1) What is innovative about Zara? What are the major differences in Zara’a supply chain when compared with that of M&S? What role does “postponement” play in Zara’s supply chain?
The first Zara shop opened in 1975 in La Coruna, Spain. It is a brand owned by Inditex, a leading group in textile design, manufacturing and distribution founded in 1963. Zara targets the trendy youngsters market. It has proven to be the most successful brand for Inditex, generating 70% of Inditex’s total turnover in 1999. Some of the factors that contribute to Zara’s innovation are its word of mouth advertising, well-located shop placements and products that meet the needs of the ever changing taste of its customers. Zara keeps itself up to date with fashion trends by introducing a new product every week and changing 70% of the product range every two weeks. Due to the frequent change in products, customers are always keen on finding out the new trends and purchasing them before they get discontinued. Zara’s supply chain permits it to react rapidly to fashion changes. c hanges. In comparison to M&S supply chain, Zara operates more internally and the only outsourced element in its supply chain is sewing cooperatives. While M&S requires external services from fabric supply to packing and trucking. The buying team of M&S is responsible for defining cloth specifications, select style, negotiating prices, planning production and running an external supply chain. The buying team develops the plan a year before store delivery in order for it to be on schedule. Whereas, Zara has its materials and designing teams work internally, this allows for faster operations. Zara relies on its internal capabilities for most of its operations such as, cutting, washing, ironing, packaging and ticketing to support its supply chain. This helps in facilitating any last minute changes. Therefore, the role of postponement is very small. 2) Why is it so difficult for M&S to start playing the “fashion” game? What do you think of the programs launched by Peter Salsbury in response to the troubles at M&S?
According to the article, Merrill Lynch pointed out several reasons for M&S’s poor performance: heavy organization, organization , limited flexibility and over-centralization. over-centraliz ation. M&S used to be controlled by Marks family until 1980s. Although the management assigned non-family members as being Chief Executive Officers since then, the firm was still centralized by the new management. Sometimes managing a firm with centralization takes advantages because it avoids different voices to confuse decision- makers’ mind. Therefore, the decision makers empowered too much control to manage the company. Hence, the company had higher risks of losing profits or market if the decision makers used the wrong market strategies. Moreover, M&S divided into too many steps in value chain process. The steps of the value chain were al most double of Zara’s value chain. For example, M&S outsources some elements of the value chain to other regions with cheap labor fees and raw materials, and it probably lowered the total costs. Therefore, the company requested all semi-finished goods, especially overseas manufacturing facilities, to send back to UK, this would increase the costs in the end because M&S spend too much time consuming and cost too much money in its value chain process. Limited flexibility was one of the main factors that M&S was hard to play the game. They had too much confidence to believe what they decide and a nd they rarely notified if their decisions were matched with consumers’ mind. For instance, M&S believed that grey and black would be in fashion in certain year, and they made many clothes in the two colors. The top management did not book unspecified productions
with other colors from suppliers in order to access flexibility at the last minutes. In general, management of M&S should release some powers to its subordinates and listened to what consumers wanted, or they would be never had hard time in loss profits and shutting down stores overseas. We think Peter Salsbury might use wrong business and market strategies in its target consumers. According to the article, M&S had 5% market share among 15-24 year-olds, but they had 24% market share among 65 and older in the UK. Moreover, it held 40% market share in women’s lingerie and 25% in men’s suits. On that time, Salsbury and the management spent £20 million in advertising, displaying the store more rejuvenated, price lowering and more fashionable. Therefore, its target consumer who were 65 and older people might not watch advertisements, they did not care about the display and they wanted the productions for better qualities than lower prices. For these reasons, it was not hard to image why it was so difficult to Peter Salsbury for launching Recovery Programme. 3) If you were on the board of directors of M&S, what questions would you ask of the new Chairman and Chief Executive, Luc Vandevelde? What if any guidance would you offer to turning M&S around? Compare M&S approach to that of Inditex, Zara’s parent company?
I believe the questions needed to be asked are; how can M&S supply chain become more efficient for quicker results? Who are their customers and how are they forecasting and meeting their demands? I would suggest M&S to concentrate on their clothing line and implement more internal elements for their supply chain. They have a gap of a whole year between the concept and store delivery, which can prove to be disastrous when a trend is identified incorrectly. Inditex focused on creativity, innovation, elegant design, fast market response of their products and paid special attention to the interior design of their shops. While M&S has a more traditional approach, they do not concentrate on just a single target market and are more focused towards advertising their products and the quality. I believe M&S has to make changes in order to realize that they need to keep up with fast changing fashion trends.
