See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/340446491

Operations and Project Management Fast-Fashion Zara By Noof Malallah Al

Ajmi

Article  in  Economic Geography · April 2020

CITATIONS READS

0 3,591

1 author:

Noof Malallah Al Ajmi

Majan College
4 PUBLICATIONS   0 CITATIONS   

SEE PROFILE

Some of the authors of this publication are also working on these related projects:

Zara's Operations Strategy View project

THE ROBOT-CREATIVITY PROJECT View project

All content following this page was uploaded by Noof Malallah Al Ajmi on 05 April 2020.

The user has requested enhancement of the downloaded file.

 Report title:

Operations and Project Management

Fast-Fashion Zara

Written by: Noof Malallah Al-Ajmi

1|Page
 Executive Summary:

Zara is one of the most successful international fashion companies in the retail industry.
The company has developed an agile network of interconnected manufacturing facilities
and has realised the significance of operations. Through operations management, Zara
can improve its customer service and achieve competitive advantage. It‟s considered
as one of the main functions that play a central role in any organisation (Slack, 2010).
This report aims to present a broad discussion about Zara‟s operational management
decision areas while providing a critical analysis of three major operations; quality
management, supply chain management and location. In addition, this report will draw a
comparison between Zara and Chanel company while using the four V‟s of operations
and suggest multiple ways to improve Zara‟s operational performance.
The integration of the company‟s operational drivers for various planning while applying
vertical integration concept is certainly important which can be correlated with
performance improvements. Therefore, Zara should improve its operational
performance through using E-commerce, expanding its manufacturing plants,
implementing ECR system, spends more on advertising and offering initiatives in all
markets they operate.

2|Page
 Table of Contents

1. Assignment Topsheet ......................................................................................................... 1

2. Cover Page ......................................................................................................................... 2
3. Executive Summary ............................................................................................................ 3
4. Table of contents ................................................................................................................ 4
5. Introduction ......................................................................................................................... 4
6. Key operations decisions .................................................................................................... 5
7. Supply chain management .................................................................................................. 5
8. Location .............................................................................................................................. 6
9. Quality Management ........................................................................................................... 7
10. Fast-Fashion Zara and Chanel............................................................................................ 8
11. Performance improvements and recommendations ............................................................ 9
12. Conclusion .........................................................................................................................10
13. References ........................................................................................................................11
14. Appendix A ........................................................................................................................13

3|Page
 1. Introduction:

In today‟s world, majority of companies have come to realise the significance of

operations. Operations management involves achieving competitive advantage and
improving customer service. It handles various strategic issues including the
management of supply chain. Furthermore, it reacts to rapid growth and changes in a
business strategy. Zara is one of the international fashion brands that are well-known
for its strategic approach to operations. It offers a unique business model which has
grown remarkably for years. The purpose of this report is to present a broad discussion
about Zara‟s operational decisions and provide a critical analysis of various processes
including quality management, supply chain management and location. Moreover, it
aims to compare Zara with Chanel and suggest multiple ways to improve Zara‟s
operational performance.

2. Key operations decisions:

It will be apparent that operation management provides a great opportunity for an

organisation to enhance its productivity. The idea behind OM decision areas is to
efficiently streamline business processes. The Spanish fashion chain Zara develops
diverse operations management, therefore, the below three main decision areas will be
discussed.

