Inditex: A strenuous supply chain

Firm Infrastructure

It was Ortega’s, the founder of Inditex, visionary management style which led Inditex towards success. It was his concept to deliver fashion quick because he was interested in revolutionalizing the apparel industry where the customers must regard clothing as a perishable commodity. To serve his viewpoint integration of designing, manufacturing & distributions were integral to the fast-fashion concept. Most of Inditex’s competitors adopt an outsourcing strategy by outsourcing all production to the external suppliers whereas Inditex maintains its production processes in house. The supply chain structure is vertically integrated.

Brands which make Inditex

Human Resources Management (HRM)

Inditex is an employer to more than hundred thousand individuals coming from 150 nationalities.Many of the Inditex’s current managers began their careers as store employees or other entry level positions. There performance was recorded and talented employees were promoted.Orientation of new employees & training of existing employees adapting to their needs is given importance in the organization.

Technology Development

Inditex achieved a competitive edge over its competitors by developing a quick response system to fashion trends & for this it had to develop state-of-the-art IT system which is integrated throughout the supply chain.

There is constant exchange of information through every part of supply chain which includes shop managers, designers, production staff, and external clothing manufacturers. Sales data, from different geographical locations, is processed & passed along to designers. This helps the designers to cater their designs to the preferences of the customers. The effective use of IT makes Inditex capable to produce very fast turnaround for its fashion designs.

Procurement

Inditex outsources less production than its competitors. Inditex outsources some of its standardardized products like cotton T-shirts which are price-sensitive to Asia as these products have longer shelf lives.

Majority of the Inditex’s supplier factories are in Spain and Portugal and these factories specialize in fashion-customised sewing. The proximity of these factories, specializing in the manufacture of fashionable garments, to the distribution facility saves time and transportation costs. This allows Inditex to respond quickly to fashion trends hence reducing its product risk.

Design

The demand in the fashion apparel industry keeps on fluctuating and any failure to meet the latest demands can be very risky and deteriorate the customer loyalty. Products may become out of fashion even before reach shelves. This can undermine the entire value chain. Hence, to avoid such a risk Inditex encourages continuous exchange of information between the store managers, designers, procurement teams and marketing specialists to ensure that the designs are exclusive & customer driven.

One of the most successful fast-fashion concept chain

Outbound Logistics

The aim is to immediately transfer the products rather than storing them. The schedule is clearly defined which focuses on deadlines on every stage in the supply chain. This helps to save costs and time by eliminating the need of intermediary warehouses to store inventory. This effective way of distribution helps Inditex maintain a strong position in the market.

 

Marketing and Sales

Inditex’s marketing budget compared to its competitiors is very less. It infact prefers to entice customers by selecting prime locations & having its new clothing displayed in its shop windows.

Exclusive clothing on display

There are reasons for this. Firstly, the clothings range changes frequently, hence any advertising activity has to be in line with the latest clothing ranges and this might be expensive. Secondly, Inditex avoids over-exposure of its limited clothing ranges & focusses on the presentation of the stores. It is interested in creating a climate of exclusivity and scarcity so that customers are encouraged to buy.