Logistics and Supply Chain Management Case Study

Logistics and Supply Chain Management - Case Study Example This discussion stresses that a supply chain may not be used to only cut costs. Instead, it could also be used to increase revenues and hence profits. The costs could still remain the same. It gives an organization a competitive advantage against its competitors. It does not allow any sale to be lost. When the customer wants something, an effective supply chain would ensure that it is available. This increases the customer’s interest in the company and encourages brand loyalty. It also helps keep a close contact with the suppliers which ensures that maximum advantage can be gained out of doing business with them.This paper highlights that Zara is one of the largest brands, by the Inditex Fashion Retail Group, that has 723 stores in 56 countries making sales of Euro 3.8 billion. Zara has a very high product turnover. It makes more than 11,000 products annually. The annual report of Zara (Inditex) for the fiscal year 2006 covers all activities from February 2006 to January 2007. Zara opened 138 new stores during the past year, increasing its selling area by 15%. The sales were an increase of 21% at Euro 5,352 million. It earned net profit of Euro 1 billion an increase of 25%, was in contrast to last year’s profit. The sales in Europe, with exception to Spain, were 40.6% of the total. After considering all this impressive data and the number of shops, it is clear why a widespread company like Zara needs a supply chain which is efficient.... When the customer wants something, an effective supply chain would ensure that it is available. This increases the customer's interest in the company and encourages brand loyalty. It also helps keep a close contact with the suppliers which ensures that maximum advantage can be gained out of doing business with them. Zara is one of the largest brands, by the Inditex Fashion Retail Group, that has 723 stores in 56 countries making sales of Euro 3.8 billion (India Supply Chain Council, 2006). Zara has a very high product turnover. It makes more than 11,000 products annually. The annual report of Zara (Inditex) for the fiscal year 2006 covers all activities from February 2006 to January 2007. Zara opened 138 new stores during the past year, increasing its selling area by 15%. The sales were an increase of 21% at Euro 5,352 million. It earned net profit of Euro 1 billion (Safe G., 2007) an increase of 25%, was in contrast to last year's profit. The sales in Europe, with exception to Spain, were 40.6% of the total. (Inditex Annual Report, 2007) After considering all this impressive data and the number of shops, it is clear why a widespread company like Zara needs a supply chain which is efficient. Zara's fashion is based on imitation; it copies designs from the catwalk and other spots and brings them to their customers at low prices in as little as a couple of weeks. Since this is all the time that is given to them, the whole process of designing, ordering, producing and delivering the clothes to the stores must be quick and timely. If this is not done, Zara will not have enough new items to bring to the shelves (which is its technique) every two weeks. Since Zara does not advertise, this is the only way it can attract customers. When the