The Inditex (Zara) model, celebrated in many a case study, goes as follows: while many other fashion companies have their clothes made in Asia, Inditex sources more than half of its products from Spain, Portugal and Morocco. The production process is more expensive, but because the supply chain is short, this Spain-based company can react more quickly to new fashion trends. Instead of guessing which styles will be trendy tomorrow, Zara manufactures its new lines based on styles customers are already buying at high-end fashion houses.
Many companies that make their products in Asia, however, face more challenges in managing their long supply chains. By the time a cargo ship has sailed halfway around the world, the latest trends may have changed, and the just-shipped items have to be put on sale. While these companies are trying to get rid of unwanted stock, Inditex sells its collections at full prices and maintains high operating profits.
This model works for Inditex in Europe, in which it conducted 70 per cent of its sales in 2011. Europe, however, is in many ways a stagnant and aging market, and the company is in need of new markets. This is why Asia plays an important role in the company’s future plans.
In the Inditex example, the logistics chain was partially built around sea cargo. Should companies invest in the slightly more expensive option of air transportation, the risk of missing fleeting fashion trends could be avoided. New clothes and accessories could reach customers in just a few days and still comply by the latest styles. As a result, brands competing with Zara would no longer have to sell new items for a discount.
When planning production for next season and making transportation plans, please consider all the benefits that air transportation can provide.
P.S. This will be my last blog as I will leave the company to explore new challenges outside Finnair. During the past two years we have taken major steps forward to develop a new Finnair Cargo. We selected a growth strategy and started to expand our passenger network with freighter operations by opening routes to Hong Kong, Shanghai, Seoul, New York, Mumbai and Frankfurt. In Marketing we took a new approach too and launched the mobile web site as well as the http://news.finnaircargo.com/ - the site you are just reading, to distribute interesting content to our customers and other readers. I would like to take the opportunity to thank you for the years we have worked together and I wish you all the best for the future!
former Vice President Global Sales (until May 2012), Finland