Do you know where your clothing comes from? Do you know why it was made there? Why are supply chains often global? But why should they rather be local? And why does Zara produce a huge percentage of their garments in Spain?
All these questions were answered by Mr. Richard Pibernik, who is Professor at the European Business School. During the awesome discussion the audience got a very well guided tour through the whole business of Global Supply Chains and Zara’s unique way of using them to achieve their aims. It usually takes a long way and about nine month time from the first sketch of a garment to the moment it is delivered to the shop, in which the customer hopefully buys it. From the cotton farm to the manufacturing and the following dying, it is carried in large containers by ship, so that the transportation price, looking on a single piece, is comparatively low. Furthermore the process of making the garment is quite cheap, because of the low level of payment in the countries, such as China, Vietnam or Malaysia, to which the huge brands send their orders. This leads to low prices at the end of the chain, thus fashionable clothing is available for almost everybody, though the companies still make huge profits.
All of the huge labels produce their clothes that way, except for Zara. If you have ever visited a Zara store, you might have noticed, that their range of goods rapidly changes. Zara offers clothing with similar prices like H&M and on top of that, they are faster and more flexible than their competitors with reacting on developing trends. But how are they able to do so? Zara only produces their basics, which form about 25 % of the clothes they sale in Asia, the rest of their range is made in Spain. This means that the time which is needed to bring the clothes from the factory to the customer is about 6 months shorter than usual. Of course it has to be considered, that this location is more expensive in contrast to China, but here is the trick: Zara only orders a small number of goods at first, if it sells well, there might be a reorder, otherwise they only have a few shirts, coats or jeans to sell and they never need to spoil their clothes in an end-of-season sale.