Zara's Secret for Fast Fashion
by Kasra Ferdows, Michael A. Lewis and Jose A.D. Machuca
Editor's note: With some 650 stores in 50 countries, Spanish clothing retailer Zara has hit on a formula for supply chain success that works by defying conventional wisdom. This excerpt from a recent Harvard Business Review profile zeros in on how Zara's supply chain communicates, allowing it to design, produce, and deliver a garment in fifteen days.
In Zara stores, customers can always find new productsbut they're in limited supply. There is a sense of tantalizing exclusivity, since only a few items are on display even though stores are spacious (the average size is around 1,000 square meters). A customer thinks, "This green shirt fits me, and there is one on the rack. If I don't buy it now, I'll lose my chance."
Such a retail concept depends on the regular creation and rapid replenishment of small batches of new goods. Zara's designers create approximately 40,000 new designs annually, from which 10,000 are selected for production. Some of them resemble the latest couture creations. But Zara often beats the high-fashion houses to the market and offers almost the same products, made with less expensive fabric, at much lower prices. Since most garments come in five to six colors and five to seven sizes, Zara's system has to deal with something in the realm of 300,000 new stock-keeping units (SKUs), on average, every year.
This "fast fashion" system depends on a constant exchange of information throughout every part of Zara's supply chainfrom customers to store managers, from store managers to market specialists and designers, from designers to production staff, from buyers to subcontractors, from warehouse managers to distributors, and so on. Most companies insert layers of bureaucracy that can bog down communication between departments. But Zara's organization, operational procedures, performance measures, and even its office layouts are all designed to make information transfer easy.
Zara's single, centralized design and production center is attached to Inditex (Zara's parent company) headquarters in La Coruña. It consists of three spacious hallsone for women's clothing lines, one for men's, and one for children's. Unlike most companies, which try to excise redundant labor to cut costs, Zara makes a point of running three parallel, but operationally distinct, product families. Accordingly, separate design, sales, and procurement and production-planning staffs are dedicated to each clothing line. A store may receive three different calls from La Coruña in one week from a market specialist in each channel; a factory making shirts may deal simultaneously with two Zara managers, one for men's shirts and another for children's shirts. Though it's more expensive to operate three channels, the information flow for each channel is fast, direct, and unencumbered by problems in other channelsmaking the overall supply chain more responsive.
Zara's cadre of 200 designers sits right in the midst of the production process. |
In each hall, floor to ceiling windows overlooking the Spanish countryside reinforce a sense of cheery informality and openness. Unlike companies that sequester their design staffs, Zara's cadre of 200 designers sits right in the midst of the production process. Split among the three lines, these mostly twentysomething designershired because of their enthusiasm and talent, no prima donnas allowedwork next to the market specialists and procurement and production planners. Large circular tables play host to impromptu meetings. Racks of the latest fashion magazines and catalogs fill the walls. A small prototype shop has been set up in the corner of each hall, which encourages everyone to comment on new garments as they evolve.
The physical and organizational proximity of the three groups increases both the speed and the quality of the design process. Designers can quickly and informally check initial sketches with colleagues. Market specialists, who are in constant touch with store managers (and many of whom have been store managers themselves), provide quick feedback about the look of the new designs (style, color, fabric, and so on) and suggest possible market price points. Procurement and production planners make preliminary, but crucial, estimates of manufacturing costs and available capacity. The cross-functional teams can examine prototypes in the hall, choose a design, and commit resources for its production and introduction in a few hours, if necessary.
Zara is careful about the way it deploys the latest information technology tools to facilitate these informal exchanges. Customized handheld computers support the connection between the retail stores and La Coruña. These PDAs augment regular (often weekly) phone conversations between the store managers and the market specialists assigned to them. Through the PDAs and telephone conversations, stores transmit all kinds of information to La Coruñasuch hard data as orders and sales trends and such soft data as customer reactions and the "buzz" around a new style. While any company can use PDAs to communicate, Zara's flat organization ensures that important conversations don't fall through the bureaucratic cracks.
