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Zara

Our Team
Group H
Ang Ruixian Chia Joo Leng Jasmine Nah Zheng Xiang Philson Tan Hong Chuan Julian Tan Jian Yue Wong Chih Yong U096845Y U097028B A0067379M A0067407A A0075054J A0075128E

Presentation Agenda
Introduction Competitors Updates Challenges Recommendations

Introduction

About Zara
Founded by Amancio Ortega
In 1975, the first Zara store was opened in La Coruna, Spain

Inditex was formed as the holding company atop of Zara, other retail chains & a network of internally owned suppliers (1985)

About Zara
Focused on opening stores in prime city locations Rapid response to market demands
Offer new clothing styles faster than its competitors

Inditex has become one of the world's largest clothes makers in the fast fashion industry 1,671 branches in 78 countries worldwide

Zaras Supply Chain


Consists of 4 Phases:

1. Design

4. Retail

2. Production
Maintains control over its product design, manufacturing, distribution & retailing operations

3. Distribution

Competition

Competitor
Closest competitor Hennes and Maurtiz (H&M)
Founded on 1947, Sweden Innovating around design and distribution Supply Chain Phases
Design, Production, Distribution and Retail

H&Ms Supply Chain


Production Phase Outsource production process
60% in Asia, 40% in Europe
Low production cost to maximize profit at Asia

Implications to Zara
No production outsourcing
Higher overall production cost

H&Ms Supply Chain


Distribution Phase
Distribution center(DC) located at every country Daily replenishment to increase stock turnover rate Able to meet customers demand on time

Implications to Zara
2 Large DCs located in Spain
Slower replenishment rate Unable to meet customers demand on time

H&Ms Supply Chain


Retail Phase
40% lower product selling cost compared to most competitors

Implication to Zara
Higher product cost due to higher production cost

Competitors
Challenges Zara faced against H&M
Higher production cost Slower replenishment rate Slower at meeting customer demand

Updates on Zaras SCM

Updates on Zaras SCM


Retailers Work Process Distribution Network and Centre Inventory Management

Retailers Work Process


Shifted to third party logistics providers Shifted to factories Enhancements made to PDA

Distribution Network and Centre


Consolidated transportation across Zaras different brands DCs are equipped to handle small scale customer orders

Inventory Management
Implemented sophisticated inventory allocation model

Challenges Faced

Challenges
1. Limitation of company wide interconnectivity 2. Obsolescence and Limitation of Technologies used

Challenge 1
POS Terminals used in store were not interconnected via any in-store network
POS terminals/PDAs could not share information
Cannot determine order requirements accurately No comprehensive overview of the overall inventory and sales information

Sales tallied and audits done manually Slow to transfer data Inaccurate data and inefficient information transmission process

More time and energy spent on admin work Discrepancies between orders and sales

Slow to check whether a nearby store had a particular item

Inefficient store operations Bad customer service Inaccurate stock information

Challenge 2
DOS outdated, no longer supported
Any upgrades rendered DOS-incompatible No guarantee from vendor

Limited capabilities
PDA becoming obsolete

Zara disadvantage Store managers need more functions Business continuity at risk

Unable to find vendor to supply or service hardware Hard to find developers for outdated platform Limited capabilities

Mobile Enterprise Applications

Our Recommendation
Run complete OS system
Huge potential

Gradually Replace PDAs

Benefits
Timeliness and Correctness
Instant access and updates Improve cycle time & efficiency

Employee Responsiveness
Reachability

Scalibility & Updates


More functionalities

Challenges Addressed
Obsolescence of PDA Systems
Technical support issues

Limited of Connectivity
Information Sharing Data Discrepancy

Feasibility Evaluation
Cost
Require customized apps

Time
Training for personnel

Upgrade POS Terminals

Our Recommendation
Intuit-HP Retail Solution
HPs POS Software Full fledged Mouse & Keyboard Industry-proven software

Gradual replacement of DOS systems


Phased Approach

Benefits
Interconnectivity between stores Merging of data into one system
Precise measurement of stocks Global trends and developments

Real-time information sharing


React faster to sales information Improve decision making

Challenges Addressed
Limitations of Existing Network
Automatically collect and process data Reduces need for calls & manual checks

Increasing obsolescence of DOS


Modern, widely supported OS Reduce reliance on sole vendor Future-proof their operations

Feasibility Evaluation
Staff adaptability to change
Need to ensure sufficient training Empower staff to fully utilize system

Risks associated with change


Use phased implementation approach Test stability on pilot stores

Conclusion

Conclusion
ZARAs competitor (H&M)
The need to stay competitive

ZARAs SCM updates


Importance of continual innovation

Challenges & Recommendations


Innovations through cutting-edge technologies

Questions & Answers