Read the case study regarding capacity planning that is available on Moodle. Your answers should refer to: Relevant concepts and theories regarding the role of capacity planning in organizations and demonstrate your ability to utilize relevant information from the case. Case Study 1 – Capacity Planning (1,250 words, due date: 25/11/2013) Identify the key characteristics of fast fashion and discuss how these affect company approaches to capacity planning. How do fast fashion companies ensure that they can meet their demand? How does this approach contribute to Zara’s success?
Introduction Over the past few years the fashion industry has changed rapidly with every New Year came newer fashion. Competition has been fiercer than ever in terms of costs, quality, dependability and innovation. In this case study you’ll find a clear discussion and logical explanation about Zara’s day to day operations, why and how have they become as successful as they are today. What makes them different from other companies and how they meet there and their customers demands in such a demanding and competitive industry.
Zara is a Spanish owned fashion label and fashion chain stores established in 1975 by the group known as Inditex owned by Amancio Ortega, it sells up to the minute fashion products in men women and kids wear at affordable prices in stores that are clearly focused on one particular market. What is Fast Fashion? Fast fashion is a contemporary term used to affiliate with clothing that is based on most recent fashion trends. It is also a way of saying that designs move from catwalk quickly in order to capture current fashion trends.
The Term Paper on Capacity Planning Model
Abstract: Capacity planning decisions affect a significant portion of future revenue. In equipment intensive industries, these decisions usually need to be made in the presence of both highly volatile demand and long capacity installation lead times. For a multiple product case, we present a continuous-time capacity planning model that addresses problems of realistic size and complexity found in ...
It emerges in the context of that the fashion cycle is moving faster than ever before and at least 10 times faster than it has been 10 years ago. Identify the key characteristics of fast fashion and discuss how these affect company approaches to capacity planning? + How does this approach contribute to Zara’s success? How do all these factors contribute Zara’s success is the main question. Firstly Zara have taken speed and responsiveness into account they have changed the way they operate in there industry where designing, distribution and delivery requires no longer than six months.
This proves that Zara can get the latest trends into their store within 6 weeks, which exceeds the capabilities of its competitors as H&M and Benetton and many other fashion companies take longer. This capability allows Zara to achieve their strategy of expedited response to consumer demand and keep up with the latest fashion. The advantage of this process is the quicker Zara can get a new design into their store the higher they will sell the product depending on the demand which will lead to more supply initially allowing company to boost profits and recognitions of their demanding products.
Zara’s unique characteristics are very accurate. Instead of them predicting the demand Zara observes the trend and identifies what is selling, for example there designers continuously track customer’s preferences allowing them to get new designs and styles into the store shelves in under 2 weeks because they have observed the trend before hand and already ahead of their competitors such as H&M. There vertical integration allows small batches of produce to be distributed and tested out allow them to save more money and cut inventory backlogs.
Zara maintains a low cost by avoiding outsourcing (where possible) and producing all its merchandise and produce in home soil in Spain. Also Zara own many fabric dying, cutting and processing equipment that provided Zara added control and flexibility to adopt new trends on demand. Effectively Zara is able to design and manufacture products as well as deliver them in less than two weeks in contrast to competitors such as Benetton and H&M which require at least between five weeks and 4 months lead time to fill orders from its retail operations.
The Term Paper on General Nutrition Company Products Gnc
Company Background General Nutrition Companies Inc. , was founded 65 years ago in Pittsburgh, Pennsylvania on the premise that Americans wanted to maintain control over their health. David Shakir ian founded the company. In 1935 he launched a dream of his by establishing a little health food store in Pittsburgh, Pennsylvania. He called it Lackzoom. The products that were offered at his store ...
One major unique characteristic was that Zara own its in house production which gives Zara the flexibility of quantity, variety, and the frequency of the designs they produce. Another way there strategy contributors to their success is that they have the capability to keep a significant amount of product in home soil in there won factories and reserve approximately 85% of their capacity for seasonal adjustments this way they will be able to rapidly respond to unexpected trends in the industry.
Additionally they use foreign factories as many other companies do as cost is much cheaper which allows production to increase and distrusted accordingly, however for fast fashion items Zara produces in the factories in Spain as it could lead to shorter time scales to be distributed and on the stores in less than 2 weeks of production. Today Zara can replenish existing stock in little as two weeks. The company spends very little on advertising and use those funds to support higher cost of producing in Spain as its more costly effective to produce than Asia.
This ensures the company they avoid inventory backlogs, allowing the company to product what the customers want and allowing themselves to being able to respond quickly to any market need. Lower inventory cost is key for Zara because as it enables Zara to manufacture and sell its products at cheaper prices. One of Zara’s distinctive success contributors is there valuable and planned logistics and supply chain managements it operates which allows them to develop and deliver competitive marketing mix.
