I clearly remember my very first trip to Zara, which would be fairly recent, say about 7 years ago, without an iota of knowledge that very soon this brand will have me in its grip. The fairly naive fashionista in me was beaming with excitement as I generously stocked up clothes, making my way diligently to the trial room. This event beautifully culminated in a self proclaimed proud moment of walking out of the store with those blue bags tucked tightly. And the rest as they say was history. My closet is secretly labelled as ‘Zara’ by my friends and I personally enjoy it (secretly ).
Its very rare that you come across a brand that offers you designs in tandem with the changing fashion arena and so promptly. And at relatively affordable prices. If you closely follow fashion, its unusual to pass a Zara store and do a double-take – didn’t you just see that on the runway? ZARA has identified its customers who’s tastes & patterns change quickly and voraciously. As a brand, their agility & responsiveness to the dynamic fashion trends are the key to their key competitive advantage. Over the years Zara has become synonymous to fast fashion at its best.
But what actually brings me to write this post, is my recent awareness of the LEAN methodology Zara practices to do what they do best (Apologies if I sounded like being living under a rock for so long ) . And ZARA is perhaps the most outstanding example of a well-executed and sustained Lean business model outside of the automotive industry.
The LEAN techniques that ZARA uses to stay abreast & ahead of its competitors and as New York Times called it “mind-spinningly supersonic” are –
Just In Time Production
Just in time’ was pioneered by the Toyota Motor Company in 1948. In the words of Toyota, it means making “only what is needed, when it is needed, and in the amount needed.” The basic premise of this technique reduces wastage, improves efficiency and productivity, and contributes to smoother production flows. A shorter production cycle can decrease financial costs, inventory costs and labour costs.
Zara’s success relies on keeping a significant amount of its production in-house and making sure that its own factories reserve 85 percent of their capacity for in-season adjustments. In-house production allows the organization to be flexible in the amount, frequency, and variety of new products to be launched.
The company often relies heavily on sophisticated fabric sourcing, cutting, and sewing facilities nearer to its design headquarters in Spain.
The ZARA app is tagged as a favourite on my mobile and browsing through the designs contribute a part of my daily shenanigans. After every 7-8 days, ZARA updates its collection and constantly adds new designs. So you never really get bored of the browsing !!!!
Through its ‘Just in time’ or Lean business model, ZARA breaks the fashion supply chain rules by holding low stock and updating its collections continuously. Twice a week, at precise times, store managers order clothes, and twice a week, on schedule, new garments arrive. If a certain style or design becomes the new must-have on the street, Zara gets to work. Designers churn out the new styles and they’re fast-tracked to stores while the trend is still going strong.
Kanban is a concept related to lean and just-in-time (JIT) production, where it is used as a scheduling system that tells you what to produce, when to produce it, and how much to produce.
ZARA breeds on the culture of scarcity
ZARA is a classic example of a pull model, a Kanban system uses a queue of resources that are ready to be pulled by the following process as they are needed.
When a resource is pulled, a signal is sent to the following process to replace what was used or completed. To avoid over-producing and over-ordering, the Kanban system keeps small quantities of resources that are needed and replaces what is used, only when it has been used.
ZARA creates up to 1,000 designs every month based on store sales and current trends. It monitors how much money customers spend in store to evaluate and understand which designs are being purchased and then it updates its next designs accordingly.
Very often I have observed that some designs, probably in an attempt to chase a certain fashion trend, never really get back to the store, owing to the customer demand , whereas some designs and cuts keep oscillating. So you either own a ZARA piece or you’ll never get your hands on them !!
Zara’s key operational theme is one of agility. Its product development, manufacturing, and supply chain processes are expressly designed and implemented for agility.
Rather than outsourcing to Asia, ZARA uses a network of automated factories in Spain and over 300 small finishing factories in North Africa and Turkey to constantly create unfinished products.
When a new design has been approved, the unfinished products are pulled, sent to the finishing shops and turned into products that are ready to shipped in as little as 24 hours to Europe, and in 40 hours to the Asian and North American markets. Zara also seems to keep excess capacity in its manufacturing operations to be able to respond quickly to unexpected demand. This is in line with Toyota’s strategy for retaining some excess capacity by running only two shifts in some manufacturing plants.
One -Piece Flow
One of the tenets of lean is one piece flow. Instead of building up a stack of inventory between the steps in the process, the idea with one piece flow , is to build at the pulse rate of customer demand. This pulse rate of customer demand, known as takt time, ebbs and flows over time. With one piece flow, the idea is to make a piece only when the customer asks for one.
The production of small batch sizes has pivotal implications in retail creating a culture of scarcity. Due to small batch size, most styles aren’t replicated -they’re new, not homogenous- but replaced with entirely new styles twice each week.
Approximately eight-hours after a store manager places an order based on customer demand, items are then picked, packed and ready to leave its distribution centre in North-west Spain. Because ZARA’s logistics are centralised, it can send products anywhere in the world within 48 hours.
Just over fifty per cent of ZARA’s clothing, usually the more trend-led items, are produced in Spain, Turkey and North Africa instead of Asia, which means goods can move much more quickly through its central hub.
ZARA has won many accolades for being on top of the every changing & dynamic trends in the fashion arena and exuding an exclusive feel but its real hero is its supply chain.