M&S & Zara Company

2 February 2017

Case: Marks & Spencer’s versus Zara’s Operations Marks & Spencer (M&S) is a major British retailer of clothing, food and financial services. Over 30 million customers are served per month in more than 300 UK stores, besides the many international locations. The company was established in 1884 and now it has over $17 billion in annual sales with the highest profit margin in the retailing industry. M & S is encountering some difficulties in logistics because it has lengthy logistics procedures forcing the retailer to order 9 months in advance.

Competitors like Zara have very fast and efficient logistics with excellent lead time. Nimble competitors are offering low prices as well as achieving many deliveries per year of new fashion items. M&S decided to pursue a new strategy of improving their product appeal, availability and value. The retailer encountered difficulties because its processes are not flexible enough to allow short lead times. New product development is slow and costly. The relationship with suppliers is not fast enough, nor efficient enough. M&S started to achieve savings by using fewer suppliers and working more effectively with them.

M&S & Zara Company Essay Example

This is to assure better product quality, value and availability. Spanish retailer Zara has hit on a formula for supply chain success that works. By defying conventional wisdom, Zara can design and distribute a garment to market in just fifteen days. In Zara stores, customers can always find new products—but they’re in limited supply. This makes the customer eager to visit the store more often and in an urgent manner. Whatever is sold will not be back again. Such a retail concept depends on the regular creation and rapid replenishment of small batches of new goods.

Zara often beats the high-fashion houses to the market and offers almost the same products, made with less expensive fabric, at much lower prices. This “fast fashion” system depends on a constant exchange of information throughout every part of Zara’s supply chain—from customers to store managers, from store managers to market specialists and designers, from designers to production staff, from buyers to subcontractors, from warehouse managers to distributors, and so on. Most companies insert layers of bureaucracy that can bog down communication between departments.

But Zara’s organization, operational procedures, performance measures, and even its office layouts are all designed to make information transfer easy. Zara’s cross-functional teams meet on short notice and without bureaucratic procedures. They can examine prototypes in the hall, choose a design, and commit resources for its production and introduction in a few hours, if necessary. Zara stores receive small shipments and carry little inventory, the risks are small; unsold items account for less than 10 percent of stock, compared with the industry average of 17 percent to 20 percent.

This case compares a traditional company with traditional logistics, versus a nimble and agile company following the new ways of doing logistics. Zara’s ways have proven to be successful and efficient, and at the same time they encourage customers to visit the stores more often and to purchase whatever they like before it gets sold out. This shows how important logistics can be in securing successful operations and processes resulting in products being at the right amount, the right price and the right place.

Question: Discuss the importance of successful operations management and logistics on gaining a competitive advantage. Use the case above, and the relevant B200B material covered so far, to analyze the differences between Marks & Spencer and Zara in terms of their operations and logistics. Clarify what made Zara so successful, and discuss current related issues in logistics and operations using the E-library (EBSCO and Emerald). (100 Marks)

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