Lecture 4

Question 1

Why is Zara so successful?

Answer 1

1. Short lead time (30 days)
2. Small quantity production
3. A large variety of styles

Question 2

What is Zara SC structure?

Answer 2

1. Procurement of the semi-processed fabric
2. Manufacture in Europe
3. Don’t own factories
4. Distribution to stores twice a week
5. Fast trend identification (Information and communications technology )
6. Prime retailer locations.

Question 3

What does Zara do differently compared to other fashion companies and what are the consequences of this?

Answer 3

1. Production in Europe that leads to short lead times.

2. Low marketing costs using prime locations. 3. Standardized product information processes lead to short design time.

Question 4

Fisher model

Characterize of Physically Efficient Process and Market-Responsive Process

Answer 4

Market-Responsive Process:

• Respond quickly to unpredictable demand in order to minimize stockouts, forced markdowns, and obsolete inventory
• Use modular design in order to postpone product differentiation for as long as possible

Physically Efficient Process:

• Supply predictable demand efficiently at the lowest possible cost
• Maintain a high utilization rate

Question 5

Fisher model

Types of products based on their demand patterns

Answer 5

Functional products (gas stations, grocery )

• Stable, predictable demand
• Long life cycle
• Competition

Innovative products (Fashion, technology )

• Unpredictable demand
• Short life cycle
• Variety