{"id":21624,"date":"2017-11-12T19:57:14","date_gmt":"2017-11-13T00:57:14","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/will-inditex-be-alive-in-10-years\/"},"modified":"2017-11-12T19:58:43","modified_gmt":"2017-11-13T00:58:43","slug":"will-inditex-be-alive-in-10-years","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/will-inditex-be-alive-in-10-years\/","title":{"rendered":"Will Inditex be alive in 10 years?"},"content":{"rendered":"

\u201cLike it or not, digitization is here\u201d <\/i><\/em>[1] It is widely renowned that the agile supply chain from Inditex has been its main competitive advantage. Digitization is impacting all industries and all geographies. If Inditex wants to remain as a leader in the clothing and apparel industry, it should perfectly leverage the benefits of the digitization. According to Pablo Isla, CEO of Inditex, \u201cour business model is based on the ability to react during the season<\/i><\/em>\u201d [2]. Exactly, the design of its supply chain allows Inditex to have a twice-per-week delivery to all the stores in the world in comparison to once every two months from most competitors [3]. However, as he pointed out, it is not only important to be fast: \u201cit is not just a question of being fast. It is (\u2026) trying to know what our consumers want<\/i><\/em>\u201d [2]. In this sense, digitization plays a key role. Digitization to better understand what the consumers want and digitization to improve and accelerate the supply chain. Will Inditex accomplish these two goals and thus continue to be a reference in the clothing and apparel industry?<\/p>\n

Is Inditex moving fast enough?<\/strong><\/p>\n

Inditex is using digital tools to keep improving its time to market (and reducing its supply-chain costs) and to better understand consumer needs.<\/p>\n

Advanced analytics and big data is helping the company to better understand its consumer preferences. For example, social media and PDAs (personal digital assistant) \u201clet Inditex capture real-time consumer data, not only in transactions, but also on preferences underlying perceptions of value\u201d [4] [5]. \u00a0With the PDA, the staff enters the customer input information at the very same moment. This input helps determine what Zara\u2019s designers will create next [6].<\/p>\n

In addition, digitization let Inditex to improve its supply chain. \u00a0One main change is attaching radio-frequency identification (RFID) tags to every item of clothing. Ten staff members can now update a store\u2019s inventory in a couple of hours\u2014work that used to take 40 employees more than five hours\u2014by waving small handheld computers at racks of clothing [7]. In addition, all these information is shared simultaneously with the rest of the supply chain so the inventory costs are drastically reduced.<\/p>\n

Another improvement is the point of sale system (POS). This transaction process immediately records a customer\u2019s purchase information, which is used to plan ahead for new styles or send more inventories to existing stores [6].<\/p>\n

What should Inditex do next?<\/strong><\/p>\n

In order to improve the consumers\u2019 preferences I would suggest Inditex to let the consumers be the designers. What do I mean with this? I believe that it would be a great idea to create an app in which consumers could vote for the clothes they would like to see produce. In this sense, Inditex could easily collect this information and produce only those clothes most voted. In addition, since customers\u2019 preferences vary from region to region, Inditex would have the ability to send the clothes based on the preferences of each region. Another feature I would add to the app would be the answer to que question: How much you will be willing to pay for this cloth? This will position Inditex in a position where consumers would be willing to use the app (and thus opportunities of cross-selling) and, moreover, it will reduce the inventory costs since Inditex will only produce clothes that it know in advance that will be sold.<\/p>\n

In the area of improving the supply chain, I believe that Inditex should start making the first steps to leverage block chain to improve the information running through its supply chain. It is a faster a safer mechanism and the total benefits from it are yet to discover. In order to keep a leadership position, Inditex should at least explore how this new technology can improve its supply chain.<\/p>\n

Biggest threats\/opportunities for Inditex?<\/strong><\/p>\n

Many companies are copying their model and the growing importance of the technology is changing completely the traditional notion of supply chain. As discussed above, Inditex is trying to improve its competitive advantage, but the question is: are the steps taken enough? How is going to be able Inditex to maintain its competitive advantage? Should Inditex establish a partnership (i.e. technology company)?<\/p>\n

Another important threat\/opportunity that Inditex will face is the rise in ecommerce. Inditex is performly well in ecommerce but would it be able to face new competitors such as Amazon. For example, Amazon PrimerWardrobe allows consumer to try for free clothes in their home and pay after only for those the consumer want to buy. Will Inditex be able to compete against these competitors? Which actions should Inditex take to increase the entrance barriers?<\/p>\n

<\/p>\n

[1] Charan, Ram. Boards can\u00b4t wait for CEOs to prioritize digital change. (2017, September 6). 性视界 Business Review. <\/i><\/em>Retrieved from \u00a0\u00a0https:\/\/hbr.org\/2017\/09\/boards-cant-wait-for-ceos-to-prioritize-digital-change<\/i><\/em><\/p>\n

[2] 2017\u2019s Top-Performing CEO on Getting Product Right. (2017, October 24). 性视界 Business Review. <\/i><\/em>Retrieved from https:\/\/hbr.org\/ideacast\/2017\/10\/2017s-top-performing-ceo-on-getting-product-right<\/em><\/p>\n

[3] Praven, Sai. Zara Clothing Company Supply Chain (2016, October). SCM Globe. <\/i><\/em>Retrieved from http:\/\/blog.scmglobe.com\/?page_id=1513<\/i><\/em><\/p>\n

[4] Hartmann, Brian and Narayanan, Subu. Digital manufacturing: the revolution will be virtualized. (2015, August). McKinsey & Company<\/i><\/em>. Retrieved from https:\/\/www.mckinsey.com\/business-functions\/operations\/our-insights\/digital-manufacturing-the-revolution-will-be-virtualized<\/i><\/em><\/p>\n

[5] Breuer, Peter and Moulton, Jessica. Applying advanced analytics in consumer companies. (2013, May). McKinsey & Company<\/i><\/em>. Retrieved from https:\/\/www.mckinsey.com\/industries\/consumer-packaged-goods\/our-insights\/applying-advanced-analytics-in-consumer-companies<\/i><\/em><\/p>\n

[6] Sawyers, Rachel. The Zara Methord. (2011, March 7). Retrieved from https:\/\/rachelsawyers.wordpress.com\/2011\/03\/07\/the-zara-method\/<\/i><\/em><\/p>\n

[7] O\u2019Marah, Kevin. Zara uses supply chain to Win again. (2016, March 9). Forbes<\/i><\/em>. Retrieved from https:\/\/www.forbes.com\/sites\/kevinomarah\/2016\/03\/09\/zara-uses-supply-chain-to-win-again\/<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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