Principles of Supply Chain Management Report Sample
Assignment Brief
Choose a fashion shop that is locally operated but not necessarily locally owned. It can be an existing small business, or a start?up. Refrain from using companies that you have no association with and are located on the Internet. You are to ensure that you know the owner(s) or someone in the organisation who can answer any questions posed to them.
Your task in this assignment is to evaluate the supply chain of the chosen company, applying the knowledge that you have learnt in this subject, whether the company’s supply chain, as implemented, is achieving its objectives i.e., being responsive or efficient to its customers’ needs. The process of assessing the company’s supply chain must meet the following requirements:
1. Introduction
• Explain how the company, and by consequence its supply chain, competes in its industry. You can look at the competition, the suppliers in the industry, and the regulations that govern them, customer expectations in the supply chain, including those of the end consumer, and so on, which would justify the approach the company is taking. The statements that you make must be supported by evidence from credible and independent references.
• You need not attempt to address this section using PESTLE, Porter’s 5 Forces, SWOT, etc. Base your assessment on anecdotal evidence obtained from the owner(s) of the company themselves, or publicly available information.
2. The Company’s Inputs
• Look at the processes that are involved in the purchase of goods and services for the company, either to meet planned or actual demand. Your emphasis is on how the company selects its suppliers, establishes policies to facilitate these processes, schedules the receipt of the deliveries, and consequently assess the suppliers’ performance.
• Explain how the input processes are set up in the company, and how it supports the company’s stated objective to its customers, using concepts learned in this module, and correlated by observations and interviews from the company.
3. The Company’s Operations
• You are then to explore and explain whether the processes that transform the purchased inputs from (2) to a finished product or service, to meet demand. The focus here is to discuss the scheduling of production, the measurement of its performance, and the management of the inventory. Provide evidence to support your views.
• Explain how operations of the company addresses or not, the challenges of balancing supply and demand in the supply chain. Based on the concepts learned in the module, explain the ways that the company could address this primary issue, therefore, satisfying the needs of both the company’s customers and its suppliers.
4. The Company’s Outputs
• This concerns the company’s processes that provide the finished goods and services to its customers. Identify and explain the workings of the company’s order management, warehouse management, and transportation management.
• Make a brief assessment as to whether the company and its supply chain is achieving its objective of being responsive or efficient in meeting the needs of its customers. This can be done by evaluating the business performance of the company, to assess whether revenues are increasing, decreasing or staying stagnant.
Solution
Introduction
Zara a locally managed but not necessarily owned clothes retailer has risen to prominence as a result of the development of a distinctive and cutting-edge supply chain strategy. University Assignment Help, This research will examine Zara's competitive landscape and supply chain to determine whether the company's present supply chain strategy effectively accomplishes the firm's goals of responsiveness and consumer happiness.
Competing in the Fashion Industry
Zara works in the fast-paced and ever-changing fashion sector which is characterised by swiftly shifting consumer preferences, short product life cyclesand fierce worldwide competition. If the organisation wants to remain innovative and at the top of its field it must face difficult obstacles. Zara on the other hand has developed a distinct fast fashion business strategy that has enabled them to compete successfully in this volatile industry(De Angelis et al., 2018).
Supply Chain Strategy and Approach
Zara's fast fashion attitude serves as the core of the company's supply chain strategy allowing it to quickly adapt to changing consumer preferences and industry trends. Unlike traditional retailers Zara prioritises vertical integration by handling the majority of its supply chain in-house. As a major percentage of its items are created in-house the company is nimble and can release new collections with shorter lead times.Zara's supply chain is heavily reliant on its production and sourcing strategies. The company's close relationships with its suppliers, many of whom are headquartered in Spain and other neighbouring European countries enable for prompt and well-coordinated supply of supplies to the company's manufacturing facilities. Zara's proximity to its suppliers enables it to respond quickly to changing fashion trends, lowering the possibility of stockpiling and price cuts. Zara also prioritises local response in the supply chain(Marah, 2023). Rather of depending simply on forecasts, the company employs a fast-to-market strategy in which things are created in smaller batches and quickly restocked in response to immediate feedback and market demand. This strategy improves supply chain efficiency by decreasing the possibility of surplus inventory and price reductions.
