Zara Organization Success in Supply Chain

Introduction and demonstrating the industry that focus on effectiveness of supply chain

management towards the logistics and the production. (6 marks)

If we denote supply chain as, it is a system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer (2018). A supply chain is actually a complex and dynamic supply and demand network. Main purpose of supply chain is to satisfy customer needs and generate business profits. Today, we are going to look into the importance of supply chain in the apparel industry. Have you ever thought about what is behind of stores’ windows displays? How companies keep up with their fast changing season styles? How all seasonal products can be found all the time? And what makes the company stay trendy? It is all about getting the right goods to the right place at the right time. But how? Supply chain management working as a key success factor for the apparel industry as the apparel industry stands out as one of the most globalized industries in the world and it is a supply driven commodity chain led by a combination of retailers, contractors, subcontractors, merchandisers, buyers, and suppliers; each plays an important role in a network of supply chains that spans from fibers to yarn, to fabrics, to accessories, to garments, to trading, and to marketing (2018). According to the State of Fashion 2018 report published by McKinsey and The Business of Fashion, the third biggest challenge fashion companies will face this year is the improvement and digitalization of the supply chain. Moreover in today’s competitive environment, markets are becoming more global, dynamic, and customer driven, where customers are demanding more variety, better quality, and service, including reliability and faster delivery. Therefore, to ensure growth, it has become mandatory for the apparel industry to be more participative and adaptive. In the apparel industry, it is very hard to forecast demand and supply accurately. As inventory management is the biggest challenge of the retail businesses, the ability of managing uncertain demand is a critical element for success. However we see some success stories in some of the fast fashion companies. They are able to overcome inventory challenge by supplying small amount of the latest fashion more frequently. However reducing inventory would be taking another risk if the products are not available when needed. That’s why facility and transportation management is another key for success in fast fashion business (2016). Furthermore, the export market for apparel industry is highly competitive because China, Bangladesh, Vietnam, India all are fighting for offering a better price to the garments buyers to hold the export share high. Any apparel’s company can compete in the market but first of all, they need to minimize your direct and indirect cost associated with your garments production. And the right solution is to use of supply chain management by which optimal sourcing is possible where cost is minimum. And this is the reason why supply chain management is important for the apparel industry.

Diagram or framework stating all units of department

Diagram 1: Zara organization structure

Zara organization structure is a hierarchical flow of subordination of functional department. It is a well-organized structure as employees know who to report to and it was easy or them to find and communicate with their colleagues. Thus, the efficiency of making work easier as well as productivity of employees will improve. Zara always concern about customer needs, and with over 200 professional designers, they always creates clothing with societies trends, ideas in order to develop their products. Zara is always a company which has a high speed production fashion as they trust that an aggressive culture would do good to get results and their targets immediately. Zara’s employees always be innovative and coming up with new ideas when adapting this culture, as zara is known for setting trends into global fashion industry. The organizational structure of Zara company has focus on teamwork, as teamwork is a basic skill people need to get to become a good staff. This organization structure and culture allows employees to work together and give them chance to accomplish tasks. Amancio Ortega Gaona is the chairman of the company, while Pablo is the First Deputy Chairman and CEO, while Carlos is the Second Deputy Chairman. Under the top management of Zara, there are some smaller managers such as store managers, regional managers and country managers. Besides, they also manage 70,000 international staffs.

Diagram