The Operating Model Canvas for Zara

Zara, located in Northern Spain, was one of the first providers of ‘fast fashion’. Recognizing that fashions change quickly, the company developed a tightly linked design, manufacturing and retailing system based on replenishing stores twice per week from central distribution centers, mostly located in Spain. A garment manufactured in India will most probably travel to Spain before being sent to a store in China.

Suppliers

Zara has many clothing suppliers, but it does many tasks in-house that are typically done by suppliers. It manufactures 50% of its own garments. It develops its own IT software. It sends its own teams to refurbish stores.

Processes

Zara’s processes are the subject of many business school case studies. The journey starts when product managers check store data and visit stores to understand better what is selling and what is changing, Then designers create collections – often five or six per year rather than the industry standard of two. These are manufactured (50% in Zara’s own factories, some linked to the main distribution center by railway), warehoused and then shipped (often by air) against store orders received twice per week.

Locations

Zara stores are in the leading shopping centers and streets. Distribution is mostly centralized in Spain. Product managers, who interact with stores, are placed in the middle of the design room to ensure good communications with designers.

Organization

The basic structure is functional. But individual stores are profit centers, and each store manager is empowered to choose what to sell. Design teams are also empowered to design what they consider will sell and are measured on the margin they contribute. But many decisions are centralized, such as store locations and store design. The concept is to decentralize the ‘fast fashion’ decisions to those closest to the market and to centralize every other part of the operating model.

Information

IT support is a critical ingredient in Zara’s success: the previous head of IT became the CEO. Store managers have hand held devices for helping decide what to order. Point-of-sale information transmits directly to the central office. Data on what was sold, what is being manufactured, what is in transit and what is in the distribution center is updated daily, if not hourly.

Relevant Reading

Title: Operating Model Canvas
Price: €34,95 excl. VAT; $36,99 excl. VAT; GBP 31,99 excl. VAT
Author: Andrew Campbell, Mikel Gutierrez , Mark Lancelott