Zara Essay

1626 Words7 Pages
1) How does Zara add value to the distribution side of its supply chain? Explain how each action or strategy adds value. Zara has added value to its distribution network by first concentrating on its distribution centers. All goods are shipped through its main distribution center, and extra space is built into the distribution center to handle economic or seasonal surges. Zara has tailored its working hours at the distribution center to match demand, and thus pays for only the labor needed to achieve accurate and timely shipping. While it has 800 regular employees, it has at its disposal up to 400 extra part-time employees as needed to meet demand and maintain lead times during periods of high demand in peak seasons. Zara has also opened a second smaller distribution facility in order to assure adequate capacity in the distribution chain. By having more distribution capacity than is required at all times, Zara will not be caught short should capacity suddenly surge, such as during the holiday seasons. Another innovative approach is to ship clothing on hangers and racks, ready for display in the retail outlets. By taking, this approach Zara can cut inventories while adding value to the distribution by taking many of the steps at the end retailers out of the loop. There is no need to unpack or iron clothing, then put it on racks for display; the clothing comes already on the racks, with price tags already on, so all the retail outlet must do is uncover the rack and roll it out onto the sales floor and the clothes are ready for sale. By taking this approach, the number of needed employees is reduced, and stock is available for sale much faster than any of the competitors. The extra cost in material handling and clothing racks is absorbed by the need for less labor and faster distribution to the retailers. Adding to the value is the fact that the shipments are 98.9%
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