What Is Zara's Supply Chain Design? Does This Fit Their Current Strategy?

1. What is Zara's supply chain design? Does this fit their current strategy?

Zara has a successful SCM which focuses on customer satisfaction. In Zara, fashion designers take responsibility of new designs. They choose the most effective fabric for designs which will be designed as models and then sent to the factory. The computer will tailor fabrics in order to waste as little as possible and then label trademarks for transporting to different regions and countries.SCM of Zara is divided into four aspects showing below:

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the biggest advantage of Zara's supply chain strategy is able to react quickly to fashion trends and offer the latest fashion clothing almost in few weeks. Meanwhile, Zara never has big quantities for its inventory.so Zara would not lose much since there is not redundant stock need to be discounted, which guarantee the advantage of lower inventory but higher profit margins. On the other hand, the weakness of Zara's supply chain is that it would be expensive for distribution to expand to far location as Zara owned all the channels of supply chain. As the development of globalization, Zara need to seek the ways for better adjusting the current global markets.

1. What are the flows of demand, supply, and cash?  

Factories could change its production quickly, so that there is less need for inventory. They can make many smaller bets on short term trends that are easier to call correctly.Stores acquire orders twice a week which drives factory scheduling. Such a short term order cycles need accurate prediction. Clothing are priced based on demand, not the cost of production. The short delivery times of items which just need short time production enable Zara offer more and flexible of styles and choices, and customer has a sense of urgency to buy because items could be sold out quickly. Zara uses the majority of money for opening new stores instead of advertisement. it was estimated that there are more than 2,100 stores and annual sales in 2015 were $15.9 billion by Forbes. In terms of its promotion, advertising spending is little and is made at the beginning of the sales seasons in September and December. The quick response cycle and the low level of inventory have helped the company maintain a negative working capital, which has made it easier for it to finance growth. In some senses, Inditex is the textile sector’s Dell.