1a: Zara’s ability to manage some of the manufacturing in-house and distribute only what is absolutely necessary to outside manufacturers gives them a unique amount of flexibility and control over cost and quality. Their competitors are primarily outsourcing the production, so that control over price is lost.
1b: The stores are able to receive inventory quickly and more than once per week, which allows them to keep their inventory “fresher”. The stores also don’t keep any inventory beyond what is on the shelves, in most cases, so they run the risk of running out of some styles that prove to be more popular than others. In the planning phases, store specialists worked in the same space as the designers, receiving information directly from the store managers, which allowed for quick feedback and the ability to rapidly transfer new ideas.
1c: From a cost-control and scaling perspective, the company’s strategy to outsource more and look to lower-wage countries for more production is a sound thought process. The last sentence in the case, however, brings up the point of the company’s fashion-forward, higher-quality clothing image. This is a huge risk to manage, with quality and other “must-control-for” items hanging in someone else’s factory.
2: The impact will vary depending on which part of the product lifecycle we’re looking at:
• When the product first comes out, it wouldn’t make much sense to outsource, since there may be quality control issues, and the volume needed is relatively low. The firm may also have an advantage to keep the production in house to reduce competitors’ ability to use the same manufacturing techniques.
• In the next phase, when adoption is much faster, the dem...
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.... Noncritical items may be something like lubricants or other items in the manufacturing process that are cheap, easily obtained, and can be ordered by anyone that is authorized.
8: Product sourcing and procurement will be focused in the strategic item category during ramp up and introduction, where it is important to secure supplier partnerships and even more important to manage the high-cost impact items. When demand is ramping up, it is important to manage bottleneck items, since the production capacity will need to increase quickly. When demand stabilizes, the focus should be placed on minimizing cost and trying to drive components to the leverage category, where higher volume can yield lower price. This strategy might carry over through the winding-down of the product lifecycle, as the attention would be turned to new products and/or development processes.
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