Case Study - Zara Zara is a Spanish clothing retailer. They base their designs on the lastest fashions, and focus on getting their clothes in-store as soon as possible. About 513 pre cent of their manufacturing is done in-house the more complex and time-sensitive products. It takes two to three weeks before a new garment designed by the Zara team is available for sale in retail stores. There is a team of designers who are constantly designing new items. which are then manufactured at Eara's factories in Spain. Nurturing a highly intimate relationship with its customers. Eara's designers respond instinctively to their changing needs, reacting to the latest trends and constant feedback received across its Woman. Man, and Kids collections, to deliver new ideas in the right place and at the right moment To enhance customer service, Zara stores also include radio frequency identification technology {RFD}, using cuttingedge systems to track the location of garments instantly and making those most in demand rapidly available to customers. This technology has allowed zara to complete the implementation of its integrated stock management system in the 54 markets in which it operates its integrated store and online platform. There are sewral activities in this process that must be coordinated to ensure that the latest fashion items are available for purchase before consumers move on to something else. It is therefore in Zara's best interest to vertically integrate these activities to maximise use of data analysis and ensure that items meet required specications and are delivered on time. tLu. 2014: The Economist, 2001; lnditek website [accEssed November 2'020] Inditek website. November 202:1 Eara Brand home page. Available: httpswww.inditex.comfaboutusfour brandsfzara [3320, Novembm 24] Lu. :2. {2:114}. "Eara supply chain analysisthe secret behind zara's retail success". Trode Gecko, p. 2:315. The Economist, 2001. Hunting or: fr. Available: Economist, August 30' Using this case study. think about how the organisation makes use of management science in different parts of their operation. Feel free to also use your personal experience and on-line research into the rm [if you would like to nd out more about the company}. Use the attached table to prompt you to think about different parts of the Eara 'value chainll and how data provides insight at each of these stages. You might want to ask yourself: - lii'il'hat kind of data is available? - How can it be used? - How can data be used to link the stages? Note your ideas in the table provided. There is no perfect answer here. There is a lot of data available. and no response is likely to cover every aspect, so examples are what is needed to illustrate how management science can be used in a contemporary organisation. Zara Case Study m Management science contributions Manufacturing Logistics Table for recording ideas about use of data at different stages in the process 2 2a Costing . Explain what direct and indirect costs are. . Give an example of each for the following processes at Zara. Process Direct costs Indirect costs Ordering raw materials Designing clothes Manufacturing Inventory Logistics . Explain what fixed and variable costs are. Provide an example of a fixed cost and a variable cost for different process stages at Zara. Process Fixed costs Variable costs Ordering raw materials Designing clothes Manufacturing Inventory Logistics Why is cost classification important to managers at Zara? 2b Budgeting: Reflection In fast-moving times, and in a fast moving industry, such as Zara, a budget can become irrelevant very quickly. If managers are expected to lock down their budget once a year and work with it, that can create real problems with dealing with market shocks, regulatory change, or new competitors. Do you think that Zara would benefit from having an annual budget? If so, give a reason If not, give a reason