Supply Chain Tricks Fashion Retailers Can Learn From ZaraNovember 9, 2018
In the midst of heated competition and elevated consumer expectations, fashion retailers must hold themselves to a higher standard. This is especially true when it comes to the increased pressure to produce fresh off-the-runway styles. Zara, one of the biggest international fashion companies, is known as a leader amongst fast fashion retailers. Quick turnaround times for design, production and deliverance can satisfy customers seeking the latest trends, translating into retailers accomplishing one of the most sought after goals in the fashion market: gaining loyal customers.
Those who fail to make speed a priority risk falling behind and ultimately losing customers and profitability. Retailers aiming to prevent that bleak fate have some work to do, but companies like Zara that are exceedingly winning customers with fast fashion offer some supply chain tricks all can learn from. Conversion to this business model starts with implementing a digital supply chain to meet the needs of an evolving consumer base.
Remove silos with a digitally connected platform
Zara has the ability to replenish its more than 2,200 stores located across 96 markets with consistent, small-batch deliveries starts at the source. This is made possible because the company owns its supply chain and competes on its speed to market. By doing so, Zara allows its stores to be filled with new items within two weeks of the original design first appearing on catwalks. Without the right technology empowering its supply chain, fast fashion wouldn’t be feasible for Zara.
Breaking down the barriers created by spreadsheets and manual processes should be the first task at hand for retailers wanting to compete on the basis of speed. Retail and fashion supply chains today are disconnected, self-contained and slow-moving, limiting a company’s ability to quickly make important decisions. As retailers begin to identify these outdated processes as setbacks, more companies are choosing digitization to reduce supply chain risks and enable faster decision making.
React to fluctuating demands
Whether it’s the amount, frequency or style of clothing that fluctuates, Zara’s fast response to match consumers’ demands stems from a controlled and integrated just in time production method. While planning ahead is necessary, Zara also maintains flexibility through committing six months in advance to only about 15 to 25% of the season’s line, leaving room for change with up to 50% of its clothes being designed and manufactured in the middle of the season.
While Zara has capacities that may not be available to all retailers such as around-the-clock operations, companies can still learn from the flexibility and urgency instilled in the business. With an agile, adjustable supply chain, retailers can finally react to changing demand signals and fashion trends without significant time lags.
Benefit from a digital supply chain with NGC Andromeda
According to McKinsey, retailers are starting to discover the secret to staying on pace as two-thirds of sourcing executives expect to have digital supply chains up and running within the next five years. As Zara and other renowned fast fashion companies like H&M are finding out, making the switch to digital is highly rewarded. Digital supply chains can reduce costs by at least 2.5% and cut lead times by two to eight weeks. Companies also often sell more at full price as items are more frequently regarded as scarce or exclusive.
NGC’s Andromeda Cloud Platform® allows companies to get started with a digital supply chain now, providing a “future-proof” solution that can easily accommodate predictive and cognitive technologies while bringing together all departments.