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8. Case: Zara Supply chain Management Practices

Question (a)
The answer is required to cover a brief introduction of Zara, a brief
description of vertically integrated supply chain management, a detailed
explanation of how Zara used its vertically integrated supply chain to its
advantage, and a discussion on the drawbacks of having a highly vertically
integrated supply chain for a fashion retailing company.
The answer briefly describes the vertically integrated SCM, and explains
how Zara used its vertically integrated supply chain to its advantage
through pull system, shorter response time, flexibility etc. It also discusses
the drawbacks of such an integrated supply chain, such as lack of
economies of scale, increased costs, rigid structure etc.
While the answer has many relevant points, it could have indicated how the
vertical supply chain structure had impacted Zaras performance.
Question (b)
The answer is required to cover a brief description of Zaras expansion plans
in Asia and America, and a detailed discussion on what modifications the
company should bring in its supply chain, in view of its expansion and why.
The answer states that Zara should consider many changes, especially in
production and logistics, before venturing into new markets. Zara should
complete its expansion in the European markets first, and then decentralize
its production process to have a production unit for different countries along
with distribution centers before venturing into Asian markets. The answer
adds that Zaras vertical integration model might not be continued as
efficiently for too long, according to present business scenario.
While the answer has some relevant points, it should have suggested
modifications for each of the elements in the production process, such as
spotting trends, designing, production, distribution, and store layout etc.
The answer lacks in-depth discussion of the issues involved.