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INTERNATIONAL LOGISTICS & SUPPLY CHAIN

MANAGEMENT

GROUP
PRESENTATION
LOGISTICS & SUPPLY CHAIN AT
ZARA AND IKEA
SUBMITTED TO: PRESENTATION BY:
(Group 12)
Prof. Praneti Shah Ankit Goyal (151106)
Institute Of Management, Palash Baheti (151227)

Nirma University Chinmay Bobra (151411)


Deepak Meena (151414)
COMPANY 1:
UNITIZATION

ZARA uses unitization for consolidation of group cargo.

The company uses 9 IT systems to control the supply chain and ensure that
functions run smoothly. This allows capacity to be increased with minimal
impact on the companys operations.
DRY PORT - PLAZA ZARAGOZA

PLAZA is the largest logistics park in Europe; it encompasses more than 130
million square feet.

Inditex established its platform in PLAZA, the complex offers excellent


infrastructures with direct accesses to railway, road networks, as well as to
the airport of Zaragoza.

The complex is equipped with the latest technology in the logistics domain.

Additionally, Zara takes advantage of the integration of numerous activities


that the platform provides.
AIR TRANSPORT

ZARA successfully disrupted the traditional fashion retail model by driving unparalleled
responsiveness to trends. Each step of the supply chain is optimized for an explicit
purpose.

Products are air-shipped in small batches twice weekly and only are transported only
when they are assembled onto hangers or displays. Even the security tags are attached
in the factory.

Air deliveries ensure that clothing arrives in top condition since air freight can provide
humidity control and dust protection.

ZARA try to achieve a balanced supply base mix to optimize on cost and speed to
market, this means that paying slightly more for quick response items that are near-
sourced and leveraging low-cost sources for everyday essentials.
ORDER FULFILLMENT

A central warehouse in La Corua prepares the shipments


for every store, overnight.
Once loaded onto a truck, the boxes and cargo is either
rushed to a nearby airport or routed directly to the
European stores. All logistics of the company that is the
trucks and connecting airfreights run on established
scheduleslike a bus serviceto match the retailers
twice-weekly orders.
Shipments reach most U.S. stores in 48 hours, European
stores in 24 hours, and Japanese shops in 72 hours, so
store managers know exactly when the shipments will
come in.
CLUSTERING

ZARA focused on forming clusters


that are local in nature and are
mainly formed based on design and
production.

Inditex has 11 supplier clusters in


the geographic areas: Spain,
Portugal, Morocco, Turkey, India,
Vietnam, Bangladesh, China,
Cambodia, Brazil and Argentina.
MULTIMODALITY

ZARA makes sure that quality designs and innovative fashions are always
available to its customers means ensuring the Inditex supply chain is fast,
flexible and responsive.

Inditex works with the XPO Logistics Group for over 2,000 stores in Spain,
France and Great Britain.

In Britain, XPO Logistics Transports overnight retail operation serves over 70


Inditex stores including Zara, Zara Home, Massimo Dutti and Bershka.
OPERATIONAL RISK

Zara has reinvented the business model by "conscientiously applying its supply chain
vision to its business."
Activities that Operational risk management comprises of:
Identifying the risk: what can go wrong?
Measuring the risk: Approximately the impact of a particular risk?
Preventing operational losses, e.g., Disaster standardized deal documentation.
Mitigating the loss impact after it has occurred by reducing the sensitivity to the
event.
Predicting losses, e.g., projecting the potential legal risks and market cannibalization
associated with a new product or service.
Transferring the risk to third parties which presumably are better able to handle the
risk, e.g., insurance, hedging, surety.
Allocating capital to cover operational risks.
TRANSITION RISK

As ZARA is one of the market leaders it has reduced its transition risk. Its sale through brick and
mortar store is more than the online selling. In both the modes it offers its customer 30 days
replacement policy. As ZARA inventory turnover is high and it produces on a small basis it is less
vulnerable to transition risks.
Risk Management
Payment Management Policy
Code of Conduct and Responsible Practices
Code of Conduct for Manufacturers
Foreign Exchange Risk Management Policy
Proxies Policy
Environmental Risks Management Policy
IT Safety Policy
Investment Policy
Occupational Hazards Policy
COMPANY 2:
ABOUT THE COMPANY

Worlds largest furniture retailer.

Started in 1943, the company was formerly known by its full initials,Ingvar
Kamprad Elmtaryd Agunnaryd.

IKEA owns and operates 392 stores in 48 countries. (as of Dec 2016)

Product Range: 12,000 products

One of the largest users of wood in the retail sector.


SUPPLY CHAIN & LOGISTICS

Global spread with both sales and purchasing facilities in all major regions of the
world.
Steps taken to minimise cost at each level:
Designs, manufactures, transports, sells and assembles its own merchandise.
Efficiently use equipments and raw materials.
Contribution through customers
Reduced transportation cost and CO2 impact in the value chain by:
Long-term relationships that allow more than 60% of products to be shipped directly from
suppliers to IKEA stores.
By locating production closer to sales markets, or by locating the material supply close to the
production
New planning concept: Centralised all forecasting activities and need
calculations in order to control stock levels and replenishment throughout the
whole supply chain.
PURCHASING

IKEA Purchasing Development is divided in seven category areas:

1) Flatline, 2) Textiles, 3) Wood & Fibres, 4) Metal, Plastic and Float


Glass,

5) Electronics, 6) Comfort , 7) Specific Home Furnishing Business

Purchasing Operations and business development teams are located in 24


offices, within 9 Purchasing Operations Areas.

