Fashion is a fluid concept. To understand the concepts of management in fashion retail, it is vital to understand the multifaceted nature of business. For retailers, there is more to the process than sales and high fashion. Those who seek a good example of the benefits of an efficient supply chain can find an excellent example in the Zara Corporation. The concept of fast fashion has been made possible because of technology and an understanding of the supply chain. For the Zara Corporation, it is vital to business and integral to the competitive edge that Zara has over its competitors.

The Zara Corporation’s success is based on its supply chain. Fast fashion can exist only with a tightly controlled manufacturing and distribution arm. Zara achieves this through keeping its design, manufacturing, and distribution wings in house, and relying on them to create clothing that is tailored to appeal to men, women, and children around the world. This fashion is based on modern styles, but is meant to be distributed through Zara’s supply chain. This structure eliminates middle men and allows the Zara Corporation to keep a tight hold on its supply chain in order to eliminate waste and streamline the process that leads them from design to manufacturing to retail sales (Zara 2001).
Background on The Zara Corporation

The Zara Corporation is subsidiary of Inditex, which is based out of Spain and is the world’s largest fashion group. The Zara shop was actually the beginning of Inditex, with the rest of the group growing from the success of Zara. The Zara Company is a clothing provider for men, women, and children based out of Corunna, Spain. The first store was founded in 1975 by Amancio Ortega, who originally working as a retail employee. Zara’s unique take on manufacturing and supply took shape in the 1980’s, and has since led to success in the industry. Since its beginnings, the Zara Corporation has grown to a world wide retail clothing business.

Zara is a company built, by their own description, on imitation (Kumar 2011). Their business model consists of high turnover of design and retail, and the design that mimics that of the latest fashions. Zara’s success can be attributed to this imitation and the speed at which products can be manufactured and shipped to retail locations, allowing the company a great deal of flexibility in its product selection (Thoney-Barletta and Hartman, 2005). This turns the traditional retail model on its head, allowing for the perfection of the supply chain and the ability of Zara retailers to maximize profitability, minimize loss, and beat their competitors to the sale of new fashions.

Zara’s future lies in globalization and expansion. While their supply chain relies on a single source of manufactured products, the model could be sped up by opening new factories farther from the main factory in Corunna, Spain. This would be further improvement upon their already impressive supply chain. In addition, the cost of shipping to all the areas of the world in which Zara retailers maintain businesses would be saved by opening more localized factories.
The Vertically Integrated Supply Chain and the Competitive Advantage

Fast fashion is the industry term that refers to the current turnover time in which designs move from the conception and fashion show stage, to the retail stores and, ultimately, in to the hands of customers. As implied by the name, fast fashion is the practice of speeding that turnover time up as much as possible in order to move the products from the design and manufacturing stage to the retail stage. The trend in fashion over the past decade has been to employ as speedy a method as possible that heavily involves the employment of efficient supply chains (Hines, 19).

The goal of fast fashion is, ultimately, to move products more effectively by ensuring that the latest fashions, often from events like Fashion Week, arrive in stores as quickly as possible. For the Zara Corporation and retailers like it, the supply chain is the most important aspect that increases the speed of fashion. Since the Zara Corporation is not in the business of predicting fashions, they must utilize effective supply chains in order to respond to consumer demand.

Zara accomplishes this goal by being in control of its own supply chain. The Zara Corporation designs its own products and manufactures them in house at a factory in Corunna, Spain. The products are manufactured and shipped to stores worldwide, with a turn over time of only a few weeks from conception to retail. The location of the factory is especially important to this effort because Corunna is known as a textile town; much of the raw materials can be purchased close to the factory, and employed in manufacturing cheaper and more quickly (Chen 119).

While some cheaper, outside sources are used in certain products, Zara produces roughly 50% of its own goods, allowing these goods to be shipped directly to stores at the lowest possible cost. These goods are often those that are imitators of those items that are on the cutting edge of fashion. Because it is impossible to predict with perfect accuracy the tastes of their customers, Zara focuses on bringing as many products to the customers as possible and allowing them to decide their preferences.

The main sourcing strategy for Zara is based on its location. Corunna is a textile town, and Zara gets its raw supplies from this local source. It is common for the Zara factory to receive a shipment of raw goods from the area surrounding the factory and implement those goods in to their current designs. This eliminates the need to purchase and ship goods from far away and is a perfect example of the Zara Corporation’s resourcefulness.

Zara’s supply chain is integral to its market strategy. The retail strategy for the company is best exhibited by utilization of its own supply chain in order to employ the concept of fast fashion as an imitator to other brands. Zara designers, manufacturing, and shipping turn fashion retail in to a trial and error business model, focused on customer needs. Because of its supply chain, the Zara Corporation is capable of listening to customers and employing new products at a lightning pace. In addition, Zara can monitor and remove poorly selling items from its shelved while incurring minimal manufacturing costs rather than the costs of purchasing those products from more expensive designers and manufacturers. Because so much of Zara’s supply chain is internal and focused on sales themselves, and the items that are produced and sent to retailers are those that sell well, the supply chain can be described as both lean and agile, which are both indications of the effectiveness of the supply chain and its overall benefit to the retail company.

A key component in Zara’s competitive advantage is the concept of imitation as it relates to the retail merchandise. Zara does not rely heavily on popular designers and traditional manufacturers like its competitors. Instead, the internal design and manufacturing functions on imitation and volume. This imitation and volume is made possible by the internal design and manufacturing, enabling the supply chain for the company to remain lean and agile while providing the highest level of cost effectiveness that is possible.