Did you know that one company single-handedly changed the shopping behaviour of hundreds of millions if not billions of people around the world? How were they able to do that?
By bringing an innovation to the fashion industry that nobody had looked at before: the supply chain.
The name of the company? Zara.
You don’t know a success until is becomes one. Zara took some bold decisions going straight against the fashion industry’s existing logic.
It started with a vision: Amancia Ortega, Zara’s founder, owner and now 2nd richest man on the planet, wanted women (and men) to shop and be able to find new collections in the stores as much as twice a week, instead of twice a year as was the custom. For this dream to come true, he had to revise the way how fashion was brought to market. In other words: re-invent the supply chain:
Where all other labels outsourced production to low income countries to reduce on labor cost, Zara decided to keep its production plant in-house and set it up at its home base in Galicia. Traditional Fashion Industry’s reasoning: keep production cost down. Zara’s reasoning: minimise shipping time and maximise selling time, putting the customer experience at the centre of its operations.
Zara was able to have its fashion reach their stores only two weeks after design, against an industry average of 6 months. These faster lead times made it possible for Zara to be more flexible with their collections. To optimise production, Zara set up an ingenious data collection system all geared towards obtaining market information at the most direct level possible: from its customers in the stores. Whenever you are trying a garment out in the fitting room or you are buying it at the cashier, Zara is registering the design, the colour and the size. This means they can prototype trends and use real time feedback to optimise their production, as well as the parts of the collection and the number of pieces it sends out to each individual store.
To show how far Zara went in setting up its supply chain to optimise its sales, let’s look at its transport and distribution. Zara’s clothes are labeled and put on a hanger right at the production plant (in size 9 times larger than Amazon’s distribution centre), enabling the racks with finished goods to be delivered from the truck straight into the store where people can start buying as soon as they see the items coming in. Compare this to the traditional fashion industry where store personnel receives stacks of boxes which they need to unpack and organise taking precious time away from being with customers.
The key take-away of this inspiring story: dare not only to be different, but be as driven as Amancia Ortega in aligning every element across you value chain to serve your strategic advantage.
Learn how to optimise your supply chain with our Entrepreneurs Basics: Operations Workshop.