Zara Essay Example | Topics and Well Written Essays - 1500 words

Zara - Essay Example tay committed to the principles surrounding supply chain management. The make-buy decision In a bid to understand the direct impact of supply chain management on the running and development of organizations, Zara has been chosen to be a focal point in this essay. This essay will critically analyze the supply chain system in place at Zara and how best it is working. It would also discuss the weaknesses of the organization’s supply chain system and how it can be improved. Zara as a fashion retail organization has been chosen by the writer purposely because of the organization is fast developing attention among reviewers who have supply chain management as their focus. Such reviewers as Kasra Ferdows, Michael A. Lewis and Jose A.D. Machuca of Harvard Business Review place premium on the recent successes that Zara is recording with its retail of fashion products. The cause of the success has been linked to the company’s supply chain system. In the view of Ferdows, Lewis and Jose (2005), â€Å"Zara has hit on a formula for supply chain success that works.† One critical area of retailing, of which Zara as a retail organization is inclusive is the concept of make-buy decision. Make-buy decision would be especially useful for discussion as far as Zara is concerned because Zara is into retail of fashion products, of which it has the choice either to manufacture its products or to purchase them. According to the Encyclopedia of Management (2010), make-or-buy decision is the act of making a strategic choice between producing an item internally (in-house) or buy it externally (from an outside supplier).† Applying the principles of make-buy decision to Zara, it can be inferred that for the organization to make a decision whether to buy or make should be backed by carefully scrutinized strategic analysis. This is seen in the definition given by the encyclopedia, making mention of the word ‘strategic’. It should be observed that fashion is a global language, yet varying and versatile (Akuoko, 2009, p.19). This makes the demand of customers for a particular type or style of fashion change over time. Due to the unstable nature of world fashion, Zara must therefore have strategic analysis at management level that ensures that the core needs of varying consumers are met. Zara has consumers from all over Europe and from different cultures. This is both a challenge and an opportunity for the organization to be diversifying. This way, the make-buy decision should permit the organization to select the kinds of fashion line they can produce internally and those they would have to depend on from external sources. In deciding which to produce internally, the organization must factor in their areas of strength and specialization. Though it is common knowledge that â€Å"Zara's designers create approximately 40,000 new designs annually, from which 10,000 are selected for production† (Harvard Business Review, 2005), it c ould equally be true that the organization cannot be ‘master of all trade’. To this effect, the principle of buy-make decision permits the organization to produce only on its specialization and buy the rest. Sourcing Strategies and supply chain configurations The decision on what to buy or make may be a complicated one but once that