Vertical integration Zara designs as well as manufactures a majority of the apparel that customers buy in its stores. The virtuous circle this approach sustains includes more frequent shopper visits to stores, fewer sales on markdown and faster cash conversion cycles.
Since Zara has zero advertising policy hence the expenses saved in zero advertising is utilised in international expansion of the market making it more economical.
The quick response system of Zara is unique which consists of human resources and Information technology. Such short term focused order cycles make forecasts very accurate, much more accurate than competitors who may order every two weeks or every month.
The designers take around nine months before the start of season to make initial sketches. Adjustments need to be made to production rates, vehicles, and delivery routes and schedules to get this supply chain to work well.
As a consequence, Zara does not have lots of excess inventory, nor does it need to do big mark-downs on its clothing items.
As you work on getting the supply chain to run for 15 days, you will form a picture in your mind of how this supply chain operates — a mental model that shows you how the products, facilities, vehicles and routes in this supply chain interact.