Business Strategy Supply Chain Strategy Supply Chain Operations

Core Pillars Principles Imperatives Policies/Choices Practices / Activities

Carefully interpret
catwalk trends suitable
for mass market
Quickly identify Monitor fashion in TV, films, concerts and other
fashion trends that
may appeal to our Monitor fashion-making
events as they happen
consumer base
Attend trade fairs and ready-to-wear fashion
shows in key cities
Monitor industry publications looking for new
trends
events
Keep an eye on fashion-makers, such as
celebrities

Stay in touch with Hold frequent conversations with store managers

preferences of current
Continuously track Zara customers Tap into sales data captured by Zara's IT system
preferences of
Stay in touch with
customer across preferences of Rely on trend-spotters in places like universities
Replicate in our markets consumers in general and discotheques
designs the most Have a very flat design organization (one not run
current fashion Have a flexible, by maestros)
responsive design team
trends as fast as that can follow the Include the store managers in the development
possible Quickly adapt trends of initial sketches
design to trends Adapt existing designs based on their
and differences Create constant change performance in the stores
across markets in the designs to follow
manufacturing and

the trends Discontinue the production of designs that

Integrate design,

perform poorly
distribution

Discard the least promising designs before

Prune unpromising manufacture
designs early on
Evolve the best Test chosen designs in key stores before large-
among many good scale launch
designs
Design

Discontinue those designs that do not perform

Continue to change our well
designs as the season
evolves Tweak remaining designs to match changing
preferences

“ T HEM ATI C R AN GE” IS TH E D I V ERSITY O F TO PI C S COV ERED BY TH E S UPPLY C H A IN STR ATEGY

Source mostly, but not Source raw materials mostly from European
changing fashion trends

exclusively, from providers.

Respond quickly to

suppliers close to the

Sell an ever-changing variety of affordable

place of manufacture. Establish a few companies in Hong Kong for

CO N CEPTS B E LOW TH I S L IN E A PPLY TO C E RTA I N F U N C TI ONS O N LY
and trendy fashion items in beautifully

Source our raw sourcing from the Far East

materials in a way
arranged and well located stores.

Facilitate the in-season Purchase about half of the fabric as ‘gray’

CO N CEPTS A B OV E TH I S L IN E A PPLY B US I N ES S - WIDE

that promotes updating of the fabric (undyed)

flexibility and in as little as one week
reduces lead time Dye, pattern and finish the fabric in a 100%
Transform new owned subsidiary
Produce the riskiest,
designs into most time-sensitive Manufacture in 20 fully owned factories,
finished items in small lots including 18 around Zara’s HQ in Arteixo
Dedicate our internally or under
products, with capacity to the contract Heavily automate Zara’s factories, specializing
the speed and most fashionable them by garment type, using just-in-time
flexibility items and the most Focus our own capacity system
required to keep capital-intensive on performing capital-
scarcity and opportunity

up with the latest activities intensive and finishing Focus Zara’s factories on pattern design and
activities cutting, and on final finishing and inspection
Create a climate of

trends
Outsource the sewing of garments to 450 small
in the stores

Even for in-house workshops in Galicia and nearby Portugal

Outsource the rest garments, outsource
Manufacturing

of the items and labor-intensive, scale- Provide these long-term subcontractors with
insensitive activities to technology, logistics and financial support
activities to nearby contractors
contractors, giving
Supply &

Carry out inspections of subcontractors, and

preference to those Outsource the
nearby production of more
basic, price-sensitive
items to lower-cost
manufacturers
insist they comply with local tax and labor
legislation
Source basic items from Asian manufacturers
with no long-term contracts with Zara

Maintain a dedicated 400,000 m2 facility in

Move all Zara
Rely on beautiful stores

Arteixo
merchandise through a
promote the brand
in key locations to

centralized DC in Spain Operate this facility on a dual-shift basis

Have a dedicated, Consolidate Zara Feature a mobile tracking system capable of
centralized merchandise in handling 45,000 garments per hour
distribution system satellite centers near
for Zara important markets far Have satellite consolidation centers in
from Spain Argentina, Brazil, Mexico, and other key cities
Ship to each store with Ship to each store twice a week
Meet the enough frequency to
demand of a keep styles fresh Dedicate two days a week to one part of the
rapidly Constantly adjust Time the shipments by
network, and two days to the other
expanding store the sequencing, size time zone, to afford In the early morning, pack and ship orders to
network, and routing of maximum ordering the Americas, Middle East and Asia
exploiting deliveries flexibility to most
stores In the afternoon, pack and ship the orders for
economies of
the European stores, based on latest orders
scale Retain the flexibility to
accommodate surges Run the DC generally at about half its rated
in demand during the capacity, with 1,000 permanent employees
start of the selling
Keep in the seasons
distribution system Hire several hundred temporary workers to
complement the permanent employees
the ability to match Use third party delivery
increases in
Distribution

services Ship about 3/4 of the merchandise by truck to

demand stores in Western Europe
Increase the capacity
of the distribution Ship the remaining 1/4 by air via KLM and DHL
system to match the
demand from
Build a second DC in a logistics cluster, with
additional stores
120,000 m2 of warehouse space

“ ST R AT EGY -O PERATIONS CO NT I NUUM ” GO ES F RO M A B STR AC T/GENERA L STR ATEGY TO CO N CR ETE/ SPEC IF IC AC TI V I TIES