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This article was taken from the April issue of Wired magazine. Be the first to read Wired's articles in print before they're posted online, and get your hands on loads of additional content by subscribing online
Master the data along your entire supply chain
Not many outsiders are allowed to enter the head office of Inditex in Corunna in northwestern Spain. The company, which owns brands such as Zara, Bershka and Massimo Dutti, is the biggest fashion retailer in the world -- with 2008 sales of
€10.41bn -- and is very secretive.
The long, calm, white corridors offer no clue that 4,530 stores in 73 countries are controlled from this one building. Set around the main office are 11 factories and a huge 500,000m<sup>2</sup> distribution centre that expedites two deliveries -- one general and one tailored -- to every store, every week.
It's in the distribution centre that you get a sense of the size of the operation: dresses and coats on conveyor belts fly overhead while technicians use bikes to cover the long distances between their tasks. Rapid activity is everywhere, the result of an industrial model built for speed.
Back in the main building, the design teams sit with commercial specialists and procurement and production planners in a vast, open-plan office. The proximity of the teams is essential to how the "fast fashion" model -- the ability of retailers to respond to trends quickly -- works. Designers collaborate with marketers, while production makes preliminary manufacturing costs. Prototypes are constantly refined in a small, mock shop. An item can be ordered from any store in the world and be designed, produced and delivered in less than two weeks. For existing items, orders take no more than 36 hours to get from Corunna to stores inside Europe, 48 hours for those elsewhere: last year the team in Corunna handled 625 million items.
Once stock hits shops each store manager tracks what's selling -- not just individual garments but colours, sizes and shapes, as well as soft data such as trends and customer feedback. Using customised PDAs to supplement weekly phone calls, they relay this information back to the commercial managers sitting right by the design teams in Corunna.
The 360-strong team designs customer-specific garments and transmits the specs directly to the factories that surround head office. Manufacturing in Spain is more expensive than in Asia and Africa, but this approach keeps shipping time to a minimum. And the relentless introduction of new items in small quantities has three benefits. Stock disappears fast, creating a sense of exclusivity: every time a customer visits they'll find something new (for this reason, a London shopper who patronises Zara will visit their stores 17 times a year; a chain with average turnover can expect just four visits). It reduces the costs associated with running out of stock. And if a design isn't selling, the company can cut its losses and try another trend.
People at Inditex constantly talk about "the model". It's fundamental to the success of this giant business. As one employee notes: "If one store fails, the whole model collapses."
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This article was originally published by WIRED UK
