SCM has precise rhythm and they stick

SCM 520

Yuntao Wu

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Case 1: Rapid-Fire Fulfillment

 

 

Q.A

l  Speed and quality: Zara uses three lines which include women’s line, men’s line, and kids’ line to produce their apparel products. These organized three groups increase both speed and the quality. Moreover, Zara uses “postponement” in one of their factory in Benetton which also increases these two objectives.

l  Reliability: Zara has precise rhythm and they stick to the rhythm. It means they have specific deadlines and all the people related should follow the guideline. So, their order cycle is consistency. Also, they use airplanes and trucks to ship their products compare to other company use ships and trains. As a result, their order always on time as what they promised.

l  Flexibility: Zara leverages its capital assets to increase supply chain flexibility. More capital assets mean less capacity utilization, and this made them more flexibility because they can deal with more issues such as unpredictable demand.

 

Q.B

l  Zara chooses to make their relatively more complicated products by themselves to ensure flexibility.

l  Keeping more capital assets to increase supply chain flexibility.

l  Zara operate three channels to make products which is more expensive, but the information in each channel is faster, smoother, and more direct. It increases the responsiveness.

l  It’s supply chain not only focus on one single part, but in the whole system. Although some single method like using small batches, shipping every two weeks, and shipping some garments on hangers will increase costs, its precise rhythm eventually lets Zara carry less inventory cost so that they can maintain a higher profit margin on sales.

 

Q.C

l  The constant flow of updated data mitigates the bullwhip effect-the tendency of supply chains to amplify small disturbances. Zara allows almost half of changes (40%~50%) to their orders when the new season begins compare to the average of 20%. This method avoids expensive surplus products, and equip with their efficient information, it has more positive effect in the industry.