Assignment 1 – Gustavo Barros

1.
Zara's advantage in having a very responsive supply chain is its ability to quickly adapt to

changing fashion trends and consumer preferences. This allows it to design, manufacture and

ship new apparel to stores within weeks, while brick-and-mortar retailers can take months to do

the same.

Also, by producing in smaller quantities for each style and replenishing regularly based

on sales data, Zara reduces the risk of overstocking and having to decline items that don't sell

well drastically. It also helps maintain a sense of scarcity, which can stimulate demand. Another

advantage is to give customers a reason to visit Zara stores more often, creating a sense of

excitement and urgency to make a purchase. This strategy also promotes the feeling that there

is always something new to discover.

2.

Inditex, Zara's parent company, chose to both in-house and outsource production to

balance efficiency and flexibility. In-house manufacturing provides greater control over

production processes, quality, and delivery times, which is essential to react quickly to changing

trends. Outsourcing production, especially in Asia, can be more cost-effective and allows the

company to scale up production as needed without much investment.

 Manufacturing in Europe allows Zara to react more quickly to changes in demand and

trends, due to shorter shipping distances and delivery times than manufacturing in Asia. Also,

proximity to production facilities in Europe facilitates tighter quality control and monitoring,

which can be more difficult when production is outsourced to remote locations.

Also, it offers flexibility in allocating production between internal and external facilities,

depending on various factors such as fluctuations in demand, fashion cycles, and disruptions.

3.

Zara's strategy of sourcing products with uncertain demand from local manufacturers

and those with predictable demand from Asian manufacturers is rooted in risk management.

Items with uncertain demand are likely to become hit-or-miss fashion items. By sourcing locally,

Zara can quickly respond to the success of these items without the long lead times and

minimum order quantities involved in sourcing responses from Asia.

4.

Restocking in stores a few times a week gives Zara several advantages over less frequent

schedules. New launches and additions create a sense of innovation and variety, prompting

customers to visit the store more often to see the latest items.

Regular stock replenishment allows Zara to keep smaller inventories in individual stores,

minimizing the need for expensive inventory and reducing the risk of unsold items. Also, quick
additions help reduce the need for steep discounts on out-of-season or stagnant items as the

store can adjust its inventory based on real-time sales data.

5.

Zara's responsive add-on infrastructure is great for online and retail sales. Online sales,

help to meet customers' expectations for fast shipping and diverse product offerings. For retail

sales, it encourages traffic and purchases by constantly offering new items and creating a sense

of urgency.