CASE STUDY

Zara Apparel ManufacLurlng and 8eLall

1oyoLa A Clobal AuLo ManufacLurer


SuppIy Chain Management
Mr. Adnan Shehzad
Monday (6-9)




Submitted By:
Miqdad Hussain (8294)





aLe
21]November]2011
2ara Appare| Manufactur|ng and keta||
1) What advantages does 2ara ga|n aga|nst the compet|t|on by hav|ng a very respons|ve supp|y cha|n?
Ans) 8y havlng a very responslve supply chaln whlch has a cycle Llme of flve Lo slx weeks ln comparlson Lo 6 monLhs of
lLs compeLlLors Zara's producLs on dlsplays maLch cusLomer preferences much more closely Lhan Lhe compeLlLlon 1he
resulL Zara sells mosL of lLs producLs aL full prlce and has fewer markdowns
2) Why has Ind|tex chosen to have both |nhouse manufactur|ng and outsourced manufactur|ng? Why has Ind|tex
ma|nta|ned manufactur|ng capac|ty |n Lurope even though manufactur|ng |n As|a |s much cheaper?
Ans) lndlLex has chosen Lo have boLh lnhouse and ouLsourced manufacLurlng Lo have Lhe besL mlxLure of
responslveness and efflclency flexlble and qulck sources ln Lurope and low cosL sources ln Asla 1hls was Lhe reason Lo
have manufacLurlng faclllLles ln Lurope as well as Asla
3) Why does 2ara source products w|th uncerta|n demand from |oca| manufacturers and products w|th pred|ctab|e
demand from As|an manufacturers?
Ans) roducLs wlLh uncerLaln demand requlre hlgh responslveness whereas a producL havlng predlcLable demand could
concenLraLe on achlevlng efflclency Pence producLlon wlLh uncerLaln demand ls produced ln Lurope Lo aLLaln flexlblllLy
and qulck sourclng and producLlon wlLh predlcLable demand concenLraLes on low cosL Aslan Sources
4) Why |s 2ara bu||d|ng a new d|str|but|on center as |ts sa|es grow? Is |t better to have the new d|str|but|on center
near the ex|st|ng one or at a comp|ete|y d|fferent |ocat|on?
Ans) Zara focuses on hlgh responslveness Lo aLLaln sales Zara's responslveness ls lncreased by addlng new dlsLrlbuLlon
sLores as Lhe sales grow 1he esLabllshmenL of new dlsLrlbuLlon cenLer near Lhe exlsLlng one or aL compleLely dlfferenL
locaLlons depends upon Lhe company's focus lf lL Lowards efflclency Lhen new dlsLrlbuLlon cenLer can be creaLed near
Lhe exlsLlng one Lo reduce dellvery cosLs or has sLores far away near Lhe cusLomer Lo achleve responslveness
S) What advantages does 2ara ga|n from rep|en|sh|ng |ts stores tw|ce a week compared to a |ess frequent schedu|e?
now does the frequency of rep|en|shment affect the des|gn of |ts d|str|but|on system?
Ans) 8y replenlshlng lLs sLores fasLer Lhan lLs compeLlLors Zara's producLs on dlsplay maLch cusLomer preferences much
more closely Lhan Lhe compeLlLlon 1he resulL ls LhaL Zara sells mosL of lLs producLs aL full prlce and has abouL half Lhe
markdowns ln lLs sLores compared Lo Lhe compeLlLlon
1hls frequency of replenlshmenL causes Zara's Lo have manufacLurlng faclllLles ln Lurope where on Lhe oLher hand all
oLher compeLlLors have moved Lo manufacLurlng ln Aslan counLrles Lo achleve low cosLs Secondly Lhe frequency of
producL shlpmenL from manufacLurer Lo reLall sLores has lncreased greaLly resulLlng ln hlgher cosL
6) What |nformat|on |nfrastructure does 2ara need |n order to operate |ts product|on d|str|but|on and reta||
network effect|ve|y?
Ans) Zara focuses on hlgh responslveness 1hls requlres greaL coordlnaLlon beLween Lhe overall supply chaln of Zara 1he
passlng of Llmely and accuraLe lnformaLlon LhroughouL Lhe supply ls requlred 1hls can be done by heavy lnvesLmenL
lnLo LlecLronlc 8esource lannlng sysLems 1hls wlll keep all of Lhe parLlclpanLs ln Zara's supply chaln llnked LogeLher and
help manage Lhelr producLlon dlsLrlbuLlon and reLall neLwork effecLlvely

@oyota A G|oba| Auto Manufacturer
1) Where shou|d the p|ants be |ocated and what degree of f|ex|b|||ty shou|d be bu||t |nto each? What capac|ty
shou|d each p|ant have?
Ans) 8aLher Lhan havlng speclallzed local facLorles for each markeL 1oyoLa should focus on cenLrallzed producLlon aL low
cosL cenLers A medlum level of flexlblllLy could be encompassed ln Lhe producLlon cenLer as a buffer agalnsL
uncerLalnLy Pavlng Lhls mlx of efflclency and responslveness 1oyoLa would be able Lo caLer Lo Lhe local markeL as well as
dlfferenL markeL whlch are nearby 1he capaclLy would enLall Lhe currenL demand for Lhelr producLs of Lhe markeLs
whlch could be LargeLed Lhrough Lhese cenLrallzed planLs WlLh Lhe lncreased amounL of compeLlLlon havlng cenLrallzed
low cosL producLlon faclllLles ls Lhe besL opLlon

2) Shou|d p|ants be ab|e to produce for a|| markets or on|y spec|f|c cont|ngency markets?
Ans) lf Lhe concenLraLlon of 1oyoLa ls Lowards efflclency Lhen ?es Lhelr planLs should be able Lo produce for all markeLs
Lhey alm Lo caLer lf Lhe alm ls Lowards achlevlng responslveness Lhen caLer only Lo conLlngency markeLs

3) now shou|d markets be a||ocated to p|ants and how frequent|y shou|d th|s a||ocat|on be rev|sed?
Ans) 1he planLs should be esLabllshed ln low cosL cenLers of Lhe world 1hen all nearby counLry's markeLs should be
consldered as LargeLs for Lhese planLs 8ecause creaLlng cenLrallzed planLs would requlre heavy lnvesLmenLs LhaL ls why
Lhls allocaLlon cannoL be very frequenLly revlsed Pence revlslon should be made very rarely

4) What k|nd of f|ex|b|||ty shou|d be bu||t |nto d|str|but|on system?

Ans) A medlum level flexlblllLy ln Lerms of producLlon quanLlLy and dlfferenL deslgn should aL leasL be malnLalned ln Lhe
dlsLrlbuLlon sysLem ln order Lo creaLe buffers for lnsecurlLles and Lo meeL Lhe ever changlng demand of consumers

S) now shou|d th|s f|ex|b|e |nvestment be va|ued?
Ans) llexlble lnvesLmenL should be greaLly valued as ln Loday markeL uncerLalnLy ls really very hlgh Pence you cannoL
[usL lnvesL ln one place llke for 1oyoLa esLabllshmenL of huge producLlon planLs aL cenLral locaLlon ?ou need Lo dlverslfy
and have as flexlble lnvesLmenL as posslble

6) What act|ons may be taken dur|ng product des|gn to fac|||tate th|s f|ex|b|||ty?
Ans) lL could be Laken lnLo conslderaLlon LhaL Lhe producL belng deslgned ls noL only llmlLed Lo one markeL buL can be
accepLed and used ln servlng oLher markeLs Loo 1hls ln Lurn wlll lncrease Lhe flexlblllLy of Lhe producL deslgn