2.1 Sustainability and supply chain management

Due to diversity in consumer preferences, many companies have been forced to

optimise supply chain flexibility and responsiveness (Christopher, Lowson, & Peck,
2004). Zara, in practice, has created a value proposition through developing its supply
chain processes and linking it with the customer backwards. McCutcheon, Raturi, and
Meredith (1994) argue that traditional fashion buying in the clothing industry may lose its
market share to competitors if the organisation is unable to integrate its various supply
chain operations. For this reason, Zara offers a unique operating model and manage its

4|Page
supply chain activities. The Spanish fast fashion retailer converts to just in time logistics
system which contains several processes including tightly integrated information
system, outsourcing decisions and new product design. It started to develop a quick-
response supply and produce smaller collections instead of planned seasonal product
(Christopher et al., 2004).
Zara has achieved competitive advantage in the market through its supply chain and
combination of various operations such as design, development, production and
delivery. The clothing company changes its designs every two weeks on average.
Basically, when agents explore initial ideas for designs, they start narrowing the
concepts while using sketches. After that, they send design sketches to the designers
for potential enhancement. At the distribution centre called “The Cube”, the garment
designers are able to address the order information to manufacturing plants and send
the produced new clothing items to the stores. Zara has developed an agile network of
interconnected manufacturing facilities and augment basic products with added-value
services. Majority of these activities are vertically combined, as for this reason, Zara has
a full control over its commodity (Chu, 2005).

2.2 Location

According to Porter, (1990) argues that good location decisions will enable a company
to achieve a competitive advantage. Whilst Blair and Premus (1987) indicate that
location decisions should be part of a long-term plan in order to deliver the desired
objectives. The success of the Zara concept is embodied in its location, where the
company started to move from a reactive position to a proactive position. The company
has realised, in essence, it‟s large growth opportunities and reached target customers
by locating their stores in places with the highest concentration of women aged between
24 and 35 years. Zara selects prime locations that attract majority of customers in the
most extensive areas around the globe. The company conducts a business analysis of
local market environment prior choosing the store location in order to define the niche
opportunities for its clothing items (Bonache and Cerviño, 1996).

5|Page
Zara has been focused on highly standardising its key strategic factors which includes
location, customer service and logistics. While the other factors are adjusted in
accordance to local needs and interests (Fabrega, 2004). The company has located its
first store in La Coruña and then started to expand within the local market in Spain.
Afterwards, Zara has opened a new store in Portugal and gained popularity which
enables the company to expand geographically in 59 countries.

2.3 Quality Management

Stables, (2001) argues that quality management system has been an essential part of
any organisation. It ensures that a product or a service conforms to specification with
consistency. The Spanish fashion chain Zara is well-known for its quality services,
which is aligned the company‟s purpose and strategic direction. It aims to deliver a
unique customer service, consequently, measures quality by using the mystery shopper
(Monllor, 2001). Zara attracts women by creating most trendy fashionable clothing items
with reasonable quality. According to China Business (2014), Zara conducts one million
quality control tests on products a year. The objectives and principles of total quality
management are consistent and aim to educate the workforce on the importance of
quality as it can impact other aspects of operations. In matter fact, quality applies not in
services or products but also in human resources. Zara sets a quality standard for
developing products while using the most sustainable raw materials to reduce the
environmental impact. At Zara‟s factories, each piece of item received from the partner
factories will be inspected for quality control using a machine-readable tag. In case the
item does not meet the requirements, then Zara will react and cancel the product lines
(Tokatli, 2008).

6|Page
 3. Fast-Fashion Zara and Chanel:

Majority of operations processes have a common ground, they all transfer their inputs
into outputs. This transformation can be accomplished using the main four factors
known as the four V‟s, volume, variation in demand, variety and visibility. Both Zara and
Chanel have different strategic approaches when it comes to operations. Zara produces
small quantities of garments and changes its designs every two weeks on average. The
company has a low impact on the stockholding level and can easily replace its products
(Ferdows, Lewis and Machuda 2004). It offers high variety of designs and complex
production planning due to products variations (Amed & Abnett, 2015; McAfee et al.,
2007). Furthermore, Zara provides a faster response to customer‟s demands due to its
high capacity and visibility. In contrast, Chanel focuses on high-quality and luxurious
goods in order to achieve higher standards of execution. Appendix A shows the 4 V‟s
that influence the operations processes for both Chanel and Zara.