Once the team selects a prototype for production, the designers refine colors and textures on a computer-aided design system. If the item is to be made in one of Zara's factories, they transmit the specs directly to the relevant cutting machines and other systems in that factory. Bar codes track the cut pieces as they are converted into garments through the various steps involved in production (including sewing operations usually done by subcontractors), distribution, and delivery to the stores, where the communication cycle began.
The constant flow of updated data mitigates the so-called bullwhip effectthe tendency of supply chains (and all open-loop information systems) to amplify small disturbances. A small change in retail orders, for example, can result in wide fluctuations in factory orders after it's transmitted through wholesalers and distributors. In an industry that traditionally allows retailers to change a maximum of 20 percent of their orders once the season has started, Zara lets them adjust 40 percent to 50 percent. In this way, Zara avoids costly overproduction and the subsequent sales and discounting prevalent in the industry.
Excerpted with permission from "Rapid-Fire Fulfillment," Harvard Business Review , Vol. 82, No.11, November 2004.
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Kasra Ferdows is the Heisley Family Professor of Global Manufacturing at Georgetown University's McDonough School of Business in Washington DC.
Michael A. Lewis is a professor of operations and supply management at the University of Bath School of Management in the UK.
Jose A.D. Machuca is a professor of operations management at the University of Seville in Spain.
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Since then, Zara's online business had grown at a fast pace. By 2018, 12% of Inditex Group's total sales came from the online channel. Since the inception of the first online store, Inditex leadership wanted its online and offline businesses to be integrated. ... Harvard Business School Case 620-073, January 2020. (Revised October 2021 ...
This case describes this model and outlines a number of challenges facing the company, with a particular emphasis on its international expansion. ... David J., and Guillermo D"Andrea. "Zara." Harvard Business School Case 503-050, March 2003. Educators; Purchase; More from the Author. November 2002 (Revised November 2005) Faculty Research ...
Powered by ZARA's success, Inditex has expanded into 39 countries, making it one of the most global retailers in the world. But in 2002, it faces important questions concerning its future growth. ... Harvard Business School Case 703-497, April 2003. (Revised December 2006.) Educators; Purchase; Related Work. April 2003 (Revised December 2006 ...
2005, had topped the Harvard Business Review ranking of best performing CEOs in 2017 and 2018, and had ambitious plans for the future. 1. Zara was the Group's oldest and largest brand, representing around 69% of sales, or €18 billion in 2018 (see Exhibit 1). At the core of Zara's success was an innovative business model based on a very
Business growth Customer analysis Demand planning Global strategy Market analysis Production. Source: Harvard Business School. Product #: 703497-PDF-ENG. Length: 35 page (s) Focuses on Inditex, an apparel retailer from Spain, which has set up an extremely quick response system for its ZARA chain. Instead of predicting mont.
HBS Professor Pankaj Ghemawat and IESE Professor José Luis Nueno prepared this case. HBS cases are developed solely as the basis for class ... photocopying, recording, or otherwise—without the permission of Harvard Business School. PANKAJ GHEMAWAT JOSÉ LUIS NUENO ZARA: Fast Fashion ... 703-497 ZARA: Fast Fashion 2 Production
Source: Harvard Business School. Product #: 503050-PDF-ENG. Length: 26 page (s) Fashion retailer ZARA has achieved spectacular growth via a distinctive design-on-demand operating model. This case describes this model and outlines.
Focuses on Inditex, an apparel retailer from Spain, which has set up an extremely quick response system for its ZARA chain. Instead of predicting months before a season starts what women will want to…. Length: 1 hour. Publication Date: Jun 23, 2003. Discipline: Strategy. Product #: 703416-HTM-ENG.
Zara's Secret for Fast Fashion. 2/21/2005. Spanish retailer Zara has hit on a formula for supply chain success that works. By defying conventional wisdom, Zara can design and distribute a garment to market in just fifteen days. From Harvard Business Review. by Kasra Ferdows, Michael A. Lewis and Jose A.D. Machuca.
The result is a superresponsive supply chain exquisitely tailored to Zara's business model. Zara can design, produce, and deliver a new garment to its 600-plus stores worldwide in a mere 15 days.
