Super Responsive Supply Chain: The Case of Spanish Fast Fashion Retailer Inditex-Zara

Abstract

The successful implementation of an integrated supply chain strategy enhances total control over the operations and thus enhances speed and flexibility. The objective of this study is two-fold: first to identify the constituents that mold the fast fashion retailing business model, and second to discuss how global leader of fast fashion retailing Inditex-Zara’s product offering is strongly supported by integration of various supply chain operations. The findings suggest that vertical integration through ownership of various operational stages including product design and development, production operation, logistics and distribution channel; appropriate sourcing strategy to meet product needs; application of process/product modularity practices in product design, material procurement and manufacturing to ensure manufacturing flexibility; flexible logistics capability; and all of these seamlessly integrated and coordinated by a centralized IT infrastructure can significantly raise overall supply chain flexibility and responsiveness. Inditex-Zara’s super-responsive supply chain reduces ‘bullwhip effect’, order-to-delivery lead time to stores, ensures lean inventory and high level of responsiveness to adapt and deliver products to stores with latest fashion trends and customer feedbacks at a rapid speed. Thus Inditex-Zara is able to successfully counter the negative effects of short product life cycles, high product variety, demand uncertainty and thus able to closely match product supply to the stores with market demand. This contributes to lower inventory backlogs; avoid mark-down losses and/or inventory stock out.