Gartner recently released its list of Top 25 supply chains of 2017. These supply chains are evaluated on many factors like: ROA (Return on Assets), Inventory Turns, and Revenue Growth. In this 3 part blog series, we will take a look at the Top 3 Supply Chains of 2017 and what they are doing right.
At number 3 is your very own beloved clothing brand: Zara
Key to Success
With over 2,000 stores all across the world, Zara has managed to stay profitable and grow while their competitors face slumps. The company credits the key to their success as how they operate and manage their Supply Chain.
Zara is able to carry 11,000 products per year compared to 2,000 – 3,000 by competitors. In fact, they can design and launch a product in 4-5 weeks. Further, reports state that Zara enjoys 12 inventory turns per year while their competitors can only manage 3-4 per year. Some factors crucial to Zara’s supply chain are:
Zara places utmost importance on data and analytics. Their business model revolves around forecasting demand to produce goods. Their stores are directly linked to the back-end production and fulfillment centers where demand data is sent throughout the supply chain. The analytics provide useful insights to manage their stock levels which set standards to fulfill and replenish their stores.
Zara stores use RFID technology. Using advanced systems allows Zara to track the locations of the garments right away. RFID tags contain information in them that can be used to capture data at the point of sale. Even though they are slightly expensive, the RFID tags are reusable and need little human interference. Collection of this data from all their stores allows them to make the items, that are in most demand, available to their customers quickly.
Another important factor of Zara’s supply chain is its agility. Stores take two deliveries per week and can receive their orders within 2 days of placement. However, making a supply chain agile is no easy task. In order to achieve agility, you must make your supply chain visible through-out. Supply chain visibility needs people, processes and technology to be in place, which Zara has managed to master.
In conclusion, Zara stays ahead of the competition by reacting fast to the ever changing retail trends. Their supply chains are nurtured to be lean and flexible, making them a strong player in the industry. Thus, spot #3 is well deserved. Stay tuned to find out the first two winning companies and how their supply chains work.