7|Page
 4. Performance improvements:

The Spanish fast fashion retailer can realise the importance of performance
management and a continuous improvement and the development of sustainable
supply chain management policies. Even small improvements to the operations
performance will have a major impact on the overall company‟s productivity. For
instance, Zara has applied the vertical integration concept which, in turn, leads to
enhancing the supply chain performance and responsiveness (Guan and Rehme 2012).
In order to optimise profitability and organisational efficiency, it becomes apparent how
much necessary to establish successful partnerships with quality management, location,
connectivity, logistics and supply chain management. The below recommendations are
to be considered:

 Advertising is one of the significant communication tools in fashion industry.

However, Zara hardly invests in advertising. The company spends only 0.3% of
sales on ads. Thus, it is advisable to contribute more on marketing automation as
it leads to streamline the business operations (Saxena, 2005).
 Zara has to consider larger audiences and broader target market in order to
make higher number of sales and flexibility. This would result in a better
customer focus as the average spend per customer online is higher than it is in
stores (Inditex, 2017). Its recommended to use E-commerce operation and
provide an omni-channel for consumers to purchase (Jessup, 2010; Kowsmann,
2017).
 Zara‟s operational management has to consider the implementation of Efficient
Customer Response system. The system improves the operational performance
as it controls information related to business activities and reacts promptly to
changes in consumption patterns (Svensson, 2002c; Dornier et al. 1998). For
instance, integrate the entire supply chain information including customer‟s actual
demands for Zara‟s products.

8|Page
  The company has to locate more manufacturers in emerging countries to expand
its operations internationally and explore various markets. This will contribute
efficiently to Zara‟s productivity growth rather than having a limited number of
factories in certain areas (Foster et al. 2001).
 Zara has to consider that most of consumers are becoming environmentally
sensitive (Keller et al., 2014). Therefore, they have to offer their garment
collecting initiative „Closing the loop‟ and their sustainable fashion line „Join Life‟
in all markets they operate including South Africa (Inditex, 2017). This would help
to increase their competitive advantage, thus, achieving customer support.

5. Conclusion

At the end, it‟s good to highlight that Zara has a unique strategic approach to
operations management. Zara critical analysis shows that quality management,
location and sustainability and supply chain management are the main decision
areas to streamline business processes. The integration of these operational drivers
for various planning is extremely critical which involves sustainability and
organisational growth and success. The fast fashion Zara has achieved competitive
advantage through developing an agile network of interconnected manufacturing
facilities. The company is recommended to improve its operational performance
through using E-commerce, expanding its manufacturing plants, implementing ECR
system, spends more on advertising and offering initiatives in all markets they
operate such as the „Closing the loop‟ and their sustainable fashion line „Join Life‟.

9|Page
 6. References

 Amed, I., & Abnett, K. (2015). Inditex: Agile Fashion Force.

 Baldwin, J. and Yan, B., 2012. Market expansion and productivity growth: Do new
domestic markets matter as much as new international markets?. Journal of Economics
& Management Strategy, 21(2), pp.469-491.

 Blair, J.P. and Premus, R. (1987), “Major factors in industrial location: a review”,
Economic Development Quarterly, Vol. 1 No. 1, pp. 72-85.

 Christopher, M., Lowson, R., & Peck, H. (2004). Creating agile supply chains in the
fashion industry. International Journal of Retail & Distribution Management, 32(8), 367-
376.

 Christopher, M., 2016. Logistics & supply chain management. Pearson UK.

 Chu, P. P. (2005). Excellence In European Apparel Supply Chains: Zara. University of

Zaragoza.

 Ferdows, K., Lewis, M.A. and Machuca, J.A., 2004. Rapid-fire fulfillment. Harvard
business review, 82(11), pp.104-117.

 Griffiths, J. (2018). H&M, Zara defend quality control practices after watchdog criticism.
[online] South China Morning Post. Available at: https://www.scmp.com/business/china-
business/article/1581717/hm-zara-defend-quality-control-practices-after-watchdog
[Accessed 20 Oct. 2018].

