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Comment This excerpt from a new book about "logistics clusters" tells how the fashion retailer Zara uses the regional cluster in Zaragoza, Spain, to support its unusual—and highly successful—manufacturing and distribution model.
In his forthcoming book, Logistics Clusters: Delivering Value and Driving Growth, Dr. Clustering many logistics services in one area Zara inbound logistics transportation and logistics operations more efficient. In addition, companies that participate in logistics clusters attract government investments, educational and research institutions, and workers and suppliers.
These developments, in turn, make the cluster even more attractive to companies that use or provide logistics services. One such cluster is located in the city of Zaragoza, Spain. This excerpt from the first chapter of the book focuses on the experience of the Spanish retailer Zara, which decided to locate its distribution center in Zaragoza in order to keep costs low and maximize transportation options.
She had popped into Zara for some casual browsing, recognized the blouse from a recent music video, loved it, noticed it was the last one in the store, and feared it might not be there the next time she went shopping.
On the other side of the world, a Madrid housewife carefully selects two large fresh fillets of Namibian hake at a Mercadona grocery store.
From her experience, she knows Zara inbound logistics the fish—caught, cut, and packed by the fish processing company Caladero—will be fresh from the sea.
These two very different products in very different locations share a common connection: Zaragoza is no giant metropolis and is known neither for manufacturing clothing nor for catching fish.
In fact, with fewer thanpeople, the modest Zaragoza metropolitan area has one-sixth the population of greater Madrid or Barcelona.
Nor is Zaragoza a big fishing port; it sits kilometers northwest of the Mediterranean and kilometers southeast of the Atlantic Ocean. Some might say that Zaragoza sits in the middle of nowhere. Why would Caladero sendmetric tons of fish a year to an arid, landlocked warehouse kilometers from the sea?
The answer lies in the economics of how and where goods move from a myriad of global sources to a multitude of global consumer outlets.
These two companies, and many others, chose this particular small city in Spain because of the agglomeration of economic activities, known as a logistics cluster, that is centered there. The story of Zara Although one might think that making a blouse starts with a bolt of cloth, it really begins with a bolt of inspiration.
In the fast-paced world of fashion, speed wins. At Zara, speed means spotting trends quickly, crafting designs quickly, making clothes quickly, and getting them into stores quickly.
When Zara designers see a hot new look, they have the authority to do what it takes to bring the idea to market. They are empowered to tap inventories, redesign garments, authorize manufacturing by trusted local seamstresses who can quickly sew the patternand then ship the new clothing off to stores.
In this particular case, Zara designed a Madonna concert-inspired blouse and got it into stores in only three weeks, before Madonna finished her tour. To go from idea to sales, Zara needs just five to six weeks for totally new designs and only two weeks for a modified design.
But within a few weeks, hundreds of European women were wearing similar outfits"—designed, made, distributed, and sold by Zara.
If the new style fails to sell well in the first week, Zara cancels it. If a new design does sell well in the first week, Zara might make more until some other new design supplants the old one. Few clothes stay in the warehouse for long.
In an average two-month period, the stock turnover will be around 70 percent. With so many new styles every week in Zara stores, customers know they will always find something fresh and exciting when they shop.
They also know that they need to buy fast, because Zara replaces styles very quickly.
It is all about creating a climate of scarcity and opportunity. To keep costs low, Zara optimizes and automates its logistics operations. Although Zara automates many manufacturing and logistics activities, sewing still requires deft human hands.
For fast-fashion items, like the Madonna-inspired blouse, Zara relies on a network of hundreds of local sewing cooperatives in northwestern Spain and northern Portugal. Although these small shops are among the least expensive in Europe, their labor costs are six to sixteen times higher than those of their Chinese counterparts used by most other clothiers.
Ocean freight from China to Europe adds three to seven weeks to the design-to-display process and to the replenishment cycle time.
Fast airfreight from China to Europe costs many times more per kilogram than ground transportation within Europe and has a heavy carbon footprint. Using nearby producers means fast turnaround—an order of magnitude faster than competitors—obviating the need to forecast what customers will want many months in advance.Zara is an apparel chain that works differently from traditionalretailers.
The main characteristic is the vertically integrated model. Instead of relying fully onoutside partners, the company manages all design, warehousing, distribution, and logistics rutadeltambor.com products are distributed in small batches. Zara stores 5. Comparison of logistics operations between Mango and Zara.
Inbound and outbound transportation. Transport mode strategies Outsourcing of logistics operations 3PL companies More about Comparison of Zara and Mango stores Log Essay. Zara Is A High End Street Store Words | 6 Pages. Zara Inbound Logistics Inbound Logistics is the flow of product into a production unit or warehouse and has not traditionally been the responsibility of a single individual.
Production, procurement and supply chain have all played a part but the end result can be unsatisfactory. Even though Zara gets product to market quicker than competitors, its logistics process, thanks to demand-driven commitment, is not so fast as to be unmanageable.
Zara utilizes higher-cost Spanish and European labor to produce 75 percent of its line. Zara case study 1. Aalborg UniversityBSc Economics and Business Administration October 24 Zara is an apparel chain that works differently from traditionalretailers.
The main characteristic is the vertically integrated model. Describe the Value Chain of InditexValue Chain InditexPrimary Value Chain Activities Inbound Logistics. This excerpt from a new book about "logistics clusters" tells how the fashion retailer Zara uses the regional cluster in Zaragoza, Spain, to support its unusual—and highly successful—manufacturing and distribution model.