Compare and Contrast Two Supply Chains

For this essay I have chosen two very different companies; Zara, a Spanish fashion collection manufacturing company, and Dell, American multinational information technologic corporation. Some years ago, in the fashion industry there was a relationship between price and quality. For high quality brands, there was a need to spend a high amount of money. Zara was one of the first companies that changed this assumption by introducing good quality clothes at a good price.

Normally, if you look at any other brand such as Loewe, Louis Vuitton, etc. you will realize that they basically have two different collections of clothes: autumn- winter and spring-summer. Zara does not use in this way of supplying their stores. On the contrary they believe in change. They are constantly changing their clothes and supplying their stores (over 14,000 stores in the whole world) with new and different outfit two times per week (only for the European stores) to satisfy the needs of their customers. Traditionally all the fashion companies required long time to supply the stores with the clothes.

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Basically the whole supply chain has very long lead times; if you want to produce a new t-shirt, the production, manufacturing, packaging and specially distribution will require a lot of time which will make the planning for weeks or even months. Zara, on the contrary, has manage to minimise the time to supply the demand as much as possible but, how do they do that? First of all they minimize the time spent in design, as they don’t always look for the most innovative and creative clothes. What they do is listen to consumer preferences and what it is more popular and produce what they want.

That is why they always have fresh and trendy designs. In terms of production, they have and control the main factory in La Coruna (north of Spain) to be able to supply as fast as possible all the stores. The fact of having the factory in Europe and not in other countries such as China is high, but it is something that is covered by lower transportation costs as well as the capacity to supply demand almost immediately, which its translated in big amount of sells. It is a very flexible demand based production.

Another positive point of Zara, due to high frequency of changing clothes is the low risk that this report. As they change constantly the outfit, if there is a product that is working good it can be immediately replace within a maximum of one week, while in other companies, where the stock is bigger, it will need to be stored in the shops for longer time. This will carry on low inventory costs. Zara, has an agile production that focus it success in the quick response to demand even though it is no, a priori, predictable.

Dell’s supply chain, on the other hand it is completely different that Zara’s one. The components of Dell’s supply chain are the customers, Dell’s website (which is the only official place where you can buy a Dell computer), Dell’s assembly plant and Dell’s suppliers. The way Dell computers production works is completely different from Zara. In the previous example we saw that the company was the one regarding the demand and trends in order to make their products (clothes). Dell provides the customers a platform, their webpage, where they have all the different options for their products.