ZARA
ZARA. Baki USLU Barış BOZOĞLU. Outline. History of Zara The Textile and Apparel Industry The Zara Model The Problem (outsourcing benefits and risks) Questions. History of ZARA. 1963 The founder of Zara, Amancio Ortega Ganoa Started his career as a clerk 1975
ZARA
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Presentation Transcript
ZARA Baki USLU Barış BOZOĞLU
Outline • History of Zara • The Textile and Apparel Industry • The Zara Model • The Problem (outsourcing benefits and risks) • Questions
History of ZARA • 1963 The founder of Zara, Amancio Ortega Ganoa Started his career as a clerk • 1975 First Zara store opened in La Coruna, Spain • 1989 There were 82 Zara stores in Spain Ortega began international expansion in Portugal, Paris, New York
In 2001 Zara was a world brand with 1200 stores in all around the world • Most of the products were produced in Spain
The Textile and Apparel Industry • Global textile and apparel industry was 5.7% of the whole manufacturing output of the world.(1999) • The clothing market in the major countries $580 bilion • 40% labor cost in textile • 60% labor cost in apparel • Apparel production is related to the fabric
The Textile and Apparel Industry in the E.U and Spain • Textile and apparel workers consist of 7.6% percent of total E.U manufacturing workers • Italy 31% • U.K 15% • Germany 14% • France 13% • Spain 9% • Portugal 6%
E.U is the second textile exporter in the world Spain • Spanish textile and apparel industry was comprimised mostly of many very small firms and had not been strong in R&D. • Wages increase
THE ZARA MODEL Zara’s Planning and Design Cycle • Designers start to work on designing collection a year ago for initial collection • There are 200 designers • They made 11.000 designs every year
Patterns and Samples • In some cases designs made by 3rd party suppliers
Production Sourcing and Scheduling • 50% of the garments are outsourced • Garments with fashion styling manufactured in Spain basics and knits are outsourced • Zara’s season inventory • In the beginning of the season 60% of the collection is ready while others are 80% • 25% of the season’s collection is stored in stores in the beginning of the season • 85% of the inhouse production is that season’s production
In-house Manufacture • 40% of fabric produced in-house • Cutting • Sewing
In Season Production • Modified in response to market demand • If an item was not selling • If an item sells • If a product sell very well • If a product’s sale is not satisfactory
Distribution • Zara’s distribution center in Arteixo • New distribution center in Zaragoza • Shipment
Retailing • Store managers decide for the items from the distribution center • Stores receive new inventory several times a week • Sale
Pricing Strategy • Pricing strategy= cost + target margin • Single Tag to Bar Code
Growth Strategy • Stores operated by Zara, franchise, alliances • USA market
Sourcing Dilemma? • Increase outsourcing vs. keeping current model
Benefits and Risks of Outsourcing • Economies of Scale; • Manufacturing costs is reduced with outsourcing by aggregating orders from different buyers • Focus on Core Competency; • A careful decide on what to outsource helps the buyer to focus on its core competency • Zara has the ability to give a quick response
Increased Flexibility; • Ability to better react to changes in customer demand • Ability to use the supplier’s technical knowledge to accelerate product development cycle time • Ability to use the supplier’s technical knowledge to accelerate product development cycle time • Conflicting Objectives; • Flexibility vs. cost reduction
