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Write 9 page essay on the topic Supply Chain Management and Fashion Industry: The Case of Zara.Download file to see previous pages... Nevertheless, the tradeoffs of doing so are recognized by highligh
Write 9 page essay on the topic Supply Chain Management and Fashion Industry: The Case of Zara.Download file to see previous pages...
Nevertheless, the tradeoffs of doing so are recognized by highlighting the negative effects of the measures taken to counter the bullwhip. The insights offered by this research paper could provide a strong basis for future research of the complexities of supply chain management with respect to the fashion industry. Further investigation could be carried out to critically analyze what companies such as ZARA forgo in countering supply chain issues such as the bullwhip. Keywords: ZARA, fashion, bullwhip, supply chain, demand The fashion industry has been fraught with challenges pertaining to supply chain management and countering the bullwhip effect particularly due to seasonal sales, outsourcing of manufacturing as well as cutthroat competition amongst fashion retailers. It is not surprising, therefore, that the success of fashion retailers depends on the agility of their supply chains especially due to changing fads and short product lifecycles of fashion apparel. This paper begins with an explanation of the bullwhip effect and demonstrates how fashion retailers such as ZARA have been successfully able to mitigate it. With respect to Fisher’s functional and innovative products, it can safely be claimed that fashion retailers such as ZARA fall in the latter category as unpredictable demand, large product variety, high-profit margins, greater chances of stock outs and end-of-season sales as well as higher errors in forecasting constitute the supply chains of such companies. Companies such as ZARA also face what is known as the bullwhip effect. The bullwhip effect was termed by Forrester who attempted to describe the supply chain in terms of the cohesion and integration between organizations’ production and operations schedules and its marketing channels. As per this view, organisations were seen as being comprised of coordination between resources, finances, materials as well as information (Panda &. Mohanty, 2011). Sometimes, however, lack of coordination and inventory practices lead to stockpiling towards the upper end of the supply chain leading to a situation of excess supply. It is important to understand the potential causes of bullwhip effect before analyzing the way ZARA deals with it. One of the major causes of bullwhip effect (which is highly relevant to fashion retailers) is the attempt to offload stock by offering seasonal discounts which result in a situation of variability in product demand. This is because low prices during seasonal sales encourage consumers to buy more than their anticipated demand (Panda &. Mohanty, 2011). Therefore, when prices return to their normal levels later, customers purchase less than their usual levels to reduce their inventory (Panda &. Mohanty, 2011). This causes more inventories to be stockpiled in the upstream supply chain than otherwise. Furthermore, forecasting demand on the basis of orders received from links in the supply chain leads to inventory stockpiling. For instance, if there is an increase in demand from the end customer, it translates to forecasts of greater inventory towards the end of the supply chain which results in even greater inventory being forecasted by the link above that (Panda &. Mohanty, 2011). This process is reversed when the demand from end customer decreases. This often occurs due to lack of a single source for inventory forecasting often attributed to the absence of IT.