Top 5 countries where purchases are made:

China (19%), Poland (12%), Sweden (8%), Italy (7%) and Germany (6%).
SOURCING

Sustainable Relationship with Suppliers: IKEA has approximately 1,500


suppliers in 55 countries. The average number of years a supplier has
been a partner to IKEA is 11 years.

IWAY Concept: Also known as The IKEA Way on Purchasing Home Furnishing
Products. This strategy implies that instead of engaging in short-term
relationships with many smaller suppliers IKEA is increasingly engaging in
long-term relationships with fewer suppliers

Unit Load Carrier System: The retailer has introduced a unit load carrier
known as loading ledge that enables varying unit load dimensions.
INTERNATIONAL WAREHOUSING

Every IKEA store has a warehouse on the premises.

Usage of High-Flow & Low-Flow Warehouse Facilities:

High-flow warehouses: Automatic storage and retrieval systems to drive


down its costs-per-touch.

Low-flow facility: Store products that are not in high demand, and
operations rely on manual processes since workers will not be shifting and
moving inventory around too much.
INVENTORY MANAGEMENT

Min/Max Inventory Replenishment Settings:

This system sets accurate reordering triggers for the minimum products
available before reordering, as well as the maximum amount of a particular
product to be ordered.

Cost-per-touch inventory tactic:

Having customers retrieve the packages themselves and select the furniture is an
inventory management tactic called cost-per-touch.

The more hands touch the product, the more costs are associated with it. With this
guiding principle to minimise touches IKEA saves costs.
PACKING AND PACKAGING

IKEA products are sold in pieces, which the customers themselves can easily
assemble at home.This is the Do It Yourself (DIY) approach used by IKEA.

The pieces are placed into flat packages for low-cost transport, convenient
and efficient, because they take up less room in trucks, maximising the
number of products that can be shipped.

Outcome: Saves in fuel and stocking costs is passed on to customers.


INTERNATIONAL TRANSPORTATION

Use as few materials as possible to make the furniture as it cuts down on transportation costs because it
uses less fuel and work force to receive materials and ship products.

Efficient Customs Handling:

Staircase Concept Is a four-step approach to improve suppliers overall performance in three areas.

In Staircase concept goods owners are allocated in five categories, depending on their compliance with
Swedish Customs standards and procedures.

IKEA made a 50% saving in their customs administrations budget in their first full year of applying the
concept.

Load Carriers:

IKEA mainly uses four standardized unit load carriers: EUR pallets, corrugated fibreboard pallets, half
pallets (600 800 mm) and long pallets (2,000 800 mm).
ORDER PROCESSING

In-Store Logistics Team:

In-store logistics manager is responsible for the ordering process and a store
goods manager is there to look after material handling.

In-store logistics team ensure an efficient flow of goods within IKEA stores.

A customer can place an order online or through a computer system placed at


IKEA franchise.

In UK PayPal is considered as the safest way of e-shopping and cash payments


are handled through it.
INFORMATION SYSTEM

Inter IKEA System:

All scattered branches of IKEA (Franchisees) are connected to a common system


networking at national as well as at international level.

All the suppliers of IKEA are connected with ECIS (IKEA's own system) which
allows them to look at inventory level, ultimately helping them to anticipate
orders, forecasting and transparency of supply chain.

Use of Biometrics: Employees are supplied with specialized computerized


made IKEA identity cards which they swipe on a card reader.
REFERENCES

https://www.inditex.com/sustainability/environment/logistics

https://www.tradegecko.com/blog/zara-supply-chain-its-secret-to-retail-success

http://blog.scmglobe.com/?page_id=1513

http://static.zara.net/static/pdfs/US/privacy-policy/privacy-policy-en_US-20131125.pd

http://ecommpoint.com/blog/retailer-fulfiilment-roadtest/fulfilment-customer-experi

ence-zara/

https://www.behance.net/gallery/17866295/Zara-Retail-Packaging

http://www.preciouspackaging.co.uk/shoe-boxes/branded-large-clothes-boxes-ref-za

ra.html
REFERENCES

https://www.inditex.com/sustainability/suppliers/working_in_clusters

http://ieeexplore.ieee.org/document/4682950/?reload=true

http

://static.inditex.com/annual_report_2014/en/annual-accounts/risk-control-systems/scope-of-t

he-companys-risks-management-system.php

http://inter.ikea.com/en/inter-ikea-group/ikea-range-and-supply/

http://www.emeraldinsight.com/doi/pdfplus/10.1108/13598540910941948

http://www.emeraldinsight.com/doi/pdfplus/10.1108/09590551111159323

http

://www.business-sweden.se/globalassets/invest-new/reports-and-documents/logistics-and-suppl

y-chain-sweden---sector-overview-2016.pdf
THANK YOU

Any Question?

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