It is basically labor intensive which is the reason that with increased competition most apparel manufacturers source their manufacturing from low-wage countries, which means they are distant from the consumer market (Diaz, 2005). Fresh fabrics introduced every season, new and original designs created every now and then, mark the fashion and clothing industry today. Their product life cycles are three weeks, twelve times faster than industry average (Diaz, 2005). Zara maintains 80% of its production processes in Europe, 50% in Spain, which is very close to its headquarters (Slashdoc, 2005). While its competitors outsource manufacturing, Zara keeps almost half of its production in-house.
It does not push its factories in maximizing output but intentionally leaves extra capacity. It does not choose economies of scale but produces in small batches. It is thus able to manage the designing, warehousing, distribution and logistics function itself. Zara has an unorthodox and cutting edge approach and applies the sense and respond business model. This helps the company to respond to the rapidly changing markets. They have a super responsive supply chain in which they control everything what happens to products till the customer buys them (Ferdows, Lewis & Machuca, 2004).
Usually companies collect data but analyze it monthly or fortnightly while Zara responds to the changing needs on a weekly are daily basis. They sense the need and respond to the changing consumer demands. To respond is to take action whether it is changing product mix or capacity allocation which is essential in the fast changing fashion industry (Clifford, 2005). Zara produces 300,000 stock keeping units, or SKUs and the garments come in garments come in five to six colors and five to seven sizes (Ferdows, Lewis & Machuca, 2005).
Their designing and production areas are combined where the designers sit amidst the production process. Against an industry average of 20 designers, Zara has about 200 designers sitting right in the midst of the production process. The designers work in close connection with market planners. They have the latest fashion magazines around and a small prototype shop in each hall so that everyone is free to comment as soon as one design is ready. This enhances the speed and quality of the design process.
Thus they involve everyone is their designing and manufacturing process which is not possible if the manufacturing is outsourced. Zara uses the latest information technology to facilitate informational exchanges.
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