ZARA AND THE LIMITED BRANDS 5
The Role of SCM in Retail Industry.
One of the main roles of the Supply ChainManagement (SCM) is to ensure the quantities produced by a firmcorrelate with the consumer demands in the market. The SCM functionenables retailers to survive in the increasingly uncertain market andstrangling competition. According to Singh et al. (2014), supplychain management involves the management of raw materials, flow offinances and information in a network comprising of manufacturers,suppliers, distributors and consumers. Failure to manage the supplychain could lead to late deliveries, lack of raw materials or abacklog of finished products ready for distribution.
Limited has consolidated its technology into asingle shared service for all its brands. The responsibility for thisplan lies with a company called Limited Technology Services. Theconsolidating company is reliable since it has over 750 ITprofessionals and a budget of $150 million. Using Tibco software,Limited has created a system of integration between its vendors andcustomers. The company can track information as it flows along thesupply chain.
Zara has an efficient communication technology,typical of any successful supply chain management. The companycollects information from customers regularly through its salesclerks that directly interact with customers. The information is thenconvertedinto new designs that find their way to the shelves within ashort duration. The distribution network is simply appalling. Withover 200 KM of underground track connections, distribution trucksmove the end product to the final consumer.
Is Zara`s competitive strategy aligned with supply chain strategy?
Zara’s competitive strategy has three keythemes- short lead time, lower quantities, and more styles (Tiplady,2006). The supply chain strategy complements this competitivestrategy. The short lead time is a result of the short duration ittakes to generate a finished product from a sketchy idea. As depictedin the case study, some products take a mere 2 weeks from the day ofinception to the finished product. The tight distribution networkbetween overseas factories and stores also leads to a short leadtime.
Because of the continuous introduction of newdesigns, Zara sees to it that low quantities of the designs areproduced. The main idea behind this strategy is to cushion thecompany from greater losses in the event that the new product sellspoorly.
Zara has continued to produce more stylesthanks to its team of top -notch designers. The company produces anew design at least weekly to ensure that the customers come back toview the new trends. The sales clerks also enhance this competitivestrategy by collecting information from the customers and thenrelaying it to the designing team.
The role of Zara`s SCM system and possible improvements.
The number one role of Zara’s SCM is toensure a continuous creation of new designs throughout the year. Thecompany has factories all over Europe hence the need for maximumcoordination. To maintain a smooth run of activities, there iseffective communication between the factories all because of SCM. Theinterconnection between the factories and retail stores requires highlevels of coordination and communication. SCM is also responsible forthe swiftness in which the end products reach the retail stores.There are over 200 KM of underground tracks that could be a source ofconfusion. SCM has ensured that the right product reaches the rightdestination, on time.
However, the system could use a fewimprovements. The number of new products is too high. From the casestudy, it is quite evident that the company spends exorbitantly onproduct development. The turnover is not as good. The alternativemethod would be to do extensive research before producing a newdesign (Johnson, 2000). With enough research, few things could gowrong unlike the haphazard research that Zara does that leads to lowturnovers.
Limited’s Supply chain Problems.
The company works with multiple vendors operating under differentbrands. In such an arrangement, limited has little or no control overthe outfit that it relies on to supply its products. This type ofsupply chain could also taint the brand of Limited.
Limited buys merchandise from over 1000 suppliers. This means thatthe company has no control over the flow of the merchandise.Industrial unrest in other parts of the world could negatively impactthe supply chain of Limited. The supply chain is also bound to beaffected by international currency fluctuations that will in turnincrease the price of its products.
Is integrating brand delivery a correct SCM strategy for The Limited?
Integrating brand delivery could help solveLimited’s supply chain problems. Using the Tibco software, Limitedcan now track the flow of information as it moves along the supplychain. Unlike before when the vendors operated in a kind of freelancefashion, Limited can now monitor their activities. The integrationhas also ensured real time communication with delivery agents. When aproblem arises with the delivery of products, the management team caneasily find out and act accordingly. Previously, informationregarding hiccups in delivery reached the managers late renderingthem incapable of correcting the error before it disrupts the entiresupply chain.
Johnson, P. (2000). Supply chain management:the past, the present and the future. Journalof Manufacturing engineer 2000, 57(8)
Singh, J., et al. (2014). Role of supply chainmanagement in the retail sector. InternationalJournal of Management Research & Review,2014, 4 (11)
Tiplady, R. (2006). Zara taking the lead infast fashion. Businessweekonline.com. BusinessWeek Online,April 4, 2006