freight to ship clothes to other markets.
A lean and agile supply chain
There is a short order cycle time (ZARA offer customers more styles and choices, and yet still create a sense of urgency to buy because items often sell out quickly. Items are shipped and arrive at stores already on hangers and with tags and prices on them): This makes it possible for store managers to order and receive the products customers want when they want them, week by week. The fact of being so closely to real customer demand from one month to the next, frees the company from getting caught in cyclical market ups and downs. Supply chain planners and managers are always watching customer demand and making adjustments to manufacturing and supply chain operations. Adjustments need to be made to production rates, vehicles, and delivery routes and schedules to get this supply chain to work well.
Business Logistics 