Transportation Economics and Decisions of ZARA

Zara
Student’s Name
Institution
Abstract
Organizations that deal with manufacturing have the aim of producing quality products at the minimum possible cost while at the same time meeting the demands of customers. The supply chain of the firms determines whether they are able to achieve the aim. This paper examines the role of transportation economics in the operations of Zara. The paper examines how the supply chain of the company influences customer service levels. The inventory control practices, as well as technology used by Zara, are also examined. The paper finds out that Zara’s supply chain contributes to a large extent on its success. It is the recommendation of the paper that companies in the industry should monitor the changes in customer tastes and preferences and incorporate them into the development of products. Firms should also invest in building their brand identities.
Zara
Overview of Zara
Since Zara opened its first store in Spain in 1975, the company has developed to be one of the most respected fashion brands in the world today. The firm is a subsidiary of Inditex, which was incorporated in 1985 (Inditex, n.d.). Zara currently owns more than 6,900 stores that are distributed in over 86 countries around the world (Hiiemaa, 2016). The company continues to grow as evidenced by the opening of new stores every year. According to Hiiemaa (2016), the past five years has seen the company open an average of 400 stores annually. As seen, the company has set foot in almost every corner of the world. Its growth has been mainly due to its supply chain strategy.
Role of Transportation Economics
What makes Zara stand out in the fashion industry is the speed with which its products reach its stores. As such, transportation economics play an immense role in ensuring the operations of the firm are continuous. The fashion products of Zara are manufactured in different regions across the world including Europe, Asia, and Africa. Despite these manufacturing points being far from one another, every product has to pass through the logistics center in Spain before it is finally distributed to the different stores around the world. Therefore, all the products have to be transported to Spain where categorization is done.
According to Ruddick (2014), all the stores of the company receive deliveries two times every week. With more than 6,900 stores distributed around the world, having each store getting deliveries twice a week is phenomenal given that all of the products have to pass through Spain first. Such pace is enabled by its transportation economics. In Spain, after inspection, sorting and price tagging of the products of the company, overnight packing is done followed by loading into trucks to be transported directly either to the airport or store. The planes and trucks have been organized in such a way that they run on established schedules. As such, delivery to most stores of the company happens within 48 hours (Berfield & Baigorri, 2013). As seen, transportation economics enables the company to deliver products to its stores within the shortest time possible.
Contribution of Zara’s Supply Chain to Customer Service Levels
The supply chain of Zara contributes to a great extent o...