Challenges faced by zara in us

However, much has happened since it went up, including the Blogger outage. Scroll down for a report on that. More new posts will be added below this one. The essay below is the conclusion of the ninth part in a series by Takuan Seiyo.

Challenges faced by zara in us

Trends Friday 21 February Nonetheless, it is this very aspect of its nature which poses significant challenges for supply chain professionals. One such challenge is the marking-down of slow-moving items at the end of the season, an example which highlights the rationale behind a number of important decisions made by companies in relation to network design and inventory location.

Generally, slow-moving stock ends up being sold at a significant discount during clearance periods, or shifted through an external, online, or company outlet store.

Challenges faced by zara in us

However, if located in the right store at the right time it could have been sold at full-price. Therefore, companies are increasingly opting for simpler supply chain networks, to easily and quickly replenish and rotate stock to stores, in accordance with local market trends.

The ideal situation would be to operate with only one global inventory location. However, this is not a practical option for most businesses. Currently, only one company, Inditex Zarahas been able to achieve efficient global deliveries from central distribution centres based in Spain, to stores within 40 hours range 1.

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This is one of the reasons why, Inditex Zara frequently arises in conversations. Generally recognised as a world leader in fashion retail, the company is renowned for listening very closely to consumers, making rapid and instinctive product design decisions, and being able to create and place products in stores faster than any competitor.

Some outsiders are convinced that their business model places a bigger emphasis on the cost of stock and mark-downs, rather than the process of producing and shipping products, a model with which many companies feel systematically incompatible. In fact, the volume of product shipped by many companies does not even merit attempting to deliver globally with such speed and efficiency.

Paradoxically, size is sometimes an enabler of speed because the very big volumes, million garments a year in the case of Inditex 6facilitates cheaper airfreight costs, and allows for production to shift between suppliers, an option not generally open to most players in the industry. Other companies have opted to situate inventories regionally to guarantee rapid deliveries and ensure order lead times to stores do not exceed three days.

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Companies that have chosen this particular strategy, operate with networks which normally consist of up to three or four globally-positioned inventory locations; typically in Asia, Europe and the US respectively. In some cases, companies use network modelling technology to assess different alternative inventory location scenarios in order to identify the optimal solution.

However, it is also possible to tackle the mark-down issue from another angle.

Challenges faced by zara in us

Some companies optimise revenue streams during sales periods using price elasticity optimisation techniques. In this way they can implement discount mechanisms that maximise revenues in accordance to the reaction by customers to different price points based on historical performance.

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