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Team Paper Thing

In: Business and Management

Submitted By valla1fm
Words 554
Pages 3
The first learning point that we retained from reading this article was that when a company’s value proposition is to provide customers with trendy fashion products at affordable, not necessarily low, prices; an operation strategy that is focused on speed is needed. In other words: a strategy where a vertically integrated supply chain is dedicated to responsiveness. The article elaborates on this when talking about Zara and Gap. While retailers such as Gap reduce costs by outsourcing manufacturing, Zara owns its entire supply chain, from manufacturing through distribution centers to retail outlets. Because of its focus on fashionable, trendy products, Zara procures capacity from its fabric suppliers but does not commit necessarily to a specific color or print until it has a clear picture of consumers’ preferences. Retail stores provide direct feedback to the company headquarters through its IT infrastructure, allowing designers to identify trends and respond accordingly. Using this strategy, Zara was able to reduce time to market for new styles to three to four weeks. Our team also learned the difference between traditional operations strategies that have been focused on efficiency vs. those that have been focused on responsiveness. In operational efficiency, the firm focuses on low-cost strategies across all functional areas. This includes supplier selection, manufacturing, product design, and distribution and logistics. Typically, in such a strategy, production and distribution decisions are based on long-term forecasts, inventory of finished goods is positioned close to market demand, and supplier selection is based mostly on component costs. Hence, sourcing from low-cost countries is often the norm. By contrast, a responsive strategy focuses on speed, order fulfillment, sercice level, and customer satisfaction. Here, the objective is not necessarily to squeeze...

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