Submitted by:-

Zara Anshu Kumari

Mohammed

Inventory
Thanu Khan
Navneet Kaur
Neha Prasad

Management Pooja Gathwal

 Zara is a Spanish fast fashion (clothing and
accessories) retailer based in Arteixo) in Galicia,
Spain.

The company was founded in 1975 by Amancio

Ortega and Rosalía Mera. It is the main brand of
the Inditex group, the world's largest apparel
retailer.

Today, Zara has close to 6500 stores across 88

About Zara
countries around the world, 12000 designs per
year and more than 30000 SKUs per year.

Today, Zara stores have men's and women's

clothing, as well as children's clothing (Zara Kids).
Zara’s highly responsive supply chain ships new
products to stores twice a week.

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 OPTIMIZATION INVENTORY
MODEL

Optimization policy is put in place to

help the company to determine the
quantity that should be delivered to
each one of its stores via shipment.

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 Push Or Pull System

Zara excels by pulling

customers into the brand

Zara has designed a supply chain that

mobilizes the financial metrics of speed
and flexibility, valuing both over cost.

Zara also capitalizes on the store experience by

continuously offering reasons for customers to visit the
stores and catch the hottest trends at affordable prices

Evolved 4Es of marketing strategy—Experience replaces Product,

Exchange is new Price, Evangelism is now Promotion and Every
Place is new Place that puts the customer at the centre.

https://unsplash.com/photos/mcLpPD36-2k
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 Short Lead
Time(as little as 2 Ownership and
weeks from Reducing Leadership
Control of
concept to store) Risks in Numbers
Production

INVENTORY MANAGEMENT
STRATEGIES
Supercharged React Information Keeping Costs
Product rather than Technology Down
Development Predict

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HOW ZARA USES
LEAN
MANUFACTURING
MODEL?
 Zara is vertically integrated. It produces nearly 60%
of its merchandise in-house. This vertical integration
approach gives Zara a lot of control over how it
operates.

In turn, Zara leverages this control into

precise data acquisition and forecasting,
Vertical seamless modifications, and reliable quality
in its products.
Integration

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 Just In
Time Zara uses vertical integrations in their supply
01.
Production
chain, and implement strict lean inventory
.
practices that ensure each store receives only
the stock that they need.

02.
Twice a week, at precise times, all the 650
store managers order clothes, and twice a
week, on schedule, new garments arrive.

03. Batch production reduces excess inventory and

wastages.

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 Holding inventory is hazardous for fast fashion because products that are in demand
one day can be out of favour the next day. So holding large amounts of inventory can
lead to heavy discounting or outright waste. Zara holds approximately 6 days worth
inventory.

LOW INVENTORY

Zara’s agile manufacturing and supply chain capabilities allow it to maintain low levels of
inventory across the supply chain and replenish as often as two times a week.

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KANBAN SYSTEM

➢ A Kanban system uses a queue of resources that

are ready to be pulled by the following process as
they are needed.

➢ ZARA creates up to 1,000 designs every month

based on store sales and current trends.

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 ONE
PIECE 01.
It is the movement of a product ,one
piece at a time through the production
FLOW
.
process

Approximately eight-hours after a store

manager places an order based on
customer demand, items are then picked,
02. 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

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 Zara’s vs.
Competitors
“With Zara, you know that if you don’t buy it, right then and there, within 11
days the entire stock will change. You buy it now or never.”
Zara which contributes 80% of group sales
concentrates on 3 winning formulae:
✓ Shorter Lead Time= More Fashionable
Clothes
✓ Lower Quantities= Scarce Supply
✓ More Styles= More Choice

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❖ Zara sells over 11,000 distinct items per year versus its competitors that carry 2,000
to 4,000.
❖ However Zara also boasts the lowest year-end inventory levels in the fashion industry.
This lean working capital management offsets their higher production costs and enables
them to boast rapid sales turnover rates.
❖ At Zara, only 15% to 25% of a line is designed ahead of the season, and over 50% of
items are designed and manufactured in the middle of a season based on what
becomes popular. This is in direct contrast to a close competitor like H&M where 80%
of designs are made ahead of the season, and 20% is done in real-time during the
season.
❖ Most other retailers commit 100% of their designs ahead of a season, and are often left
with excess inventory that they then have to discount heavily at season-end.
❖ Instead, Zara’s quick replenishment cycles create a sense of scarcity which might
actually generate more demand.
THANK YOU