 GUAN W., and REHME F., 2012. Vertical integration in supply chains: Driving forces
and consequences for manufacturer‟s downstream integration. Supply Chain
Management: An International Journal, Vol. 17 (2), pp. 187-201.

 Karakaya, F. and Canel, C., 1998. Underlying dimensions of business location

decisions. Industrial management & data systems, 98(7), pp.321-329.

 Lopez, C. and Fan, Y., 2009. Internationalisation of the Spanish fashion brand Zara.
Journal of Fashion Marketing and Management: An International Journal, 13(2), pp.279-
296.

 Marber, A. and Wellen, P.M., 2007. DEVELOPING PRODUCTS WITH SOUL: THE
MARKETING STRATEGY OF CHANEL IN JAPAN. Marketing Management Journal,
17(1).

 March, C. (2009). Operations management for construction. 1st ed. London: Spon
Press, p.162.

 Marketline, July 2017. Zara clothing annual report: South Africa, Inditex Annual Report.

 McAfee, A., Sjoman, A., & Dessain, V. Zara: IT for Fast Fashion (2007).

10 | P a g e
  McCutcheon, D. M., Raturi, A. S., & Meredith, J. (1994). The customization-
responsiveness squeeze. Sloan Management Review, 35(2), 89-99.

 Omera, K., Christopher, M., & Creazza, A. (2012). Aligning product design with the
supply chain: A case study. Supply Chain Management: An International Journal, 17(3),
323-336.

 Porter, M. (1990), The Competitive Advantage of Nations, The Free Press, New York,
NY.

 Reyes, P.M. and Bhutta, K., 2005. Efficient consumer response: literature review.
International journal of integrated supply management, 1(4), pp.346-386.

 SLACK N., CHAMBERS S., and JOHNSTON R., 2010. Operations management.
6th edition. United Kingdom: Pearson Education Limited.

 Stables, D. J. (2001). Quality management systems. Florida: Technikon SA.

 Terkan, R., 2014. Importance of creative advertising and marketing according to

university students‟ perspective. International Review of Management and Marketing,
4(3), pp.239-246.

 The Fashion Law. (2018). Chanel and Co. Are Snapping Up Suppliers to Solidify Their
Supply Chains. [online] Available at: http://www.thefashionlaw.com/home/chanel-
acquires-yet-another-tannery-in-aim-to-control-supply-chain [Accessed 20 Oct. 2018].

 Tokatli, N. (2008). Global sourcing: Insights from the global clothing industry - The case
of Zara, a fast fashion retailer. Journal of Economic Geography, 8(1), 21-38.

 YOUNG, V. M. (2018) „Chanel Tops Luxury Brands in China for Handbags, Apparel:
Second place went to Gucci for handbags and Armani for fashion apparel, according to
an RBC study‟, WWD: Women‟s Wear Daily, p. 2. Available at: http://0-
search.ebscohost.com.brum.beds.ac.uk/login.aspx?direct=true&db=buh&AN=13046850
8&authtype=shib&site=ehost-live&scope=site [Accessed: 30 September 2018].

 Zara brand analysis. (2018). 7. STRATEGIC RECOMMENDATIONS. [online] Available

at: https://sbmldanielle.wordpress.com/2017/06/02/blog-post-title-5/ [Accessed 20 Oct.
2018].

11 | P a g e
  Appendix A

4 V’s Zara Chanel S.A

Operations
Volume (Low) Zara changes its designs every two weeks on (Low) Chanel has committed to produce high quality
average in small quantities, which means high costs products including luxury clothing items. The company
to execute this particular strategy. The company has a focuses on low repetition and using most sophisticated
low impact on the stockholding level; therefore, it has materials and skilled craftsmanship to boost its efficiency.
low repetition and can easily replace its unsold Chanel‟s office in New York manages the entire group and
products after few weeks (Ferdows, Lewis and support many operations such as sales, store design,
Machuda 2004). Zara manages its operational marketing and human resources. The company is
processes while eliminating unnecessary procedures representing a luxury brand, which results in high cost due
and increasing its cost effectiveness as well as to the materials used in production (Fionda & Moore, 2009).
productivity.

