The Inditex Company Operations Management Strategic Programs

Introduction

The fashion industry across the world continues to grow rapidly in contemporary times. Fashion and clothing organizations are becoming essential in the growth of the world’s economy. This aspect makes it necessary for managers to understand, analyze and interpret the operations management of their companies to promote the sales of commodities. The quality of decisions and success of fashion businesses can be linked to operations management, planning and other strategic concepts. Organizations find it challenging to deal with various issues in the modern setting.

A number of complex matters in the fashion sector involve maintaining the competitive ability of a company against its market counterparts. In addition, it is difficult to maintain social, ethical and employees’ concerns within a sustainable balance that cannot affect productivity and sales. The introduction of innovative technologies creates efficiency in the fashion sector. However, managers need to develop and keep pace with the ever changing consumer trends (Cachon & Terwiesch 2006).

Operations management may refer to an activity of controlling resources that produce and deliver services and goods to clients. It is necessary for organizations to adopt effective operations management strategies to promote their services and products efficiently. Different personnel within organizations may be responsible for operations management. The specific human resources in charge of operations management processes comprise of manufacturing, storage, and operations’ managers.

These human resource professionals are valuable in developing the operations management exercise. They ensure that operations within other functions run efficiently in order to produce competitive commodities. For instance, a marketing function makes use of operating activities to conduct an innovative campaign. In a different scope, an information technology department can use operating structures to install a new network for the operations of the organization (Van Mieghem 2008).

This paper explains the case of the Inditex Company. The study describes the core business strategy and how the organization oversees its operations management. The research interrogates the operations management strategic programs that promote the ratings of the Inditex Group above other market players in the global fashion retailing market. The study also explores various perspectives from other fashion industry competitors and how they vary from those of Inditex. The analysis presents financial data to compare and contrast the performance of Inditex against other companies in the fashion industry.

The nature of operations management environment

The nature of the operations environment in organizations may be complex. Operations management works closely with other organs in an organization to deliver the desired output. Management experts derive a positive correlation between operations and strategic management. Strategic management offers the business the overall control of the purpose and direction of the organisation. This concept may involve integrating marketing aspects of the business to the service or product development and the operations management sections. The operations management context may also include other units within the business like finance, procurement, information and human resource management (Westcott 2010).

The operations management environment contains diverse components that enhance the performance of the chain that produces goods and services. The marketing and sales’ units promote the products to clients and work towards registering high volume of sales. The product and service development units are responsible for devising new services and commissioning new products and information content. The operations unit maintains the hardware and software content in order to implement new connections and services.

The operations management process contains numerous links between various departments and sections of an organization. It ensures that other functions run efficiently with a view of improving the entire system.

The nature of the operations environment is different in diverse companies. For example, an operation in an automobile industry may involve a machine that rapidly assembles products to meet the needs of a client. In case of a physician, operations management may entail the application of relevant knowledge and skills to diagnose a patient.

Merits and demerits of operations management functions

This paper presents a wide range of operations management roles applied by the Inditex Group. One merit of the existing operations management involves the use of people to create services and products that can meet the current and prospective demands of clients. The disadvantage with this aspect is that workers require training to be efficient. The training may be costly for the company. The next advantage of operations management may refer to a disaster relief charity. This operations management circumstance may involve an organization that uses resources from donations and charity. The challenge of the idea is that donors may make difficult demands before giving aid. Charitable bodies also conduct thorough monitoring and evaluation of the use of funds they give to various organizations. They may not always provide the required amounts of funds to organizations.

The other merit of operations management involves advertising. This situation refers to the use of operations management to develop attractive ideas to prospective customers. The advertisements may inform customers of products that address their actual needs. The aspect of advertising can be expensive and prone to distortions. A number of governments may impose strict measures on advertising through regulation. Operations management can be linked to the realization of a company’s business plan and decision making. The program enhances practices and other functions within the business. It supports the strategy of the business and develops innovation in the company. The demerit of this approach relates to the concept of dynamism of business operations and practices. Organizations must always conduct regular reviews of their strategies and objectives to remain relevant in the market. This aspect may involve extra costs for the company (Drew et al 2004).

The Inditex Group

The Industria de’ DisenoTextil (Inditex) is a global fashion and clothing business that includes the Zara fashion chain. The company manufactures disposable products. The choice of its products is strategic because the products can sell fast. The Inditex Group sells its products on a worldwide scale. It has several shops across the world. The group operates in 76 different countries with a distribution chain of more than 4,700 shops. The Inditex Group operates under diverse brands with a target on strategic customers’ schemes. It primarily deals with eight different brands that include Massimo Dutti and Zara (Inditex 2013).

