Why the Supply Chain is Merging

Wednesday, October 5

Millenial shoppers are the dominating the markets. They demand more trends, more products, more style all in about a two-week turnaround time. This pressure to produce newer and better products with less than half the original production time puts stress on all facets of the fashion supply chain. Thus, now to combat this excessive demand, we are seeing businesses return to form with hybrid models. For one, being more vertically integrated allows a company to drastically cut down response time. It also allows a brand to have more stringent control over quality of the products.

One of the best examples of vertical integration in a fashion company is fast-fashion retail giant Zara. Owned by Inditex, 80 - 85% of what the company manufactures is done in house. Only 25% of the line is planned out six months ahead 
They also utilize a JIT delivery system to ensure that they don't have to worry about storing excessive levels of inventory. Besides manufacturing, the company has built a strong presence in the fashion industry. Touted as a leader in fashion, Zara capitalizes on l recreations of runway looks for a premium price and a two week turnaround. Limited drops of products keeps product scarce and keeps demand extremely high as it seems scarce. Zara knows today's customer and well. Overall this method is high risk and cost with a high return on investment. 

Other companies wanting to adapt to today's market should look at Zara. After all, they are thriving where other companies are failing.  We will sit patiently and see how it goes for them!


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