Supply chain management is an operation strategy organizations use to achieve sustainable competitiveness. According to Robert, supply chain activities cover everything from product development, sourcing, production, logistics and information systems needed to coordinate these activities (Robert, 2011).Therefore, information is vital and must be available at all time across the supply chain. Information sharing in supply chain management is a strategy that improves customer satisfaction.
Spanish clothier Zara was founded in 1975.The brand is recognized globally for its ability to make and deliver fashionable clothes in small batches to stores quickly. It has developed a superresponsive supply chain different from other retailers. Zara follows a vertically integrated supply chain that incorporates together the functions of designing, sourcing, manufacturing and distributing the products to outlets. Unlike other cloth retailers who hurry to outsource their products, Zara keeps half of the products made in their stores. It maintains a rigid timetable for placing orders and receiving stock. Price tags are put on items before they are shipped
Zara’s retail success is attributed to the following three principles:
Closing the communication loop. Communication is crucial in supply chain management. Proper communication and information sharing between stakeholders and suppliers brings more creative ideas, thus improving the process. Zara’s supply chain is responsible for transferring all information to all stakeholders. The goal of managing information transfer from shoppers to production staff is to close the loop between the customers and production entity.
Sticking to rhythm across the entire chain. At Zara, rhythm begins in retail shop. They are aware of the specific times when customers make orders and they are strict on deadlines. Fulfillment of orders follows the same rhythm .The central warehouse is mandated to prepare shipments for every store. Later, the trucks collect the products that have been already pre-priced and tagged from the stores.
Leveraging capital assets. Zara uses the principle of producing the most complicated products in-house and outsource simple products from other companies. It uses this capital investment to increase responsiveness of supply and chain and the decreasing demands.
At Zara, speed and responsiveness are more important than cost. This is achieved by reinforcing the three principles that ensures that there is a continuous rhythm in supply chain system.
Article: Kasra Ferdows., Michael, A., & Jose. A. Machua. (2004).The 21st –Century Supply Chain: Rapid-Fire fulfillment.HBR, 6, 104-110.