The Zara brand is popular in the United Kingdom’s towns and cities. Massimo Dutti brand stores operate in Manchester and London. The other brands of the company operate in the United States, Asia and Europe. However, all the brands operate with a standard approach of operations certified by Inditex.

The clothing industry adopts a design and production process that may at times take long to penetrate targeted markets. However, this nature of conducting business confines the sector’s players to 2 or 3 annual collections. In addition, it is difficult to predict consumers’ tastes. These factors present inherent challenges to the clothing industry. Producers and distributors face continuous challenges of “stagnant” stocks (Inditex 2013).

The Zara brand started in 1975 through the efforts of Spain’s wealthiest businessman, Amancio Ortega Gaona. He had an idea of breaking the monotony of long production processes in the clothing industry through creating fast or instant fashions. He felt that the model would allow him to respond to the continuous transformations in consumers’ tastes and preferences. He would also address the emergence of new trends in the market. Gaona’s unique inventions transformed the Inditex Group making it one of the biggest global clothing and apparel companies.

The Inditex Group is a stable organization with a strong commercial position. The company creates room for a progressive self-funded expansion that promotes a self-sustaining company model. Financial statements indicate that the net sales of Inditex were $20.75billion in the fiscal year of 2012. This aspect was an improvement of 16% from the year 2011. However, as business rivals continue to mature, Inditex’s rapid expansion may start to experience challenges as a result of diverse world consumers’ demands and a rise in distribution needs (Inditex 2013).

Financial results

Financial results

Financial results

Analysis of Inditex’s operations management

Inditex may be the most popular fashion and clothing retailer across the globe. It has the highest number of outlets in the world. The company uses a unique technique of operations management that relies on marketing through the use of different brands of outlets across the world. The company has outlets in Spain, Arteixo and Galicia. In the year 2012, the Inditex Group had about 100 clothing and wear companies. This fact meant that the organization’s market coverage was competitive. It conducted its operations with about 6,000 shops globally and 86 market resorts. This operations management aimed at increasing the volume of sales for the organization. A rapid assessment of the company’s financial results indicates that it had annual revenues of more than $15 billion. The retail outlets of the Inditex Group include Zara, Uterque, Bershka, Oysho, Massimo Dutti, Stradivarius, and Zara Hom.

The Inditex Group remains one of the thriving companies in the clothing and textile sectors despite dwindling financial resources. The organization makes €245.9 billion in terms of profits annually. Inditex’s rising growth can be linked to the organization’s numerous stores across the globe. The company always changes fashion trends to keep up with the changing consumers’ tastes and preferences. The company produces summer and winter wear. Inditex’s winter wears are specifically popular in Europe with positive reception in all major cities.

Winter clothing offers textile companies the highest amounts of financial returns in a season. Inditex has remained above its competitors in designing unique attires that fulfil the requirements of consumers. The clothing industry is always under the risk of consumers’ “backlash” in terms of tastes and preferences. Companies with “old” stock may find it difficult to offset it. Inditex’s rare, fast selling products provide it with a major comparative advantage over most of its business rivals. The company knows how to adapt to transformations in the fashion industry. It has the fastest response to consumers’ tastes. This idea gives the company an edge over H&M, Gap, and Walmart.

The operations management of Inditex ensures that the stock is always shifting from retail outlets. For instance, the business introduces new brands of clothing every week in Zara’s outlets. Inditex can design, produce and distribute the collection within a period of four weeks. In contrast, Inditex’s rivals take numerous months to complete the same task. This dimension assures customers of new collections on a weekly basis. This approach of operations management can be equated to the “Inditex revolution”. The ability to understand and appreciate the dynamics that dictate tastes and preferences among consumers remains to be Inditex’s biggest asset against its rivals. The Inditex Company does not invest its funds on advertisements.

Inditex’s comparison with other competitors

A rapid assessment of the textile and fashion industries reveals that Inditex faces a formidable challenge from major companies like Benetton, Walmart and H&M. However, the company maintains a unique commercial model that boosts its performance in the market. The company controls most of the fashion industry processes in its retail outlets. The company is the “pioneer” of fast-fashion products. The textile and clothing industries focus on the minimization of costs by searching for cheap producers from China. Despite the cost-effective nature of this strategy, it creates a long supply chain of the market. The operations management of Inditex sells more than half of its products to Morocco, Portugal and Spain.

This fact creates a short, controllable, and a demand-supply chain. However, this concept increases the costs of production. The innovative thinking of Inditex on the need to react fast in the clothing market remains the driving force that maintains the company in the top hierarchy in terms of sales. Inditex’s rivals may waste time on predicting clients’ trends while Inditex observes and responds within a short span of time to its customers. The company’s digital record system and modern production house promote fast and effective production processes. In addition, the processes may have a short supply chain that ensures that collections reach the outlets fast to address customers’ needs (Christensen & Overdorf 2000).