Meeting Customer Expectations
Consumers today want quick access to the latest trends as well as reasonably priced stylish clothing. Zara's supply network was created specifically to fulfil these increased demands. Zara's ability to regularly offer new styles may appeal to consumers who like to be on the cutting edge of fashion.Zara's effective supply chain enables the company to shorten the time it takes for products to move from the design phase to the retail phase(Shabir &AlBishri, 2021). Zara's quick turnaround times distinguish it from its competitors and endear it to a loyal consumer base eager to receive the current trends as quickly as possible.
Regulatory Consideration
Zara has proven that it adheres to the environmental and labour standards that regulate the garment sector. Inditex Group Zara's parent company has a strong code of conduct that requires ethical working conditions and the use of sustainable materials in all of their goods. Customers increasingly place a larger importance on such ethical issues and Zara's dedication to ethical business practises has helped to improve both the company's image and the number of customers who shop there. Zara has been able to compete successfully in the fast-paced fashion business thanks to its unusual supply chain strategy that promotes vertical integration, local responsiveness and a fast-to-marketapproach(Wren, 2022). Zara's success may be traced back to the company's ability to respond quickly to changes in consumer demand for new trends. Because of its exceptional record for meeting and exceeding consumer expectations the brand has grown to become a prominent participant in the worldwide fashion sector. By diving further into Zara's supply chain this inquiry will reveal whether or not the corporation is meeting its goals of responsiveness and efficiency in providing its customers' expectations.
The Company’s Inputs
Zara values the supplier selection process as an important component of its supply chain. The company chooses its suppliers carefully because it expects them to meet its quality standards, finish orders on schedule and operate in a sustainable manner. Zara is able to meet its consumers' expectations and stay current with fashion trends because it maintains stable connections with its suppliers. Zara's purchasing practises are designed to find a compromise between having enough goods on hand to meet demand while also keeping costs down. As part of the company's fast-to-market strategy, smaller quantities are produced and items are refreshed more frequently. This strategy is supported by real-time sales statistics and client feedback (Shabir &AlBishri, 2021). Zara may avoid overstocking while still meeting its clientele' unquenchable demand for the latest in runway fashion by using this strategy. Zara's close relationships with its suppliers aid in the delivery planning processes of the company.
The company's well-developed communication channels allow for the fast resolution of delivery concerns, ensuring a steady supply of goods to satisfy fluctuating market needs. Zara also has a sophisticated system for assessing the quality of its suppliers' work. Consistent monitoring and fast repair of any problems detected ensure that the supplier's high standards for product quality, on-time delivery, and ethical behaviour are maintained. Zara has established a dependable and adaptive supply chain through close collaboration with its suppliers, which has contributed to the company's sustained success as a fashion hub. Setting up input processes strategically is critical to achieving Zara's goal of providing its esteemed customers with trendy, high-quality fashion products that are exceptionally responsive, which is influenced by the ideas presented in this module and supported by observations and interviews. Zara is able to constantly deliver on the high standards set by its clients and preserve its position as a forerunner in the extremely competitive fashion business by properly coordinating its multiple input processes.
Delivery Planning
On-time material delivery is critical to the success of Zara's fast fashion business approach. As part of its fast-to-market strategythe company works closely with its suppliers to set appropriate delivery dates. Zara's frequent and low-cost acquisitions enable more flexible production planning and shorter lead times. The delivery schedules are continuously checked and changed as needed to ensure a consistent supply of materials to satisfy the ever-changing demands of the fashion industry. As the company's lines of communication with its vendors are always open any delivery issues are swiftly handled and rectified.
Evaluation of Supplier Performance
Zara understands the importance of continually evaluating the performance of its suppliers in order to preserve a competitive advantage. The organisation has a thorough approach for evaluating the performance of its suppliers, which takes into account factors such as product quality, on-time delivery, adaptability to market fluctuations and adherence to ethical and sustainable norms(Shabir &AlBishri, 2021). This evaluation is ongoing in order to identify issue areas and develop a culture of continuous improvement and collaboration among Zara and its suppliers.
