February 22, 2009

Lesson 2

The First company I have chosen is Zara (group Inditex):

Inditex is one of the most important fashion distributors groups in the world. Currently the group is located in 68 countries worldwide and has 3,691 stores; with 80% of its business is based in Europe. Inditex is made up of seven distinct but Zara is the most famous brand and also it accounted for 72% of Inditex’s Revenue in 2006.

The operations process in Zara is Unique and envied throughout the world. The volume of clothes being produced and sold by Zara is huge but also the variety of the production is equally big. The visibility of the process is to the customer is low as they are simply presented with the final product to try on and finally purchase.

The quality objective – Zara brand name is synonymous with quality and the right price. Stores are located on emblematic streets like Oxford Street and  5th avenue; the highest standards of products are demanded in these areas. 65% of products sold in Europe are produced in European plants where quality controls are higher and easier to manage. Flawed clothing items would erode the brand name eventually.

The speed objective – hectic changes in fashion and high street tastes imply a need for logistic speed. Goods can be designed and delivered to the shelf within 6 weeks. In fact items spend so little time in the warehouse that they are already sold before they have to be paid for to their suppliers.

The flexibility objective – demand for different types of clothing will changes and Zara must react accordingly. Sizes, color, quality and quality will change continuously. The customer has an active role from the start of the chain and is the drive for its business model. Customer requests are considered by the commercial and design team.

The dependability objective – Delivering on time to stores in a must. Customers have come to expect new items on a weekly basis on the shelves.

The cost objective – affordability is vital to Zara’s strategy however only 35% of goods are produced in Asia. This implies that operations management must be at its leanest as they operate within Europe where the cost structure is much higher.

Due to the High Volume and Variety involved in the process the process choice is the Batch process. A high Volume of Identical Items are produced together hence the flow is intermittent as each batch although requiring the same basic skills requires different variety and expertise in detail.

The lay out type is undoubtedly the Product layout type. Once the goods have been produced on the factory floor they are moved to store houses and quickly shipped to the high streets. Hence we can say the fit between the layout and the process type is correct as product based processes are used for high volume processes in general.

2) The second company I have chosen is a local Taylor named ‘Guzman’

Guzman has five outlets in Madrid which specialize in tailored suits for an the exclusive upper class segment of the market. Suits can also be rented for special occasions.

The volume of clothes being produced is low due to the fact that this is and exclusive product which includes the service of having the suit tailored. The variety is high as the degree of personal tastes change and the shapes and sizes of customer differs. The variation in demand should not fluctuate excessively throughout although seasonal demand changes can be experienced, for example renting suits during the Christmas period. The visibility in the process is quite evident as the customer is involved in the fitting /measuring process before he finally buys the suit.

The quality objective – The exclusivity of the suits and service demands top quality. Ill fitting suits would be unacceptable. However levels of distinct quality do exist. For example rented suits although specially fitted, they are simply adjusted (let down and let out) whereas bought suits are tailored to the needs of each client. Furthermore depending on the tailor that is chosen then the quality can differ.

The speed objective – The process involved in producing tailored suits is not expected to be fast. Personal tailoring takes time and this is what customers expect. Furthermore, producing a suit too quickly may even damage expectations.

The flexibility objective – The operation of producing the suits must be flexible, each customer has unique needs and tastes. The skill required to produce different types of suits is huge and minor adjustments need to be made even well after the final product is apparently finished.

The dependability objective – delivering what is promised is of course important. But exclusive suits are more a question of taste so a minimum of delivery dependability is required, pleasing all customers will not be possible. However the process is very personal as measuring and touching the customers is involved. There is no real dependable objective about this process with the exception of the rented suits, they must be clean and totally presentable.

The cost objective – The tailoring process is costly and the differentiation gained through the personal service means that reducing costs is not and aim of the elitist orientated segment. Cleaning the rented suits does have a cost objective

Due to the highly skilled employees that are used to create a unique service/product The Guzman process can be defined as a professional service process when we describe it in terms of a service and a jobbing process from the product point of view we can describe the process as a Jobbing process.

The lay out type is a fixed position layout. The product is moved to the customer and becomes part of the process when being fitted out.

Inditex Guzman
Volume High Low
Variety High High
Variation in demand High High
Visibility Low High


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