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The theoretical scope of this literature review is distributed by purchasing strategy and by supply chain strategy prospective. This part of the literature is founded on the Internet and from the articles from the Burch International University library. The internet search and articles are studied as a qualitative selection of Internet available in Burch online library and online materials offered as well as in the online Burch library.
Through searching for the appropriate articles, journals and newspapers, research was being executed with the keywords such as purchasing strategy or supply chain strategy or even management or Zara's supply chain management or even just Zara. There are different data's, articles, we sites that were funded by the Internet about the Zara, and all offers different ideas of the research direction. A Zara supply chain strategy was the key terms of my research and was an important part of my theoretical focus on supply chain strategy. The aim of this research is to give a clear picture of the theoretical research and to be able to manage analysis of the Zara case study showing how company purchase and which supply chain strategy perspective is the most convenient for such a company. The purpose of use of the literature in my research is based on the explaining and verifying the role and impact of purchasing and supply chain strategy of the Zara industry and how it's making successful.
The basic of my report is to describe and analyze the structure of the company and to understand the influence of purchasing and supply chain strategies and then to determine solution of the well know International ZARA fashion industry. The manufacturing ZARA clothing company has an excellent development of supply chain, practical and innovative distribution channel processes. "Supply chain refers to all the value adding operational activities involved with supplying to an end user with a service or product (Lowson 2002)."
"Supply chain or value chain management is composed of the operational or tactical activities and can be defined as 'managing the entire chain of raw material supply, manufacture, assembly and distribution to the end consumer (Jones 1989 cited in Lowson 20002)." "Christopher (1998) he defines supply chain management as the management of upstream and downstream relationships with the suppliers and customers to deliver superior consumers value at less cost to the supply chain as a whole."
Background of the ZARA industry
Zara is one of the most recognized fashion stories around worldwide. It was described by Louis Vuitton fashion director Daniel Piette as "possibility the most innovative and devastating retailer in the world." ZARA has been also described as a "Spanish success story" by CNN. The first store of ZARA was opened in 1975. Zara is owned by Spanish creator Amancio Ortega, and who is a former of the retail Inditex group which is one of the largest and fastest growing and successful clothing retailers across Europe. Amancio also includes brands such as following: Oysho, Bershka Uterque, Massimo Dutti, Pull and Bear. ZARA is presented in the 73 countries across Europe with among 1,341 stories around world and in major cities in its main locations. Following today's trends with society across cultures ZARA's capable to give its full potential to satisfy the needs and wants of its consumers with different backgrounds with whom all share the same thing which is a special feeling of fashion and interest in it. ZARA offers wide range of wardrobes for men, women and as well as for children, providing comfortable, fashionable and affordable cloths regardless of the season period. In BiH ZARA clothes can be found in all stories of AZEL FRANCE, while in MOSTAR customers can find store of ZARA in new open MEPAS MAIL center.
The major success of ZARA Company is its dynamic supply chain with its specified outcome of focusing on a shortest response time. Using the supply chain management ZARA generate its instant fashions being cheap, stylish and trendy clothing by using a high wage form. Recognizing what the consumers wants of fashion products; Zara has developed a supply chain which is efficient of getting a trend from the catwalk from their stores in period of one month, while for four to twelve months from its company competitors. According to this the strategy of reducing the quantity manufactured creates scarcity. Thus, this is productive for Zara because of two reasons; first the less availability leads to highest desirability and from the second reason, with fewer amounts being produced in any time means that there is less to be added at the end of season sales. An overall discount of Zara is about 18% of its total operation range, where half of the level its competitors. In the case of Zara the time is one of the primary drivers to reach the competitive advantage, where an agile of supply chain management is created. Zara is being focused on the flexibility and market sensitive, until to comparisons of the ordinal method of being forecast driven.
Presence of the ZARA in the fashion world has pressurized competitors of entering their supply chains to keep the track with Zara; therefore it does recognize the importance for the quick response. With quick response system Zara is able to respond its customer's wants better than its competitors. ZARA industry is focused on the ultimate consumer with allocating a huge emphasis on implementation of backward vertical integration to perform the strategy into a fashion follower, before than to accomplish production efficiencies. Zara's accepts a quick response strategy communication that is effective expected to its management and collective culture. The continuous processes of information between managers provide the company to keep its customers satisfied, which in turn results in raising the sales.
Furthermore, Zara's centralized issuing offer the chain a competitive progress by decreasing the lead-time of their goods. Reducing the time to increase the delivery speed transportation is scheduled by time zones and it's loaded by way of air and place of land. The advantages of ZARA delivery time outside the Europe is around one or to two day approximately. Based on Zara's strategy centered on fewer advertising cost is one another advantages over its competitors. Investments advertising cuts minimize a total expense that makes the international expansion more profitable. According to this company relies mostly on its stores to project their image, so it is clear why Zara is familiar for its essential real estate locations.
Nowadays people all around the world have far higher access in world fashion because as the result of the e-commerce and internet. Company of Zara recognize this and use it to their advantages by offering the latest clothing to their customers. However, Zara has a successfully developed business model which distinguishes itself from its competitors, but it also has disadvantages that can have influence on its sustainable growth. Therefore there are some weaknesses that strategy of Zara creates. Furthermore, vertical integration is considered by many authors as a strategy which potentially raises profits and decrease risks, where the defects are still equally considerable to recognize. Thus, vertical integration often brings to the inefficiency to acquire economies of scale. Reflexive introduction and focus on speed of new products incurs increase costs as well. Hence they have greater research and development costs. Also they have increased costs due to the constant transformation of production techniques to make out their different clothing lines.