MGCR 331 Lecture Notes - Vertical Integration, Transaction Processing System, Natural Disaster
15 Jan 2013
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Document Summary
Zara: highly vertically integrated keeping huge swaths of its production process in-house speed up complex tasks, lower cycle time, reduce error. Young and hungry designers, individual bonuses tied to the success of the team, rotated teams: manufacturing and logistics: getting locally targeted designs quickly onto store shelves. The firm is so responsive through a competitor-crushing combination of vertical integration (several layers in its value chain) and technology-orchestrated coordination of suppliers, just-in-time manufacturing, and finely tuned logistics. The firm makes 40 percent of its own fabric and purchases most of its dyes from its own subsidiary. Roughly half of the cloth arrives undyed so the firm can respond as any midseason fashion shifts occur. Able to retool offerings away from more costly fabrics, preserving margins. The facilities move about two and a half million items every week, with no item staying in-house for more than seventy-two hours.
