Ezra chain management
The purpose of this report Is to understand and analyze fashion retail brand Sara’s secret behind Its successful supply chain management. Ezra has been the pioneer In agile supply chain management and for popularizing the trend of fast moving fashion. Therefore, with the help of this example, agile distribution management has also been discussed in this paper.
Additionally, computer hardware brand Dell and Australia’s leading retail chain Meyer have also been studied in order to understand their supply chain transformation Journey. Sara’s Supply chain strategy has been compared to that of Dell and Meyer. Dell adopted Just in time inventory model in order to keep up with the changing customer demands and has seen success with this strategy. Meyer too adopted lean transportation and distribution processes post acquisition In order to sustain its business and grow.
Lastly, Sara’s strategy and a Fortune 500 Company’s supply chain strategy have been discussed.
The Fortune 500 Company chosen Is the global fast food chain McDonald’s as Its SCM Is a huge success story and classic case worth researching on. The latter part of the research paper provides post analysis conclusions and recommendations for companies to rulebook at restructure their end to end supply chain processes.
Table of Contents Supply Chain Management Strategy of the Retail Brand Ezra 1 Executive Summary 1 Introduction 3 Sara’s success story in Logistics and Supply Chain Management 3 Comparing Sara’s Supply Chain Strategy with Dell 5 Comparing Sara’s Supply Chain Strategy with Meyer 5 Comparing Sara’s Supply Chain Strategy with McDonald’s (Fortune 500 Company) 6 Conclusion 7 Recommendations 7 References 8 Introduction When the retail brand Ezra was launched, it did not aim at aping the existing retail cuisines models of outsourcing at lower costs and selling at higher margins.
Instead, it had its own unique and game changing strategy. By introducing highly fast moving fashionable products at nominal prices, Ezra has been a huge success in every market that It has entered In. Behind this success Is a systematic and agile supply chain strategy and this research paper talks about the same.
The concept of agile planning Is not new to companies, however, Ezra takes It to an all new level.
They roll out new designs very frequently and update their store collections twice in a week in emitted quantity of an item, thus creating an artificial scarcity and demand of the products. While most retail stores rely on sale seasons to clear out their stock, Ezra believes in updating fashion fast and keeping stocks minimal so that the products go off shelves fast even during non-sale seasons. Ezra is not the only brand that has cracked the code for sound logistics and supply chain management.
Companies like Dell, Meyer and McDonald’s have also invested human capital and other resources in optimizing and tailoring their processes in order to suit the ever changing customer needs and business demands.
This research paper will discuss the strategies of these companies and compare and contrast how each business has tailored their processes. Sara’s success story in Logistics and Supply Chain Management The fashion brand Ezra was established in 1975 by Inedited, a Spanish group owned by Manioc Ortega.
Over 3,000 designers that have been hired in house by Ezra are responsible for creating over 40,000 designs per year of which 10,000 shortlist per year for production. Unlike its competitors, which outsource their production to countries in South America and Asia in order to avail benefits of cheap labor, Ezra aeries out more than 50% of production in Europe (Data, 2002). Ezra has been credited for mastering Agile Supply chain management by introducing fast moving fashion in over 77 countries and 4900 stores across the world.
Sara’s key success factors can be enlisted as follows: Short lead time (within weeks) for trends to reach the stores and the market Small inventory per style creating an artificial scarcity and reducing risk for Ezra High churn rate of styles per year (Collection changes in stores twice every week) In order to make this success possible, the fashion giant has rated a streamlined and detailed supply chain strategy.
It starts with reactive and extensive market research which is essential for product development. The other strategy is to establish business functions such as warehouses etc. N close proximity to the headquarters so that they can be tightly monitored and decisions can be made quickly. Ezra invests early in raw material and directly or indirectly ‘own’ processes and production houses. The most important factor in managing the interlinking of functions and management is Communication and Information Technology. It is vital or managing the huge amount of product and market information (Data, 2003).
The entire process of Sara’s supply chain can be segregated into 4 parts. They are organization of products, procurement and production, distribution and sales and feedback (Ghana, 2008).
Product Organization Looking at Sara’s product design and organization strategy, it is important to understand that the designers at Ezra do not aim to create innovative designs but at understanding market trends and designs and then creating trending products (Ghana, 2008). The design team frequently researches the market and takes inputs or the front end executives and sales representative at the stores and rolls out ‘in demand’ designs and items. Purchase and Production Coming to procurement and purchase, Ezra has strategists every piece of the puzzle from supplier selection to product decision making.
More than half of the retail chain’s production units are either wholly owned or closely controlled.
They are situated in a close radius in or around Spain. Even those units that are outsourced are closely monitored. Ezra has had to bear higher cost of production than its however such a model gives them the flexibility to regulate designs and achieve aster logistics. Distribution Model Ezra has a State-of-the-Art distribution system which involves minimum human intervention. Several kilometers long tracks take merchandise from the manufacturing units to chutes to the right destinations.
Sorting and distribution happens through optical reading devices.