Variety
(High) At the beginning of each season, Zara has (High) Chanel changes its designs six times a year and
committed to introduce a new collection, which means offers luxury clothing items which are divided into made-to-
producing up to 50-60% of its line. The Spanish fast wear-clothing and ready-to-wear-clothing. The company
fashion retailer offers complex production planning produces classic products while making variations to the
due to products variations such as changing the materials designs and types such as jersey, tweed and silk.
colours, fabric, engaging several factories and Chanel‟s basic strategy is to be specialised at particular
creating new clothing items in shorter life cycle (Amed business in the market. The company‟s business is
& Abnett, 2015; McAfee et al., 2007). Since Zara has privately held, therefore, it considers as one of a kind
its own production assets, the overall organisational model. Okonkwo (2009) argues that fashion considers as
flexibility and capacity have increased (Ferdows et al., one of the categories of luxury goods. Chanel has
2004). In fact, Zara is well-known for its high level of purchased four of its silk suppliers in an attempt to increase
supply chain responsiveness and acting based on its own production assets, thus, strengthen their production
customer feedbacks. capacity and flexibility. Moreover, the company
corresponds to customers‟ needs by creating a pleasant
shopping experience for them.

12 | P a g e
 Variation in (High) Zara‟s high level of flexibility in its operations, (High) Chanel has possessed a great deal of capital and
demand allows producing larger number of garments in each continued to develop the value of its brand due to its
season based on more accurate short-term commitment to remain private, long-term investment and
anticipated demands. This means that Zara has high level of operational flexibility. The company produces
attained capabilities of fast responsiveness to demand reasonable amount of products along with exclusive
changes due to its highly automated manufacturing clothes. For this reason, Chanel forms a loyal customer
facilities and high capacity. As result, Zara is able to base. The company designs clothes that will meet
achieve fast inventory turnaround and reduce market customers demand while using computer-assisted design
mediation costs (Tokatli, 2008). Whilst Zara is seeking techniques and other automated manufacturing facilities.
to control its costs through its production, it must be According to Fujimori (2018), demand for luxury products
recognised that the company‟s cost strategy is mainly have been tremendously increased due to incremental
related to sustainability. spending by Chanel‟s existing customers.

Visibility (High) In case Zara‟s retailer staffs operate (Low) Workers in Chanel‟s office are highly influenced by
inefficiently, customers will have short waiting Coco Chanel‟s values and vision. The vision stated that
tolerance as service perceptions play a major role in workers have to adjust with the environmental changes
consumer behaviour and communication process. while using past elements. This philosophy has been
Nevertheless, Zara has proven itself to be unique with implemented throughout the operations. Therefore, majority
their business strategies that have allowed employees of their collections are hand-made, which results in high
to be satisfied with their work and improve their staff utilisation especially skilled employees. Developing a
communication skills and involvements. The company product with soul is the ultimate goal of Chanel (Kopp 2003;
engages employees who have proactive approaches Tokyo International Forum 2003).
as well as a high degree of customer contact skills. Chanel is consistently focusing on a local approach that
Zara introduces new clothing items in huge variety allows managing its supply chain effectively. Furthermore, it
and able to replenish its new collections rapidly based enables the company to be centralised and focused at
on customer demand. Due to high visibility, Zara particular business (BusinessWeek, 2007).
requires high unit costs that are mostly covered by its
efficient supply chain and tight integration of various
operations that lead to increasing customer value and
achieving a sustainable competitive advantage.

13 | P a g e

View publication stats