The most
different part in the supply chain management between ZARA and H&M is that
ZARA has its own factories to produce its collection, but H&M does not.
ZARA
(1)
ZARA
has followed a pull model because it creates more than one thousand designs
every month according to sale volumes in physical stores and current and the
latest trends. As in the “Customer’s Relation”, ZARA monitors its customers’
spending in the store to evaluate and understand what kinds of designs will be
accepted and bought by customers and then the ideas will be considered in the
next designs.
(2)
ZARA
has a fast turnover because each good is produced in a few quantities, which
can make it realize that what kinds of designs are attractive and accepted for
its customers. Moreover, it is also a good chance for ZARA to create new
designs in the market and lower the inventory rates.
(3)
Since
ZARA has its own factories to produce its collection, the only thing is to find
the suitable supplier which can provide raw materials with high quality for
ZARA. In order to avoid that it will be over-dependent on some supplier, ZARA
tries to find as many suppliers as possible; this strategy also shortens the
reaction time for the suppliers to deliver materials and decreases purchasing
costs, which contributes to ZARA’s features of low prices and fast
distribution.
(4)
ZARA
has very strong IT systems for its good distribution. All the finished products
are shipped back to Spain, the central location and headquarter, and then these
goods are distributed to different countries.
Note: In this analysis, we only
focus on the production and distribution of ZARA. As for the rest part of ZARA’s
supply chain strategy, please take a look in “The most representative strategy
between ZARA and H&M: Customers’ Relation.”
H&M
(1)
Production
and Outsourcing:
a. Through
local production offices, H&M finds the best independent suppliers and
outsources to them to produce its collections.
b. H&M’s
production is situated in those countries where there are low labor cost, such
as Mainland China and Turkey, to decrease its costs. Around 60% of its
production is in Asia.
c. The
production offices are responsible for purchasing raw materials and choose the
best manufacturers according to the quality asked by the design department in
the headquarter.
d. Even
when checking on the quality of its products, the offices should try their best
to avoid their production environment from pollution.
(2)
Distribution
and Product Management:
a. More
than 90% of the finished products are delivered via sea and land
transportation; the rest proportion is transported by air.
b. The
logistic center deals with massive information about the transportation of
products by using ICT in order to increase its efficiency of running and
delivering.
c. H&M uses its order
tracking system to see results of the achieved percentage of scheduled progress and goods examination.
d. ICT is linked to the order tracking system, which controls its products
from designing, manufacturing, distributing to selling in physical stores.
Sources:
Great post. Keep it up. Thank you so much for sharing your valuable blog. Warehouse Audit | Inventory Audit | Visibility Audit
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