Achieving Success Through Supply Chain

Let’s now understand how companies have succeeded by differentiating themselves through their supply chain strategy alone. Kinchit will demonstrate how supply chain has proven to be a differentiating factor for organisations with the help of two examples. You will go through the example of Zara, the Spanish apparel retailer specialising in fast fashion, followed by the example of the unique supply chain model of the Mumbai dabbawalas.

In this video, Kinchit talked about one of the world’s biggest fast-fashion retailers, Zara. Surprisingly, Zara has a product lead time of about one week, whereas competitors have a lead time of close to six months. Some key points to remember about Zara’s supply chain are as follows:

1. Zara adopted a strategy to keep all of the production in-house, which helped it reduce the product lead time. Zara also developed a robust ecosystem of having all its suppliers in its vicinity.
2. Zara's strategy is to produce in small lot sizes and maintain a limited inventory of one product type. The benefits of this strategy are two-fold:
   1. It does not have to block its working capital in the form of inventory.
   2. The chances of inventory getting redundant with the launch of a new product are reduced.

You also learnt about the unique supply chain model of Mumbai dabbawalas. Kinchit explained how a coding system is used to achieve an error rate of one in a million deliveries.