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What Is Innovative About Zara? What Are the Major Differences in Zara's Supply Chain When Compared with That of M&s?

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1. What is innovative about Zara? What are the major differences in Zara's supply chain when compared with that of M&S?

Zara was founded in Spain in 1975 and is owned by Inditex which is a leading firm in manufacturing, distribution and textile design. Zara now has expanded their market by operating in 74 countries worldwide. Its target market focuses on young women that are price conscious but aware of the latest fashion trends.

Zara's innovative strategy has kept them as a leader in the retailing industry. Their innovations include having new products in their shops every week where 70% of the product range changes every 2 weeks; keeping customers coming back to their stores more frequently relative to other competing retailers. The product quantities are purposefully limited to promote novelty and avoid saturating the market with fashionable designs. When store managers communicate that they have made successful designs, the designs are altered by color, styling, material, or accessories. This innovation is possible because they have specialized in having a short lead time of 7 days. Therefore, they are able to stay up-to-date with developing fashion trends without appearing outdated or targeted to 'the masses' as a whole. Zara has successfully been able to meet customer demand by manufacturing products with short lead times and having strategically-located store placements.

Zara's supply chain has enabled them to be able to react quickly to different fashion changes in the changing industry. When comparing the M&S supply chain to Zara's supply chain, Zara's operational functions are not as outsourced. Instead they are controlled internally by their own firm which makes it easier to manage and implement quick changes. Therefore, they don't have to rely on other suppliers to quickly respond and be able to handle their last minute demands. The only outsourced operational function in Zara's supply chain is their sewing cooperatives. M&S greatly relies on external services, all the way from fabric supply to packaging and trucking which leads to their shortcomings when supplying products to their customers. The M&S firm develops the design and clothing plans a year before they are delivered to the stores. The planning must be done a year early in order for it to be shipped on time since so many functions in the supply chain are outsourced. On the other hand, Zara's team is capable of making products in the season for the season and they can adapt to last minute changes because most of their operations are done internally therefore, it is easy for them to adapt.

2. Why is it so difficult for M&S to start playing the "fashion" game? What do you think of the programs launched by Peter Salsbury in response to the troubles at M&S?

Marks & Spencer had a particularly hard time playing the "fashion game" because it was so drastically different from what it was used to. In addition to globalization beginning to play a large role in fashion, more casual trends developed and had much lower life cycles than they had in the past. This required companies to have low lead times and extreme flexibility, which were not things that M&S possessed. Typically, M&S would try to forecast what trends would be in style up to a full year in advance due to such long lead times. As a result, there were instances where the wrong decision was made and M&S was stuck marking down very large amounts of product that people were not particularly interested in. Needless to say, an occurrence like this proved to be a major setback for the company. Merrill Lynch implied that "heavy organization, limited flexibility, and over-centralization were some of the reasons for M&S's poor performance."

Peter Salsbury seemed to be on the right track with his Recovery Programme. Although the actual plan gave the impression that it would address the firm's issues, it seemed to be poorly executed. The extra investment in advertising, rejuvenated store displays, and lower prices would have been very helpful in dealing with some of the problems that faced M&S. First, M&S was trying to capture everyone instead of targeting one segment of the market, which is one of the factors that led to outdated displays in the eyes of the consumers. If M&S wanted to cater to younger consumers, then it needed to target them specifically.

Second, the problems that needed work were much deeper than the solutions to fix them. The entire value chain needed substantial work, but the efforts only skimmed the surface of what really needed to be done. While M&S needed to work on the superficial details at some point, the larger issues that should have been priority were rationalizing the supplier base, reducing lead times, and learning Zara's method of quickly cycling through styles and inventory. Without making these changes first, then doing things like lowering the price are not going to be beneficial. M&S should have gotten their priorities in order before just jumping into making changes.

3. What, if any, guidance would you offer for turning M&S around?

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