Zara – a quick change inventory

Most big fashion retailers have to guess what their customers will want in nine months’ time so they can start making it now. But product cycle times are much shorter at Zara, a Spanish fashion company with 519 stores in 46 countries. It takes Zara just three weeks to go from designing a new product to selling it.

Zara is a complete supply chain, from start to finish. Design, manufacture, and distribution are integrated and they take place in-house. Zara’s competitors outsource all the manufacturing and use cheaper foreign labour, but Zara makes half its clothes itself.

It has 23 highly automated factories in Spain where the fabrics are cut and dyed by robots. Most finished products are only in its warehouse for a few hours. It doesn’t store clothes. It moves them.

Zara can respond quickly to market trends. At the end of every working day, the store managers report on sales to the headquarters in Spain. They give feedback about what customers like, and this information goes back to the design department right away. Product lines can be discarded or altered and new lines can be created immediately.

The company keeps costs down by keeping inventories low. New products are delivered to the stores twice a week and lead times are short. Zara can receive and ship an order almost as fast as a teenage customer can change his or her mind, and that’s very important in the world of fashion. It’s what keeps Zara ahead of its competitors. Rapid design, just-in-time production, and fast stock turnover are the keys to Zara’s success.