Operations management is arguably the most influential department that determines a firm’s profitability. A vigorous and thorough operations management department ensures that the operations of a firm are conducted efficiently and effectively.
Process design holds a pivotal role in the successful operations of a business.Process design entails the selection of the workflow methods, utility requirements and equipment needs required for the smooth running of operations in an organization. Basically, the process design of a company refers to the laid out strategies and modes of communication of work to enable a firm attain its mission.Zara is located in a textile city. The firm’s acquisition of raw materials is rather easy and cheap.
The raw materials are gathered in the warehouses where the weaving starts. Weaving needs the skills of experienced workers as this stage involves coming up with cloth whose notion is only in the mind. Dyeing follows where weaved garments are coated with desirable colors. Printing is then done selectively on garments that allow for printing. Finally, stitching is done to create a neat and tidy output.
Zara uses the engineering design process in its operations. This is a more advanced method when compared to the scientific method. The scientific method focuses on the study of the current operational processes whereas engineering process focuses on creation of new operational processes, websites and environments. (Christopher, 2000) Zara is a fashion company that deals with clothes and human wear. The use of the engineering process has enabled the creation of new and catchy trendy styles that suit the tastes, preferences and interests of the consumer market.
The engineering process exhibits a wide range of advantages, starting with the intensive research conducted in aproblem. The problem is first defined then thoroughlythen backgroundresearch is conducted. Alternative solutions are created to ensure a positive turn in the way operations of a business are done. The use of the engineering business process has enabled the company determine the inventory shipment it sends from its two central warehouses to its 1500 stores around the globe. This process has enabled the company to monitor its replenishment and demand levels by ensuring demand meets supply. This has subsequently led to the reduction of wastage as there are no enormous amounts of excess demand cases in the market.
The firm uses the centralized layout. They have a centralized system of operation of activities. All of the clothing of Zara is processed through the distribution center in Spain. The new items are inspected, sorted and tagged and loaded into trucks. In most cases, the clothing is delivered within 48 hours of placing an order. The firm controls most of the procedures on the supply chain, designing, manufacturing and disseminating its products. This has enabled the firm produce over 450 million items in a year (McAfee, 2004). The firm focuses on vertical retailing where it covers a wide range of products. This ranges from children clothes to men’s wear, as well as ladies wear.
Zara has set up its factory in La Coruna. This is a city well known for the production oftextiles. Its mode of distribution is called the just in time (JIT) system (Tungate, 2008). This model of production has made the company establish a business model that allows for self -containment through -out the stages of materials, manufacture, product completion and distribution to the multiple stores around the world.
Interestingly, Zara has adopted asystem in its layout that is not incorporated in other firms. This is its rate of zero advertising. As a company, Zara has not engaged in activities of creating awareness of its products. This has helped the finance department cut its costs enormously as they do not incur advertisement costs. Instead, the company has preferred to invest a percentage on its revenues in opening new stores instead. This is a recommendable move as this strategy has led to the exploration of new markets. In addition to that, the firm is able to penetrate deeper into the consumer market to reach those who could miss out on media advertisements. It has brought its product near the people.
Question 5
Product design refers to the methods and strategies used by a company to come up with new products to be introduced in the market. Critical thinking and thorough exploration of the consumer market is needed. The most dominant form of product design is through divergence. Divergence entails the exploration of new markets through the application of critical thinking. This provoked the firm to use be using its revenues to create new markets instead of advertising. This also resulted to the sustainability method of product design where the process of exploring new markets is managed. This helps to reduce the wastage of financial resources. This is because the firm has checked for its viability in the locating its stores in new markets.
The products of Zara lie in the growth stage. Growth stage is normally characterized by a strong growth in sales and profits. This is evident in Zara as they continue to register enormous numbers of clothe line stores. The zeal to be effective in acquiring new markets drove the firm to use its revenue and resources to establish new stores instead of using their revenue for advertisement purposes. The growth stage is also characterized by the enjoyment of factors of production (Mazaira & Avendano, 2003). Again, this is evident in the firm’s activities as they offer large amounts of discounts when compared to their competitors. It should be noted that this does not tamper with the profit margins. This has made it possible for people to invest in the firm which has consequently led to the maximization of the growth stage.
Sustainability is an important concept that is widely referenced and that has achieved broad support. It remains difficult to implement because of its complexity. The most challenging aspect of sustainability remains in technology which changes rampantly. Sustainability requires the balanced pursuit of three aspects. The first aspect is that of ecological health. This means that a business should not engage in practices that cause harm to the people in the society.
The second aspect is that of economic welfare which stipulates that the company should engage in charitable activities in the society such as visiting the sick and donating food and clothes to the people. The last aspect of legal issues on sustainability ensures there is economic welfare. This basically entails producing goods and services that are needed in the community (Tiplady, 2006). The wants and desires of the people should be met.