Sales and Feedback In the actual stores, fashion rotates very fast. The collection changes twice a week and the sales representatives keep a track of the most selling items and latest trends. Such feedbacks are then taken up by the product development teams to in turn create new trending items. Comparing Sara’s Supply Chain Strategy with Dell The computer hardware company, Dell realized that it faced a challenge of ever changing customer demands, contamination of products and newer and cheaper competitors.
The company then decided to design its supply chain as a mixture of cost optimization, high speed delivery and choices of products that customers value along with aligning internally across all functions (Davis, 2010). Dell adapted a Just in time inventory model and configure-to-order manufacturing system.
It started providing the option to customize products based on customer’s requirement hence loving the problem of forecasting requirements in the fast changing environment.
They started with understanding customer value, then unifying an end to end business strategy which involved all the business functions controlled by cross functional executive governance and finally implementing lean supply chain techniques (Davis, 2010). Dell’s strategy has been similar to Sara’s in many respects. Both the companies realized that the customer demands are changing very fast and hence they adopted lean and agile supply chain strategies. While Ezra solved this problem by treating fashion as a perishable commodity and introducing trends recently, Dell pushed product customization to the very end of the supply chain.
Comparing Sara’s Supply Chain Strategy with Meyer Emery’s supply chain vision has five key drivers: service, safety, speed, flexibility and cost (AS 1, 2010). Before 2006, however, the supply chain of the store was sluggish. The inventory was distributed everywhere across 24 warehouses in the country and there was no optimization if distribution channels. Earlier, items arrived in boxes which were flat packed. Several such out of date processes changed after the retail chain was acquired by private equity firm TAP Capital (datedness. Mom, 2012).
Then, eight new local and international Distribution Centers (Disc) were opened and new landscape IT systems were created and the processes and recruitment took slightly over 12 months. Streamlining of processes lead to the following positive changes: operating costs reduced by over 50% from the time of acquisition, international freight costs reduced 22% even though there were greater volumes, domestic freight declined by 11 per cent. Also, international lead times decreased from an average of 42 days of transit time for freight to move from China to Australia, to almost half: 24 days.
Next, roll cages were introduced across majority of the stores which dramatically improved the transportation efficiency of goods from the store dock to the stores. Offloading time reduced to Just 7 minutes from a previous time of forty five with the use of pallets.
While, previously, stock could not be moved during productivity by 50%. Today Emery’s supply chain management has proudly reached benchmarking standards for department store retailing across the world (Game- Laptop, 2009). For both, Ezra and Meyer, supply chain management is a core competency and the businesses of both lay emphasis on working closely with store ND with customers.
The systems are such that they ensure two way communication across the supply chain and comprise of both push and pull strategies. While Ezra has been able to expand across the globe, Meyer still has presence major in Australia.
Comparing Sara’s Supply Chain Strategy with McDonald’s (Fortune 500 Company) The Fortune 500 company McDonald’s’ (wry. Fortune. Com, 2014) supply chain can be aptly summarized as being ‘adaptive, collaborative and efficient’. Global but local, I. E. Global is the name of the game for this leading fast food chain.
McDonald’s works on the model of shared system or Joint ownership. The company has a philosophy of developing, maintaining, sustaining and monitoring its supply sources very religiously. They source products locally in order to reduce supply chain costs. The suppliers are chosen and trained in a way that they keep up with the quality standards of McDonald’s. The company works in collaboration with its suppliers across the globe in order to maintain, innovate and implement best practices for creating sustainable produce and follow human rights laws and practices at the work place.
The combination of CARS activities and supply chain development has worked well for the company.
By sourcing ingredients and packaging sustainable, they aim at creating value for their business as well as society. McDonald’s work on the principle of innovating sustainability through 3-Sees: ethics, environment and economics (Aviates, 2014). Comparing the strategy with Ezra, it can be concluded that even though Ezra takes collaboration with suppliers seriously, McDonald’s takes it to the next level altogether.
Nonetheless, both the companies keep a close eye on its supply chain links with the assistance of information technology and communication channels. While, Ezra changes its clothing collection recently based on customer choices and trends, McDonald’s tailor makes its menu based on the market it serves in, continuously updating its menu based on sale of items.
Conclusion Supply chain management is becoming a game changer for all businesses regardless of the industry they are work in.
For companies that have been able to master the art and develop core competencies in this field, the road to success has become easier. With the customer demands changing at an extremely fast pace, agile and lean supply chain management processes are the only sustainable ways to insure that companies do not go out of business. Companies like Ezra, Dell, Meyer and McDonald’s have concentrated on optimizing their inventory, product designs and distribution processes in a lean manner in order to reduce costs and maximize sales.
With companies desiring to go global with their businesses, it is essential to maintain consistency, quality and standardization in all markets.
Recommendations For this research, few lessons can be learnt about supply chain management. Firstly, it is essential to keep a close connection with the source of raw materials of your business. A company like Ezra stayed away from outsourcing its production to Asia ND that helped it in achieving over all flexibility. Successful companies has ensured communication and three sixty degree view across the chain needs to be established.
According to the business competencies and missions, backward and forward integration must be done in order to gain control and reduce cost. Technological up gradation and automation of processes tremendously improves lead to for a lot of functions and is highly advisable for all businesses.