Supporting the Company's Objectives
Zara's input procedures are intended to assist the company's aim of providing clients with the most up-to-date premium fashion at unrivalled speed and flexibility. Zara ensures that it can respond quickly to changing consumer tastes and fashion trends by being choosy with its suppliers. The procurement practises enable the organisation to better estimate inventory requirements and avoid both overstocking and product shortages. Zara is able to meet its clients' requests for quick access to the latest fashion items because the company prioritises achieving delivery dates. Zara ensures that its partners are capable of supporting the fast-paced business strategy and ethical standards that distinguish the Zara brand through continuous supplier reviews. By virtue of its commitment to effective supplier collaboration and performance assessment Zara is able to keep ahead of the competition in the fashion sector and remain a go-to site for consumers looking for the latest trends. Aligning the strategic input process with Zara's goals assists the company in meeting its objectives which promotes customer pleasure and confidence in the brand.
Company’s Operations
The production is aligned with existing demands and prediction of future purchasing patterns. The final orders are sent to factories and warehouses; hence, each store receives stock just in time. This reduces the cost of operations and saves retail space used for layout, designing in-store promotions, and effective use of retail spaces of Zara Singapore. This operation has helped Zara manage demands when most of its stores were closed during the pandemic. Since each store receives stock just in time, most stores did not face the issue of managing stockpiling. This also helped convert stores into fulfilment centers when Zara chose to sell online in Singapore. The operational strategy is generally supported with determinants like the location of stores, production units, warehouse, and transportation system.
Just-in-time inventory management requires strategic management and planning, which helps optimize companies' supply chains to meet demands and align with the strategic positions (Seeling et al., 2021). The primary strategic choice of Zara in Singapore is creating a unique market position with new styles as it faces issues in managing competition from local vendors and shops. In addition, Singapore is well connected to other neighbouring nations, which helps all the fashion shops like Zara and local ones to get supplies quickly. Zara Fashion has successfully developed its operational model to align with meeting demand and challenges in the supply chain. In addition, the company follows a just-in-time inventory management system, which helps meet seasonal demands, aligning with the strategic option of providing new styles. At the same time, this also reduces the wastage of resources. The company uses data-driven technologies to schedule its production and each store's inventory management (Bijmolt et al., 2021). For this, the Point of Sale is directly linked with the warehouse and the company's head office; this helps plan inventories for each store-based purchasing pattern. This strategy also helps in developing designs and patterns which customers frequently purchase.
Although, this model adopted is not sustainable as Zara consumes more resources for launching its styles and developing production units accordingly. Since Singapore is well connected with other countries, Zara can procure materials easily. Although, the just–in–time management requires speedy transportation of materials. For this, Zara uses different logistics like air, road, and ships, which not only increases costs but impacts the sustainability of the environment. The company requires logistics more frequently than other brands, thus impacting the environment. In addition, the company operates in the retail sector, requiring more textiles and other resources for production to meet the demand and its strategic choice of launching more styles. Thus, supply chain sustainability in all verticals is essential for aligning with changing environmental laws and ethical business strategies. In addition, the company’s operations are primarily aligned with an offline store strategy, while the company is expanding through its online mode, for which operations and supply chains need to be modified to align with changing customer needs and market forces (Caro & Sadr, 2019).
Company's output
The output of Zara's business model in Singapore can be subdivided into order management, warehouse, and transportation. In addition, the output of company operations is directly linked to its supply chain. Besides, Zara adopts a centralized system from the main head office, which analyses and evaluates stock requirements of different fashion products based on which each store is supplied a quantity. Global companies like Zara face issues in managing orders, transportation, and warehouse, in case production units are in different countries. The companies choose production units based on the ease of locating supplies for their final products. Currently, Zara faces high costs in managing activities like orders, warehouse, and transportation, while supply chain management is complex as production units are segregated in different countries.
Order Management
Every Store of Zara submits its stock list to the zonal and head office. Meanwhile, every store is focused on selling other products and categories in the fashion context. Once these stocks are out, new batches are received per stocks ordered in every category. The head office mainly does the order management, as the same stocks are not fulfilled, while the production is based on subcategory demands. For example, any Zara store will submit orders based on stocks of subcategory like women bottom or dresses. Like other retailers, the stocks do not remain the same, while the head office will review the demand of that store with spending patterns and supply stocks before other category stocks are out. This helps in managing demands and providing new arrivals.