Zara has engaged itself in charity works. Zara is behind the initiative of Tonic Music for Mental Health. It is a fundraising project where Zara organizes for workshops to help people living with mental health to develop new skills and hobbies. These activities accelerate the rate at which they recover. Tonic also focuses on eliminating stigma directed to people with mental problems. In addition to that, Zara recently made a proposal to Tanzania to engage themselves in the activity of planting trees. This is yet to be passed through.
Question 8
Management is certainly an important factor in the running of operations in an organization. Zara has given much priority to its management system. The management is in charge of all the operation of the firm. It has the mandate to give orders and sometimes, alter the normal operations of the firm in order to increase a firm’s profitability. A selfless management team is essential to ensure there are no cases of embezzlements of funds.
Zara’s management team exhibits flexibility. This particularly entails flexibility in designing products that satisfy human wants (Lopez & Fan, 2009). They have made attempts over the years to cover the increase the satisfaction of its customers and acquire new customers though the diversification of its products. There is need to develop a system that promotes short lead times. Lead time is the time taken to deliver the ordered goods and services to the customers.
Zara should consider decreasing quantities produced to decrease inventory risk. The firm makes as much as 450 million items annually. It has been noticed that some of the inventory ends up staying in the retail shops for long durations of time. This is because they produce a lot of similar stocks in a world that everybody is struggling to possess unique attires. This leads to low stock turnover. Some clothe designs are not in accordance with the tastes and preferences of the consumer market.
Increasingthe number of available styles will cause a drastic change in the firm’s profitability. This will ensure that the customers have a wide variety of choices to choose from. Diverse styles will increase the utility of their products and will lead to a broad and wide satisfaction of its customers. This will consequently increase the purchase rate by customers as the tastes and preferences of many customers will be focused on by the firm (Ghemawat, 2003).Diversifying the design of their items and products will also give Zara a competitive advantage over its competitors.
However, in the chase for quality management, Zara should be ready to encounter additional costs. The overhead costs are bound to increase due to the need to purchase equipment and the more personnel involved in enhancing the quality of management. To start with, capital costs will be involved. This will be encountered where the firms will need to purchase equipment that enables easy styling of clothes or purchasing vehicles to decreases thelead time. Zara will need to invest in delivery methods to ensure the lead time is reduced by buying more private vehicles to increase the number of deliveries done in a day. Toadd on to that, Zara will incur more costs on salaries and wages. This will arise as a result of needing more employees to aid faststyling of clothes and in the manufacture of more products to satisfy the wants of their customers. In regard to that, the firm will be forced to hire more delivery personnel to counter the challenged of delayed deliveries as well as overworking their workers.
Inspection refers to keen observation and analysis of an item or an activity. Benchmarking is a method of improving quality management which involves direct comparison of the performance of activities between two firms. The company which hosts the benchmark in most cases is the company performing better than the company in question. The company has engaged itself in benchmarking activities to compare its performance with that of its competitor Inditex. Inditex is a company well known for its ability to distinguish itself from other fashion companies through its mastery of understanding the trends of the consumer market.
Zara has been able to incorporate these skills in its activities and operations. Zara has also adopted the skill of inspection in its activities and products. It checks for pests in its human hair products to ensure the human hair supplied to its consumers is neat and tidy. This protects consumers from the effects and infections that could be caused by the pests.
In conclusion, the management, process and product design incorporated in Zara has played a fundamental role in the profitability of the firm. The accurate arrangement and differentiation of the three factors roles and responsibilities has contributed to the effective and efficient running of activities. This has led to smooth operations of activities. Other business entities should carry out a benchmark on Zara to adopt its management strategies.
References
Christopher, M. (2000). The agile supply chain: competing in volatile markets. Industrial marketing management, 29(1), 37-44.
Ghemawat, P., Nueno, J. L., & Dailey, M. (2003). ZARA: Fast fashion (pp. 1-35). Boston, MA: Harvard Business School.
Lopez, C., & Fan, Y. (2009). Internationalisation of the Spanish fashion brand Zara. Journal of Fashion Marketing and Management: An International Journal, 13(2), 279-296.
Mazaira, A., Gonzalez, E., & Avendaño, R. (2003). The role of market orientation on company performance through the development of sustainable competitive advantage: the Inditex-Zara case. Marketing Intelligence & Planning, 21(4), 220-229.
McAfee, A., Dessain, V., & Sjöman, A. (2004). Zara: IT for fast fashion. Harvard Business School.
Tiplady, R. (2006). Zara: Taking the lead in fast-fashion. Business Week, 4.
Tungate, M. (2008). Fashion brands: branding style from Armani to Zara. Kogan Page Publishers.