Oct 19, 2022

Inventory Visibility and Accuracy: A Case Study of How ZARA Using Technology and Speed to Become the

ZARA, a wholly owned subsidiary of Inditex group, was launched in 1975, in Galicia, Spain. ZARA is one of the largest international fashion stores with over 2000 physical stores in 96 countries.

ZARA specializes in fast fashion and launches over twenty new product lines per year, with brands covering clothing, accessories, shoes, perfumes, and beauty products. In 2010, ZARA launched its first online store in Jordan and expanded to other countries quickly.

On product strategy, ZARA adopted the principle of quick response, small quantity, and great variety of style. To cope with this strategy, ZARA has invested a lot on implementing just-in-time approach, RFID technology, and Cloud-based inventory management system, in order to manage the complex supply chain.

Just-In-Time (JIT)

Changes and updates offer more reasons for customers to visit the stores and keep their shopping experience fresh.

ZARA changes its apparel design every 2 weeks on average, while the competitors change theirs every 2 or 3 months. To be the lead of the market and compete on its speed to market, ZARA implemented just-in-time (JIT) and production in-house.

Just-in-time (JIT) is a strategy that encourage the company to generate the order of material and intermediate products only when required. This method helps the company to effectively reduce the production wastage, and the cost of storing and maintenance of inventory, which is especially suitable for ZARA – a fast changing fashion company.

RFID

ZARA started implementing RFID technology in its stores and warehouses in 2014. The RFID tag is buried inside the plastic security tag of each product, and this allows ZARA to track the item throughout the whole process from production until it's sold.

Before RFID system was implemented, ZARA’s staff had to scan one barcode at a time, so lots of staff and time have to be involved in each inventory-taking task, and hence, they would carry out the inventory count once every six months only.

The RFID system allows the warehouse to take inventory counting quickly, and now, they can carry out the inventory count every 6 weeks, and this helps ZARA to get a clearer picture on what products are popular and what are growing weak, and results in a better demand forecast.

Cloud-based Inventory Management

ZARA is now using a cloud-based inventory management system, and its integrated solutions allow ZARA to fulfill online orders from physical stores or warehouse, and this enables ZARA to allocate their stock more effectively and shorten the order waiting time.

Since ZARA will change their apparel design every 2 weeks, supply chain visibility and inventory accuracy become more important to them. The cloud-based platform allows everyone on ZARA’s team to check inventory levels, review orders and be productive from anywhere and anytime.

To execute the just-in-time approach, ZARA will need a high inventory visibility to monitor the demand, to allow them to plan their replenishment accurately to meet customer expectations, seasonal or even unexpected demand changes.

The Importance of Technology

To maintain the market leading position, ZARA keeps improving their business process to keep their service standard and set the bar even higher.

By developing and implementing cutting-edge technologies, such as RFID and cloud-based inventory management system, ZARA is able to make big savings in inventory, which is a major expense for many fashion companies, and hence, increase the profit.

Are you ready to grow by adopting new technologies? Want to explore more about how technology can help your business?