Purchasing Transformation

Last week, I promised that Purchasing Transformation would take a closer look on how purchasing can ascend in the value chain of a company to truly become a valued partner and fully exploit the potential which sometimes is left unexplored.

At the Spanish fast fashion company Zara, the organizational layout has been designed to facilitate speedy communication and deep co-operation between designers, purchasing and marketers in order to speed up the supply chain to deliver fashion that is up-to-date, trendy and affordable.

For those of you that don’t know Zara, they are part of the Spanish Inditex corporation, the worlds second largest clothing retailer, only overshadowed by Gap Inc, but what makes them so special in terms of supply chain and procurement practices is the tightness in which marketing, designers and procurement interact.

Zara has a single centralized design and production centre in La Conuña; which is set up in three large halls; one for the women’s line, one for men’s and one for children’s. Designers, marketers, production planners and procurement all sit next to one another and large circular tables are continuously shared between the different practitioners. In each hall a small prototype store is set up so that everyone can comment on the new garments as they are developed.

The idea behind this layout is that Zara wanted to do away with the layers of bureaucracy that usually hinder inter-departmental communication. The physical closeness of the different business practices makes it possible for Zara to design, develop, procure and commit resources for production as well as introduction within hours if necessary.

With a super fast fashion profile, Zara has been pivotal in restructuring the fashion industry; forcing competitors (and even high-fashion brands such as Prada and Gucci) to adapt to Zara’s frequent product updates and speedy supply chain practices (Zara claim to be able to design, procure, produce and deliver new garments in little over two weeks time)

Now the organizational layout is not the only thing that sets the Zara supply chain apart from its competitors; instead of opting for the traditional far east supply base, Zara still produce many of its garments in Spain – citing closeness and speed of delivery as arguments over low cost of production – as well as at production facilities in nearby countries such as Portugal, Morocco and Turkey.

With the recent globalization of Zara’s markets, the company now faces new challenges; with stores in the US and Asia the company’s supply chain is coming under heavier pressure and time will tell if they need to adjust their current supply chain to facilitate the expansion and keep costs of logistics down.

This entry was posted on October 1, 2008 at 11:56 am and is filed under Best Cost Country Sourcing, Organization, Strategy, Supply Chain Management. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.