Transportation and warehouse management- Since Zara follows heterogeneity in mass production, the stores do not order repeats for any categories. Zara produces each category in limited quantities, while the order and transportation of products are based on the selling patterns of the brand. The company produces more of the more demanded stocks, while styles and designs differ (López et al., 2022). The location of Zara factories and production units in Bangladesh and other developing regions within Asian continents. Even though the production is done in Asian countries, most stocks are sent to Spain, where the main head office is. From the head office, distribution and transportation of production takes place (Xuejie, Chang &GuangHao, 2019). Zara carefully develops and chooses its production units so that the transportation to regional and local warehouses is done in less time, supporting its just-in-time inventory management systems and centralization strategic choice. The transportation from the main head office and sometimes the production unit is done to a regional warehouse in Singapore, where stocks reach different fulfillmentcenters. The distribution of the products from the warehouse is managed based on data obtained from different stores and strategically managed with upcoming stocks of seasonal arrivals. It is a data-driven process that helps manage inventories within the warehouse efficiently, reducing costs and aligning with the company's pulling inventory management (Jocevski et al., 2019). In addition, Zara does not disclose its treatment of returned stocks from every store which is not sold; hence warehouse management mainly focuses on fulfilling new arrivals from production units to stores.
Reference
Bastas, A. & Liyanage, K., (2018). Sustainable supply chain quality management: A systematic review. Journal of cleaner production, 181, pp.726-744.
Bijmolt, T. H., Broekhuis, M., De Leeuw, S., Hirche, C., Rooderkerk, R. P., Sousa, R., & Zhu, S. X. (2021). Challenges at the marketing–operations interface in omni-channel retail environments. Journal of Business Research, 122, 864-874. https://doi.org/10.1016/j.jbusres.2019.11.034
Caro, F., & Sadr, R. (2019). The Internet of Things (IoT) in retail: Bridging supply and demand. Business Horizons, 62(1), 47-54. https://escholarship.org/uc/item/7r7714k7
De Angelis, R., Howard, M. &Miemczyk, J., (2018). Supply chain management and the circular economy: towards the circular supply chain. Production Planning & Control, 29(6), pp.425-437.
Jocevski, M., Arvidsson, N., Miragliotta, G., Ghezzi, A., & Mangiaracina, R. (2019). Transitions towards omni-channel retailing strategies: a business model perspective. International Journal of Retail & Distribution Management, 47(2), 78-93.
López, T., Riedler, T., Köhnen, H., &Fütterer, M. (2022). Digital value chain restructuring and labour process transformations in the fast?fashion sector: Evidence from the value chains of Zara & H&M. Global Networks, 22(4), 684-700.
O’Marah, K. (2023). Zara Uses Supply Chain To Win Again. Retrieved July 24, 2023, from Forbes website: https://www.forbes.com/sites/kevinomarah/2016/03/09/zara-uses-supply-chain-to-win-again/?sh=1aeef9341256
Seeling, M. X., Kreuter, T., Scavarda, L. F., Thomé, A. M. T., &Hellingrath, B. (2021). Global sales and operations planning: A multinational manufacturing company perspective. PloS one, 16(9), e0257572.https://doi.org/10.1371/journal.pone.0257572
Shabir, S., &AlBishri, N. A. (2021). Sustainable Retailing Performance of Zara during COVID-19 Pandemic. Open Journal of Business and Management, 09(03), 1013. SCIRP. https://doi.org/10.4236/ojbm.2021.93054
Wren, B. (2022). Sustainable Supply Chain Management in the Fast Fashion Industry: A Comparative Study of Current Efforts and Best Practices to Address the Climate Crisis. Cleaner Logistics and Supply Chain, 4(100032), 100032. sciencedirect. https://doi.org/10.1016/j.clscn.2022.100032.
Xuejie, C., Chang, Q., &GuangHao, Z. (2019, August). Research on Innovation supply chain Management in Fast Fashion Industry——A comparative analysis of ZARA and H&M. In 2019 3rd International Conference on Education, Culture and Social Development (ICECSD 2019) (pp. 7-16). Atlantis Press.
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