In 2003, Zara's CIO must decide whether to upgrade the retailer's IT infrastructure and capabilities. At the time of the case, the company relies on an out-of-date operating system for its store terminals and has no full-time network in place across stores. ... Harvard Business School Case 604-081, June 2004. (Revised September 2007.) Educators ...
Learn how Zara, the fast fashion pioneer, achieved success with its unique strategy and supply chain management. Read the case study on ResearchGate.
Product Description. In May 2021, SHEIN overtook Amazon as the most downloaded shopping app on the US iOS and Android app stores. During the pandemic in 2020, SHEIN achieved substantial sales growth and is now catching up with the fast-fashion giant Zara. This case first briefly discusses the apparel and fast-fashion industry and the creation ...
Zara uses intensive data and analytics to manage a tight supply chain and give customers exactly what they want. Introduction. Zara's parent company Inditex has managed to thrive in the last decade while several other fashion retailers have faced declining sales or stagnant growth. Inditex has grown over 220% in annual revenue since 2004 ...
Abstract. Focuses on Inditex, an apparel retailer from Spain, which has set up an extremely quick response system for its ZARA chain. Instead of predicting months before a season starts what women will want to wear, ZARA observes what's selling and what's not and continuously adjusts what it produces and merchandises on that basis.
IT infrastructure Operations and supply chain management Organizational structure and design. Source: Harvard Business School. Product #: 604081-PDF-ENG. Length: 23 page (s) In 2003, Zara's CIO must decide whether to upgrade the retailer's IT infrastructure and capabilities. At the time of the case, the company relies on a.
Zara is the main brand of the Spanish retail company Inditex, headquartered in Arteixo, in the north-west of Spain. Inditex's sales in 2014 reached $19.7Bn, compared to H&M with $20Bn or The Gap with $16.4Bn. Zara designs, produces and distributes clothing products for women, men and kids.
Pablo Isla, the CEO of Zara, wanted to improve operational efficiencies in managing its store network. In particular, he wanted to improve labor productivity at the stores. ... Harvard Business School Case 610-042, November 2009. (Revised January 2010.) Educators; Purchase; More from the Authors. June 2024; Faculty Research;
Case Overview "Zara: IT for Fast Fashion" is a case study published by Harvard Business School focusing on Zara, a multinational clothing retail chain that is known for its fast fashion. The case study was written by Andrew McAfee, Anders Sjoman, and Vincent Dessain and was published in 2004 with a revised edition in 2007. The case study explores the challenges faced by Zara's CIO in ...
The stage between 1900 and 1910, is a key in the trajectory and formation of Manuel Gómez-Moreno, before his entry into the Centre for Historical Studies of the Board of Extension Studies. This period was marked by the survey and writing of four successive monumental catalogues, Ávila, Salamanca, Zamora and León, while on a personal level he ...
Each Case Flash Forward provides educators and students with a brief, 2-3 page update of key changes at a particular company covered in a related case study. It is a compilation of publicly-available content prepared by an experienced editor. This Case Flash Forward provides an update on Inditex and Zara, including significant developments, current executives, key readings, and basic financials.
Zara Case Study Harvard Business School In: Business and Management Submitted By mariamnemsadze Words 1786 Pages 8. 1. Inditex financial results compare to competitors. The four companies shown above have very different business models. Inditex owned much of the production and most of its stores. Inditex is thus a vertically integrated company.
Harvard Business School pioneered the case method of teaching in the 1920s as a way of bringing management lessons to life in the classroom. The HBS case method presents real-life situations that executives have faced and asks readers to consider how they would respond. Today the vast majority of HBS classes are built on the case method.
Powered by ZARA's success, Inditex has expanded into 39 countries, making it one of the most global retailers in the world. But in 2002, it faces important questions concerning its future growth. ... Harvard Business School Multimedia/Video Case 703-416, May 2003. (Revised May 2009.) Educators; Purchase; More from the Author. December 2011 ...
Teaching Note for HBS Case Nos. 620-073 and 620-074. Keywords. Stores; ... Moreno, Antonio, and Anibha Singh. "Zara: An Integrated Store and Online Model (A) and (B)." Harvard Business School Teaching Note 621-117, May 2021. (Revised October 2021.) ... Harvard Business School