Operation’s strategy Zara's Operating Model Group 09 Elements of operations Strategy at ZARA Fast Fashion Infographics Vertical integration Zara owns and operates a significant portion of its supply chain, including its design, manufacturing, and distribution operations. This gives Zara a high degree of control over its product development and production process. Short lead times Zara's lead times for new products are typically just a few weeks. This is achieved by producing small batches of products frequently and using a centralized distribution system to get products to stores quickly. High responsiveness Information Vertical integration technology Zara collects real-time sales data from its stores and uses this data to inform its product design and production decisions. This allows Zara to quickly respond to changes in customer demand and ensure that its stores have the right products in stock. Zara uses information technology extensively to manage its supply chain and operations. This includes using RFID tags to track inventory levels and using proprietary software to optimize production and distribution How has Zara revamped its strategy over a period of time? Fast Fashion Infographics Increased the use of data and analytics Invested in new technologies Expanding its product range Focusing on sustainability Reduced the number of new products it releases each year Investing in e-commerce Explain how the business model directly relates to how it achieves profitability. Fast Fashion Infographics • Zara's business model is directly related to how it achieves profitability in a number of ways. First, Zara's focus on fast fashion allows it to quickly bring new products to market and respond to customer demand. This helps Zara to generate high sales and maintain a competitive advantage. • Second, Zara's vertical integration gives it a high degree of control over its supply chain. This allows Zara to keep costs low and ensure that products are of high quality. • Third, Zara's use of information technology helps it to manage its supply chain and operations efficiently. This reduces costs and allows Zara to generate more profit. • Finally, Zara's focus on sustainability is helping to reduce its environmental impact and improve its brand image. This is attracting new customers and helping Zara to increase sales and profitability. Examples of how fundamentally different business models can coexist within industry. Food and beverage industry Fast food restaurants: Fast food restaurants offer convenient and affordable meals. They typically have a limited menu and focus on speed and efficiency. Fine dining restaurants: Fine dining restaurants offer a more upscale dining experience. They typically have a wider menu and focus on quality and service. Technology industry Hardware companies: Hardware companies sell physical products, such as computers, smartphones, and TVs. They typically generate revenue from the sale of their products. Software companies: Software companies sell software products, such as operating systems, word processing programs, and video games. They typically generate revenue from the sale of their software licenses or from subscription fees. Retail industry Department stores offer a wide variety of products, including clothing, accessories, home goods, and electronics. They typically have a large physical footprint and offer a variety of services, such as personal shopping and gift wrapping. compare the operations strategy of ZARA with its competitors Lead Time Internet Technology Zara has shorter lead times than its competitors. Zara is able to bring new products to market in as little as two weeks. This is achieved by producing small batches of products frequently and using a centralized distribution system to get products to stores quickly 01 Vertical Integration Zara is more vertically integrated than its competitors. This means that Zara owns and operates a significant portion of its supply chain, including its design, manufacturing, and distribution operations. This gives Zara a high degree of control over its product development and production process. 02 Zara uses information technology more extensively than its competitors. Zara uses RFID tags to track inventory levels and proprietary software to optimize production and distribution. This helps Zara to improve its supply chain efficiency and reduce costs. 03 Responsiveness Zara is more responsive to customer demand than its competitors. Zara collects real-time sales data from its stores and uses this data to inform its product design and production decisions. This allows Zara to quickly respond to changes in customer demand and ensure that its stores have the right products in stock. 04 Table of Comparison with H&M and Uniqlo Feature Zara H&M Uniqlo Vertical Integration High Medium Low Lead Times 2 Weeks 4-6 weeks 6-8 weeks Responsiveness High Medium Low Use of IT High Medium Low Thank You!
