BBA311 SUPPLY CHAIN MANAGEMENT Case Study Task brief & rubrics
Students are required to develop an individual report addressing the specific tasks set out in the guideline below.
CASE STUDY CONCEPT: Zara’s Unique Business Model is Driven by Its Supply Chain Capabilities.
Zara changes its clothing designs every two weeks on average, while competitors change their designs every two or three months. It carries about 11,000 distinct items per year in thousands of stores worldwide compared to competitors that carry 2,000 to 4,000 items per year in their stores. Zara’s highly responsive supply chain is central to its business success. The heart of the company and its supply chain is a huge, highly automated distribution center (DC) called “The Cube”.
Company Business Model
Agents for the company are always scouting out new fashion trends at clubs and social gatherings. When they see inspiring examples, they quickly send design sketches to the garment designers at the Cube. New items can be designed and out to the stores in 4 – 6 weeks, and existing items can be modified in 2 weeks.
Zara has 12 inventory turns per year compared to 3 – 4 per year for competitors. Stores place orders twice a week and this drives factory scheduling. Such short- term focused order cycles make forecasts very accurate, much more accurate than competitors who may order every two weeks or every month.
Clothing items are priced based on market demand, not on cost of manufacture. The short lead times for delivery of unique fashion items combined with short production runs enable Zara to offer customers more styles and choices, and yet still create a sense of urgency to buy becaus e items often sell out quickly. And that particular item or style may not be available again after it sells out. Zara sells 85 percent of its items at full price compared to the industry average of sell ing only 60 percent of items at full price. Annually there is 10 percent of inventory unsold compared to industry averages of 17 – 20 percent.
Manufacturing and Supply Chain Operations Make Zara Unique in Its Industry
Zara buys large quantities of only a few types of fabric (just four or five types, but they can change from year to year), and does the garment design and related cutting and dyeing in-house. This way fabric manufacturers can make quick deliveries of bulk quantities of fabric directly to the Zara DC – the Cube. The company purchases raw fabric from suppliers in Italy, Spain, Portugal and Greece. And those suppliers deliver within 5 days of orders being placed. Inbound logistics from suppliers are mostly by truck.
Zara can deliver garments to stores worldwide in just a few days: China – 48 hrs; Europe – 24 hrs; Japan – 72 hrs; United States – 48 hrs. It uses trucks to deliver to stores in Europe and uses air freight to ship clothes to other markets. Zara can afford this increased shipping cost becau se it does not need to do much discounting of clothes and it also does not spend much money on advertising.
An Agile Supply Chain
Stores take deliveries twice per week, and they can get ordered inventory often within two days after placing their orders. I tems are shipped and arrive at stores already on hangers and with tags and prices on them. So items come off delivery trucks and go directly onto the sales floor. This makes it possible for store managers to order and receive the products customers want when they want them, week by week.
Zara stores respond practically in real-time as styles and customer preferences evolve. It is a great business model for success in the high-change and hard to predict fashion industry. It means about half of the clothing the company sells, which includes most of its high margin and unique fashion items (but not its lower margin basic items), is manufactured based on highly accurate, short-term (2 – 6 week) demand forecasts.
A fast-moving and finely tuned supply chain like Zara’s requires constant attention to keep it running smoothly. Supply chain planners and managers are always watching customer demand and making adjustments to manufacturing and supply chain operations.
Zara is a clothing and fashion retailer that uses its supply chain to significantly change the way it operates in a very traditional industry. No other competitor can copy its business model until it first copies its supply chain. And since supply chains are composed of people, process, and technology, even the latest and greatest technology is not a competitive advantage all by itself. People must be well trained, and processes must be put in place that enable people to apply their training and their technology to best effect.
CREATE A FINAL REPORT showing Zara’s supply chain model and describing the supply chain challenges you encountered. Explain why successful solutions to those challenges provides such a competitive advantage for Zara:
• Explain the supply chain principles and best practices to solve the challenges that Zara encountered. What were the biggest challenges and how did Zare solve them?
• Identify places in Zara’s supply chain model (facilities, vehicles and routes) where they used new technologies. How do these technologies produce the performance capabilities that Zara shows in their results?
• Show how a supply chain with these capabilities makes it possible for Zara to use its fast fashion business model. If Zara co mpetitors were to emulate Zara’s business model, what supply chain capabilities would they need?
• What can Zara do to lower the carbon footprint of the supply chain and being more sustainable? • Use data to illustrate your report.
• Wordcount: 2500-3000 words
• Cover, Table of Contents, References and Appendix are excluded of the total wordcount.
• Font: Arial 12,5 pts.
• Text alignment: Justified.
• The in-text References and the Bibliography have to be in Harvard’s citation style.
Week 3 – Via Moodle (Turnitin).
Deadline: 17th October 2021 at 23:59 CEST.
Weight: This task is a 30% of your total grade for this subject.
It assesses the following learning outcomes:
• Outcome 1: Assess the impact of supply chain management decisions on a particular company and its internal processes, customer services and profit
• Outcome 2: Appraise the important role of logistics and supply chains in 21st century organizations.
Exceptional 90-100 Good 80-89 Fair 70-79 Marginal fail 60-69
Knowledge & Understanding
Student demonstrates excellent understanding of key concepts and uses vocabulary in an entirely appropriate manner.
Student demonstrates good understanding of the task and mentions some relevant concepts and demonstrates use of the relevant vocabulary.
Student understands the task and provides minimum theory and/or some use of vocabulary.
Student understands the task and attempts to answer the question but does not mention key concepts or uses minimum amount of relevant vocabulary.
Application (30%) Student applies fully relevant knowledge from the topics delivered in class.
Student applies mostly relevant knowledge from the topics delivered in class.
Student applies some relevant knowledge from the topics delivered in class. Misunderstanding may be evident.
Student applies little relevant knowledge from the topics delivered in class. Misunderstands are evident.
Critical Thinking (30%)
Student critically assesses in excellent ways, drawing outstanding conclusions from relevant authors.
Student critically assesses in good ways, drawing conclusions from relevant authors and references.
Student provides some insights but stays on the surface of the topic. References may not be relevant.
Student makes little or none critical thinking insights, does not quote appropriate authors, and does not provide valid sources.
Student communicates their ideas extremely clearly and concisely, respecting word count, grammar and spellcheck
Student communicates their ideas clearly and concisely, respecting word count, grammar and spellcheck
Student communicates their ideas with some clarity and concision. It may be slightly over or under the wordcount limit. Some misspelling errors may be evident.
Student communicates their ideas in a somewhat unclear and unconcise way. Does not reach or does exceed wordcount excessively and misspelling errors are evident.