Walmart may be among the world’s biggest retailers. It has more than 10,000 stores across the world. Most of its stores sell clothing and other wear. Its stores assume the form of hypermarkets. In contrast, Inditex operates strictly as a retailer of wears and clothing merchandises. This operations management strategy gives Inditex a market advantage over Walmart. Walmart and Inditex also show variations in terms of employees’ development. Inditex focuses on human resource development as one of the strategies of improving its performance. In contrast, Walmart does not take interest in employees’ factors.

Employees’ development is one of the key factors operations management uses to empower an organization to deliver its mandate. Employees’ development involves an organization and its employees joining efforts to upgrade their knowledge, skills, and abilities. It may be linked to the principles and objectives of the company. This development makes a positive contribution towards meeting the goals of the company. Skilled employees acquire the capacity to improve their work performance and deliver the desired results.

Walmart operates different retail stores in various formats around the world at low commodity prices. The company focuses on helping people to improve their living standards by selling them cheap products. It appeals to the community, embraces new structures and opens stores to provide customers with the products they want at affordable prices. Its operations management program is different from Inditex’s. Inditex focuses on the provision of fast selling fashion products, and other wear in different parts of the world. This aspect provides the Inditex Group with a significant comparative advantage over other businesses.

Unlike Inditex, the other competitors like GAP, H&M and Benetton do not manufacture their clothing collections. In addition, Inditex uses vertical structures. This idea provides the company with the flexibility to enjoy greater responsiveness than its rivals.

The Inditex Group “owns” its shops. Its rival, Benetton, makes commodities in small production plants. However, Benetton operates retail merchandises that belong to third parties (Belch et al 2009). The control over the point of sale is a strategic operations management aspect. It provides the Inditex Group with unique contacts with its clients, unlike its rivals. Therefore, Inditex can collect market information directly from the consumer to understand and keep abreast with market dynamics. This idea provides the organization with a comparative edge over other businesses.

The biggest business rival of H & M remains the Inditex Group. H & M also attributes its progress to sound operations management of its global outlets. The organization owns about 1203 outlets in the world. However, the Inditex Group continues to be the market leader in the industry.

Problem solving techniques for a range of contexts

The Inditex Group can explore various techniques to improve its operations management. The company encounters challenges in advertising. The operations management of the company can use technology to promote its products in a cost-effective way. This point may involve social media like Facebook and Twitter to reach out to prospective clients. The other technique can be linked to rigorous market research in countries where its products do not make big sales. The other method may involve a scenario building plan for examining the organization’s context in relation to other factors like external competition (Belch et al. 2009).

The company can perform a needs assessment which may bring out outcomes like the need for human resource development and training. The company can also outsource its operations in areas where it encounters stiff competition. The Inditex Group can buy small upcoming companies and rebrand them in order to promote its products and dominate the markets. The company uses a complex logistics system. The software helps in the design and production. The technological upgrade helps the company to manufacture and distribute new clothing in a period of 4 months. Previously, the company took 8 months to carry out the same process.

Conclusion

This paper affirms that the Inditex Group is the world’s leading and fastest growing fashion producer and retailer. The company has its headquarters in Arteixo, Spain. The business owns about 100 industries in clothing and fashion, processing and distribution. The Inditex Group is accountable for the production of 840 million wears in a year. The company has more than eight retail store formats: Bershka, Massimo Dutti, Oysho, Pull & Bear, Stradivarius, Uterqüe, Zara, and Zara Home. These retail formats collectively occupy 6,009 stores in 86 markets. Operations management can be an essential factor in the development of the Inditex Group.

This study proves that strategic decisions keep the Inditex Group above its competitors. The application of operations management ensures implementation of appropriate practices and innovation within organizations. Inditex’s success can be attributed to its innovation of fast fashion collections. The Inditex Group now has the best practices in the textile and clothing industries unlike its rivals, Walmart and H&M. Inditex group can be a model organization that many upcoming companies can emulate. The Inditex Group needs to conduct research on the aspect of operations management in order to enhance the sale of its products in various parts of the world.

References

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Christensen, C & Overdorf, M 2000, Meeting the challenge of disruptive change. Harvard Business, Vol. 78. no.2, pp.67-76.

Drew, J, McCallum, B, & Roggenhofer, S 2004, Journey to Lean: Making Organizational Change Stick, Macmillan Publishing, New York.

Inditex, 2013, Our Group, Web.

Van Mieghem, A 2008, Operations Strategy: Principles and Practice, Dynamic Ideas, Belmont.

Westcott, R2010, Stepping Up To ISO 9004: 2000: A Practical Guide For Creating A World-class Organization, Paton Press, USA.