Case 1: Rapid Fire Fulfillment
What are the supply chain objectives of Zara?
How is Zara’s supply chain different from most other supply chains in their industry?
· In order to increase their flexibility, Zara has invested a lot of their capital to build new production factories, as well as distribution centers.
· For Zara’s rivals, like, H&M, GAP, they like to outsource most of their product, however, according to the article Rapid Fire Fulfillment, “Zara keeps almost half of its production in house.” Zara only outsource some easy tasks, such as sewing. Therefore, Zara can control most of their product’s quality.
· In order to increase their flexibility, speed, and reduce their cost, Zara only produce small batch and intentionally leaves extra capacity (Rapid Fire Fulfillment). Therefore, Zara has ability to produce new fashion product quickly once there is the new fashion trend in the market.
· Zara also has established their own raw material companies. For example, they could buy fabrics from their own raw material companies, called Comditel. So, Zara could reduce their cost and control the quality.
· Since Zara realizes that fashion trend always comes from designers, and customers, they want to ensure such information can be heard by everyone who works in the Company without bureaucracy problems. Zara sent out PDA to retail sore, and market specialist, and design center in La Coruna so that such critical information can be heard by everyone without bureaucracy.
· Not like Zara’s rivals, Zara can run their different production channel in the same time.
How does Zara control the bullwhip effect?
· Zara has built the vertical integration supply chain, it gives Zara ability to make change and increase flexibility.
· According to the article Rapid Fire Fulfillment, “Zara produce in small batches.” Therefore, Zara has ability to avoid over inventory problem.
· Normally, the industry allows retailers to change their maximum order of 20%. Zara allows retailers to change their maximum order of 40% to 50%(Rapid Fire Fulfillment) since they only produce limited quantity for each single style. Zara could control and avoid some over production problem and reduce such discounting event.