{"id":2838,"date":"2015-12-08T06:50:41","date_gmt":"2015-12-08T11:50:41","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/inditex-lessons-in-fast-fashion\/"},"modified":"2015-12-08T06:54:48","modified_gmt":"2015-12-08T11:54:48","slug":"inditex-lessons-in-fast-fashion","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/inditex-lessons-in-fast-fashion\/","title":{"rendered":"INDITEX: Lessons in \u201cFast Fashion\u201d"},"content":{"rendered":"

Inditex is an example of a company that is highly effective at driving alignment between its operating model and its business model. Its business model seeks to provide global consumers with the latest designs, at high quality, affordable prices and most importantly at speed. [1]<\/a><\/sup>\u00a0Inditex differentiates itself from its competitors most successfully through its ability to understand exactly what products global consumers are demanding and to get them into store quickly. If consumers\u2019 tastes change mid-season, Inditex is able to respond by designing and manufacturing new items and delivering them to stores rapidly. In 2014 Inditex produced 36,000 different designs and delivered these to global stores at least twice per week. [1]<\/a>\u00a0\u00a0<\/sup>This is in contrast to traditional apparel\u00a0retailers who anticipate customers\u2019 demands and manufacture the entire collection ahead of each season.<\/p>\n

The company\u2019s speed in providing cutting edge fashion and responding to customers\u2019 demands on an on-going basis is clearly to the market\u2019s taste. As a result, Inditex has achieved exceptionally strong financial performance and global expansion. Between 2010 and 2014, Inditex grew net sales by approximately 10% CAGR. In 2014 alone the company increased retail space by 10%, opening 343 new stores in a number of prime locations globally. [2]<\/a><\/sup>\u00a0Crucially, this has been achieved at a time when many global apparel retailers have been struggling.<\/p>\n

In my view, there are three key features of Inditex\u2019s operating model that support its highly successful business model:<\/p>\n

(1) Rapid information flow supported by internal employee training programmes and highly centralised design, prototyping and production facilities.<\/strong><\/p>\n

Central to delivering fast and frequent fashion is the company\u2019s ability to engineer a rapid and daily information flow from customers, to designers, to prototyping and finally to production. This information flow operates as an on-going feedback loop that enables Inditex to understand global customers\u2019 demands in real time and modify its designs accordingly.\u00a0[1]<\/a><\/p>\n

Information Flow\u00a0[1]<\/a><\/em><\/strong><\/p>\n

\"Information<\/a><\/p>\n

Inditex provides internal training programmes for in-store staff in customer service, product management and trends. [3]<\/a>\u00a0<\/sup>This training supports in-store staff\u2019s ability to understand customer feedback and to transmit insights effectively back to the company\u2019s headquarters in Spain. Once inside Inditex\u2019s headquarters, the speed of the information flow is supported by the fact that the design, prototyping and production facilities are both vertically integrated and highly centralised (located a short walk away from one another). [4]<\/a><\/sup><\/p>\n

Information flow example:<\/strong> Across subsidiary Zara\u2019s c. 2,000 global stores, shop assistants meet on a daily basis to aggregate consumer insight and feedback on designs. This information is fed back daily to Inditex HQ where the brand\u2019s designers are based. New designs and alterations can be drawn up in a matter of hours before being sent to the workshop to be constructed into prototypes. Once prototypes are complete they are immediately inspected by the design team before being sent to production.<\/span><\/em>\u00a0[4]<\/a><\/sup><\/p>\n

Customer feedback [5]<\/strong><\/a><\/sup>\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0In-house designers [6]<\/strong><\/a><\/sup>\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0Prototyping [7]<\/strong><\/a><\/sup>\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 Production [8]<\/strong><\/a><\/sup><\/em><\/strong><\/p>\n

\"1\"\u00a0 \u00a0\"Inditex-design_3078392b\"<\/a> \u00a0\"3\"\u00a0\u00a0\"4\"<\/a><\/p>\n

\u00a0<\/strong>(2) \u201cJust in time\u201d manufacturing.<\/strong><\/p>\n

Whereas the majority of Inditex\u2019s peers have attempted to reduce production costs through outsourcing manufacturing to developing economies, Inditex has prioritised short lead times. On average the company will move apparel from design to store in as little as two weeks, while rival retailers such as GAP take up to nine months.\u00a0[4]<\/a>,\u00a0[9]<\/a><\/p>\n

\u00a0<\/sup>Short lead times are achieved through two key aspects of the company\u2019s operating model including:<\/p>\n