Where customers expect to find latest trends which are still in fashion Zara for an example the ultimate company of how to make it possible because it usually could take up to six months in the textile industry for an idea to be transformed into a product and reach the stores. However if you were reduce the lead times through channel management Zara has developed a vertical integrated business model which allows them as said before lets them change some parts of their inventory in only a couple of weeks. This strategy they use is known as the quick response.
The Business plan on Zara fashion swot
1. Barriers to entry: HIGH a. High fixed cost business requires economics of scale for sustained profitability b. High Selling & Administration Expenses which includes advertising, in-store promotions, etc.; up to 3.5% of its revenue, even though for Zara, the company is famous for spending minimum level of advertisements and commercials. However, recently the company announced that it ...
As part of its vertical integration, Zara maintains a very high control of its supply networks as a strategy in achieving fast response. It supplies products to its 650 retail stores twice per week (Rice & Hoppe, 2001) in strictly limited quantities of stock. This ensures Zara’s brand promise to customers of exclusivity and design freshness, thereby minimising inventory of old stock in any part of its supply chain from raw materials to end user. How do fast fashion companies ensure that they can meet their demand?
Without customers businesses cannot exist. The clothing manufacture and clothing distribution industry has witnessed dramatic changes in recent years for example consumers have higher expectations today then before, they often look for quality and unique fashion at affordable prices. Hence why companies like Zara, H&M and Benetton manufacture and distribute their garments in other Asia countries. Zara communicate with numerous manufactures around the world to provide consumers with what they want.
For example like H&M Zara a primarily a European retailer, produce most of their garments in costly Asian factories which allows them to save on cost rather than outsourcing to less expensive European and continuously monitors inventory levels in stores this way they can effectively match the supply and demand of the customers. Fast fashion combines with quick response production with enhanced design compatibilities to both design the latest garments as well as capture the latest trends.
Also exploit minimal production lead times to match the supply with uncertain demand. This is why there are only a very few established fashion companies todaydominating the fast fashion market. Zara ensure they meet there demand and there consumers demand by keeping up to date with the latest fashion trends. They ensure that that if there isn’t a product selling of their shelf within a week then this product would be likely to get replaced with a new existing product.
The Essay on As completely as possible, sketch the supply chain for Zara from raw materials to consumer purchase
Zara makes about 40% of their raw material (fabric). The remaining 60% is outsourced from within Spain, mostly from the La Curuna. Designing of clothes at Zara is done by creative teams of over 300 professionals at the headquarters in La Curuna, Spain. They act on the information fed to them from the stores managers. The first stage in Zara’s production system is cutting of fabric. The design is ...
Another example, if body warmers become the season hottest trends and Zara’s competitors are selling well in this product then Zara reacts quickly, designs new styles, and gets them into stores while the trend is still peaking. This is one of the way Zara meets the customers demand as well as for the business as a whole. Another component is done by studying and monitoring the consumers and the fashion industries unexpected tastes for fashion which allows Zara to reduce design lead times.
For example, Benetton another global fashion brand, based in Treviso, Italy employs a network of people known as ‘Trends spotters’ and designers throughout Europe and Asia who pay close attention to seasonal fashion and give feedback to the Benetton design team to help bring out newer garments that consumers like to wear. From an operational perspective quick response strategies have been relatively well studied, and are known to yield significant value to firms by better matching supply and demand and by influencing consumer purchasing behaviour.
Zara has a 100% reputation for keeping their customers happy and always meeting their demand. The company is vertically integrated and controls most of the process in its supply chain. On average, 50% of Zara’s products are manufactured in home soil – Spain, and the rest are equally produced in Europe and Asia. Having said that this shows that Zara can bring in a blazer in less than two weeks from Zara’s design team in Spain to a Zara stores in any part of the globe, as much as 12 times faster than the competition.
And with shorter lead times, Zara can ship fewer pieces, in a greater variety of styles, more often and they can more easily cancel lines that don’t sell as well, avoiding inventory backlogs. Recommendations/ Conclusion Zara’s operational strategies today defy conventional wisdom about how operation chains should be ran. The key to their success is because of their fast distribution channels, they mainly focus of their customer segment and their awareness for fashion; because of Zara’s fast distribution network they are able to satisfy the rapid change in demand of consumer behaviour.
The Term Paper on Zara Fashion Competitive Advantage
ZARA Fashion 1) With which of the international competitors listed in the case is it most interesting to compare Inditex^aEURTMs financial results? Why? What do comparisons indicate about Inditex^aEURTMs relative operating economics? Its relative capital efficiency? Note that while the electronic version of Exhibit 6 automates some of the comparisons, you will probably want to dig further into ...
Zara is enjoying competition in fast fashion today as they are dominating in all areas. Over the last few years Zara have been a customer magnet, there fast distribution network of Zara is able to satisfy millions of customers with the rapid change in fast fashion and demand. In coming years Zara will need to be even more innovative as fashion is changing and competitors are always looking to improve therefore it is essential Zara stay on top of their game to ensure they are on top of their game.
